Widely supported bill would increase transparency in drug pricing & direct FTC to hold PBMs accountable for manipulation
CBO: Bill Would Reduce Deficit by $740 Million Over Next 10 Years
Today, the Senate Committee on Commerce, Science and Transportation passed the bipartisan Pharmacy Benefit Manager Transparency Act, introduced by Sens. Maria Cantwell (D-Wash.), Chair of the Commerce Committee, and Chuck Grassley (R-Iowa), Ranking Member of the Budget Committee, to increase transparency in prescription drug pricing and hold pharmacy benefit managers (PBMs) accountable for deceptive and unfair practices that drive up prescription drug costs. The bill was approved 18-9 and now heads to the full Senate.
According to a preliminary estimate by the Congressional Budget Office, the legislation would reduce the deficit by $740 million over the next 10 years.
“Drug prices have been increasing at an alarming rate and are compromising consumers, their budgets and the cost of health plans. Pharmacy Benefit Managers are middlemen in the drug pricing supply chain and today, three PBMs control 80% of the prescription drug market, operating out of the view of regulators,” said Sen. Cantwell at the beginning of the markup. “This committee has heard testimony showing how PBMs’ substantial market power and opaque practices impact patients, providers and pharmacies, including a Seattle pharmacist who had to close a pharmacy serving retirees because the PBM had clawed back over $538,000 in just a single year. So, I look forward to moving this out of committee again.”
“This bipartisan bill would not only put a stop to deceptive and opaque pricing schemes that burden consumers with higher prices, it also saves taxpayers $740 million. It’s a win-win, and warrants swift approval in Congress,” Sen. Grassley said.
The bipartisan bill is also cosponsored by Sens. Jon Tester (D-Mont.), Cindy Hyde-Smith (R-Miss.), Mike Braun (R-Ind.) Jerry Moran (R-Kan.), Thom Tillis (R-N.C.), Shelley Moore Capito (R-W.Va.), John Boozman (R-Ark.) and Peter Welch, (D-Vt.).
Sen. Cantwell successfully advanced the Act through the Commerce Committee last June and vowed to keep fighting until it becomes law. On January 27, Sens. Cantwell and Grassley reintroduced the legislation and the Commerce Committee heard testimony on February 17 from a pharmacist, oncology doctor and experts who explained how PBMs pervade nearly every aspect of the drug distribution system – from setting prices, clawing back pharmacy reimbursements and making care decisions.
While PBMs were initially formed to process claims and negotiate lower drug prices with drug makers, today they administer prescription drug plans for hundreds of millions of Americans and three PBMs control nearly 80 percent of the prescription drug market. They serve as middlemen, managing every aspect of the prescription drug benefits process for health insurance companies, self-insured employers, unions and government programs. They operate out of the view of regulators and consumers — setting prescription costs, deciding what drugs are covered by insurance plans and how they are dispensed – pocketing unknown sums that might otherwise be passed along as savings to consumers and undercutting local independent pharmacies. This lack of transparency makes it impossible to fully understand if and how PBMs might be manipulating the prescription drug market to increase profits and drive-up drug costs for consumers.
Pharmacy Benefit Manager Transparency Act (S. 127)
This bill has drawn support from a diverse group of health care and consumer organizations:
- AIDS Healthcare Foundation
- American Academy of Dermatology Association
- American Medical Association
- American Pharmacists Association
- Association for Clinical Oncology
- Association of Mature American Citizens
- Autoimmune Association
- Biotechnology Innovation Organization
- Crohn’s & Colitis Foundation
- Community Oncology Alliance
- National Community Pharmacists Association
- National Association of Manufacturers
- National Consumers League
- PBM Accountability Project
- Ryan White Clinics for 340B Access