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Senate panel advances PBM legislation

A key congressional committee intensified the political pressure on pharmacy benefit managers on Thursday by approving a bipartisan bill that would curb industry practices that have attracted increasing government scrutiny.

The Senate Health, Education, Labor, and Pensions Committee voted 18-3 to advance the Pharmacy Benefit Manager Reform Act of 2023 Thursday. Chair Bernie Sanders (I-Vt.) and ranking member Dr. Bill Cassidy (R-La.) introduced the measure together. Republicans Sens. Rand Paul (Ky.), Susan Collins (Maine) and Mitt Romney (Utah) voted no.

The bill would ban spread pricing, require PBMs to pass along the rebates they receive from drugmakers to employers and policyholders, to disclose the prices they pay pharmaceutical companies for medicines and the fees they pay pharmacists to fill prescriptions, and to report what they earn from drug company copayment assistance programs.

“A market without transparency is a dysfunction,” Cassidy said. “Patients should know what they're expected to pay, and employees and employers have the ability to shop around for the best deal. Today's PBM legislation is at its core about improving transparency."

The proposed spread pricing ban provoked the strongest opposition from the senators who voted against the measure. PBMs engage in spread pricing by charging health insurance companies more for medicines than they pay pharmacies to fill prescriptions, and then pocketing the difference. More than 20 states already have outlawed this practice.

Paul and Romney objected that prohibiting spread pricing would limit employers and the PBMs with which they contract from creating pharmacy benefits they believe suit employees and would disadvantage PBMs that compete with CVS Caremark, Express Scripts and OptumRx, which collectively hold a nearly 80% market share.

"The big three PBMs have a diversified business model, but some smaller PBMs depend on spread pricing over 90% of their business," Paul said. "Banning these contracts may actually put smaller PBMs out of business and make the big three bigger."

The Pharmaceutical Care Management Association, which represents PBMs including CVS Health subsidiary CVS Caremark, UnitedHealth Group subsidiary OptumRx and Cigna subsidiary Express Scripts, opposes the bill. "The legislation would create a one-size-fits-all contracting mandate that ignores the unique needs of patients and removes employer choice," PCMA said in a news release Thursday. "Real solutions to existing gaps in prescription drug affordability could easily be included in a drug pricing bill that actually lowers costs.”

The Sanders-Cassidy measure is not Congress' last word on PBMs.

Senate Finance Committee Chair Ron Wyden (D-Ore.) and ranking member Mike Crapo (R-Idaho) plan to consider similar legislation, while a number of senators and House lawmakers have introduced PBM bills. House Oversight and Accountability Committee Chair James Comer (R-Ky.) initiated an investigation into PBMs and rising drug prices in April. The House Energy and Commerce Committee has not commenced legislative efforts related to pharmacy benefit managers.

Pharmacy benefit managers are under fire off Capitol Hill, as well. The Federal Trade Commission has been investigating PBM business practices for nearly a year and PBMs have been subject to state inquiries and enforcement actions in recent years.



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