What’s Congress doing about PBMs? A guide to PBM reform.

Pharmacy benefit managers (PBMs) serve as intermediaries between drug manufacturers, pharmacies, plan sponsors, and patients. Originally created to negotiate favorable terms and maintain affordable prescription drug costs, PBMs have gradually strayed from their intended mission. Instead, they've become entangled in opaque practices that drive up drug costs for employers and their teams.

As concerns over rising drug prices grow, the U.S. Congress has introduced several bills to curb the unchecked practices of PBMs. These legislative measures aim to bring transparency to an industry known for its secrecy, with a focus on the "big 3" PBMs that control 80% of the market.

Understanding the push for PBM reform.

At the heart of the legislative agenda lies an effort to overhaul shady PBM practices, addressing key concerns such as profiting from rebates and lack of transparency. The legislation also targets spread pricing, a tactic where PBMs charge plan sponsors more for a prescription drug than what they pay back to the pharmacy. By mandating full disclosure of fees across the supply chain, Congress aims to foster a fairer, more transparent marketplace for prescription drugs. Let's dive into the specifics of some of the pivotal bills under consideration:

• S. 1339 "HELP" Bill: This bill seeks to ensure that 100% of drug manufacturer rebates benefit plan sponsors and patients directly. It mandates that PBMs must pass rebates back to plan sponsors, prohibits spread pricing, and requires detailed annual reports.

• S. 127 PBM Transparency Act of 2023: This act places emphasis on passing rebates back to plan sponsors. It requires PBMs to disclose the cost and reimbursement of drugs, any fees or discounts charged, and submit annual reports to the FTC.

• S. 1131 Drug Price Transparency Act of 2023: Intended to prevent PBMs from pocketing discounts, this act advocates for direct passage of discounts to plan sponsors and transparency in fee structures. It also allows manufacturers to pay PBMs flat fees for specific services, as long as they are disclosed to plan sponsors.

• S. 1217 Ending the Prescription Drug Kickback Act of 2023: Addressing the issue of kickbacks, this bill aims to prevent PBMs from receiving rebates or payments from drug manufacturers. 

• H.R. 3285 Fairness for Patient Medications Act: This legislation safeguards patients from exorbitant drug prices, ensuring they never pay more than what the insurer negotiated for the drug in the previous year. It sets limits on deductibles and cost-sharing for drugs with high rebates.

• S. 1542 DRUG Act: The DRUG Act requires PBMs to charge a flat service fee unrelated to the cost of drugs. It aims to prevent PBMs from profiting off the price difference between the cost and the amount reimbursed to pharmacies. Additionally, the bill would block insurers and PBMs from interfering with patients' choice of pharmacies.

• H.R. 2534 The PROTECT 340B Act: This act aims to protect entities or contract pharmacies participating in the 340B Drug Pricing Program from discrimination by health insurers and PBMs. 

• H.R. 2679 PBM Accountability Act: Focusing on accountability, this act mandates PBMs to provide detailed information to employers regarding their drug spending. It mandates providing information on covered drugs, wholesale acquisition costs, out-of-pocket spending, and more.

• S. 1130 Health Care PRICE Transparency Act: This act requires PBMs to provide employers with data on drug spending, such as their out-of-pocket costs and the rationale for placing drugs on their formularies, every six months.

• H.R. 2816 Pharmacy Benefit Manager Sunshine and Accountability Act: Focusing on accountability and transparency, this act mandates PBMs to disclose the total rebates they received and didn't pass back to the plan sponsor, how much of the post-claim adjudication payments they received from pharmacies and didn’t pass back to the plan sponsor, and the total retained rebate percentage under a contract.

• S. 1269 INSULIN Act of 2023: This act aims to make insulin more affordable for diabetes patients by capping out-of-pocket costs at either $35 or 25% of the list price per month. 

• S. 4822 Health Care Price Transparency Act of 2023: This act mandates PBMs to provide comprehensive reporting to employers, outlining copayments, rebates, discounts, net payments, and the net price of every drug. Additionally, it calls for a report from the Government Accountability Office (GAO) on vertical integrations between health insurance plans, PBMs, and pharmacies.

• H.R. 3561 PATIENT Act of 2023: The PATIENT Act requires PBMs to provide employers with detailed annual data on prescription drug spending along with their acquisition costs, out-of-pocket spending, formulary placement rationale, aggregate rebate information, fees, alternative discounts, and any other payments from drug companies.

• H.R. 5378 Lower Costs, More Transparency: This bill requires PBMs to provide employers with semi-annual prescription drug spending data like total out-of-pocket spending and formulary placement rationale. 

• S. 113 Prescription Pricing for the People Act: This bill requires the Federal Trade Commission (FTC) to investigate and report pharmaceutical supply chain practices they deem anti-competitive. 

Despite legislative efforts striving to bring about a new era of affordability and accessibility in prescription drug pricing, change can’t come soon enough. Fortunately, you can take proactive steps by partnering with a transparent PBM that prioritizes passing back savings to employers and members. With audit-level reporting, Rightway sets a new standard in PBM transparency, ensuring that every dollar saved is returned to you and your teams. 

Uncover a new level of PBM transparency today with Rightway. Learn more here.

Bills are long, dynamic, and far-reaching. This overview covers some of the current legislation as of March 2024. It summarizes portions of the bills that would impact PBMs working with self-insured employers.