New Senate bill targets PBM fees, rebates under Medicare Part D

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Pharmacy benefit managers would not be allowed to incorporate fees, pharmaceutical company rebates and other costs into prescription drug prices for Medicare Part D plans under bipartisan Senate legislation introduced Wednesday.

The Patients Before Middlemen (PBM) Act of 2023, sponsored by Sens. Robert Menendez (D-N.J.) and Marsha Blackburn (R-Tenn.), has won the endorsement of Finance Committee Chairman Ron Wyden (D-Ore.) and ranking member Mike Crapo (R-Idaho), along with Sens. Jon Tester (D-Mont.) and Dr. Roger Marshall (R-Kan.). Wyden and Crapo have not scheduled a hearing or a markup to consider the bill.

“Pharmacy benefit managers have rigged the system to maximize profits while doing little to drive down the cost of prescription drugs for patients at the pharmacy counter,” Menendez said in a news release. “This bipartisan legislation would help lower prescription drug prices for Medicare Part D beneficiaries by delinking PBM compensation from list prices and utilization levels—eliminating a perverse incentive structure that has done nothing but disadvantage patients.”

The Menendez-Blackburn measure emerged from the Finance Committee’s prior work on PBMs and drug prices, such as a legislative framework the panel unveiled in March.

“This legislation will put a stop to one of the most egregious practices driving up the price of prescription drugs in Medicare: pharmacy benefit managers getting paid based on the price of a drug,” Wyden said in the news release.

The Pharmaceutical Care Management Association, which represents PBMs including Cigna subsidiary Express Scripts, CVS Health subsidiary CVS Caremark and UnitedHealth Group subsidiary OptumRx, blasted the bill.

“While we’re currently reviewing the legislation, it’s clear that it fails to address the root cause of high prices and appears to buy into the false rhetoric and self-serving agenda of big drug companies. Drug companies, not pharmacy benefit companies, profit immensely from high list prices they alone set and raise,” the Pharmaceutical Care Management Association said. “Pharmacy benefit companies are compensated based on how effectively they secure savings for employers, patients and taxpayers—serving as the only real check against drug companies’ otherwise unlimited pricing power.”

The Finance Committee is the latest congressional panel to target PBMs this year. The Senate Health, Education, Labor and Pensions Committee approved legislation last month that, among other things, would prohibit pharmacy benefit managers from engaging in the lucrative practice of spread pricing. And the House Energy and Commerce Committee advanced a measure last month that would impose strict new transparency rules on PBMs. In addition, the House Oversight and Accountability Committee and the Federal Trade Commission are investigating the industry.

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