Rep. Jake Auchincloss, D-Mass., has been one of several lawmakers introducing bills designed to … [+]
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Despite bipartisan support, a last-ditch effort to pass a healthcare package that included pharmacy benefit manager reforms was scuttled last week. This marks the umpteenth time that lawmakers couldn’t cross the threshold to pass and enact changes to how PBMs do business.
It’s not for lack of congressional hearings on PBM reform over the years, or the introduction of numerous bills that include provisions directed at potentially anti-competitive practices. Lawmakers on both sides of the aisle agree that changes are needed.
The legislative initiatives center around issues such as spread pricing, transparency, conflicts of interest, and more. These bills aim to address the manipulative practices of PBMs in the pharmaceutical industry.
There was a bipartisan agreement last December to include several key PBM reforms in a sweeping healthcare package into a so-called continuing resolution, which is a temporary spending bill that allows federal government operations to continue when final funding appropriations have not yet been approved by Congress and the President.
Besides addressing changes to the methods by which PBMs operate, the CR would have included a series of other policy measures, but Republican Speaker of the House Mike Johnson pulled PBM reforms and other changes from the CR, under apparent pressure from then President-elect Donald Trump and current de facto head of the Department of Government Efficiency, Elon Musk.
This month, Senate Democrats laid the groundwork to pass a major bipartisan, bicameral healthcare policy package that failed to make it in December. Senators Ron Wyden (D-Oregon) and Bernie Sanders (I-Vermont) brought the proposal to the floor, trying to pass it by unanimous consent, but their attempt was blocked by Senator Rick Scott of Florida.
What Are PBMs And What Do They Do?
To most lay people, the acronym PBM means nothing. But PBMs serve as key intermediaries at the center of the complex and often opaque United States pharmaceutical distribution chain. They manage the prescription drug benefit for around 275 million Americans, negotiating prices and terms for patient access.
Following recent mergers, the leading PBMs are now part of healthcare conglomerates that control the U.S. prescription drug market. These PBMs have considerable control over drug availability, pricing, and patient access.
Rebates play a significant role in driving up drug prices and cost-sharing for patients. These payments from drug manufacturers to PBMs influence market share and formulary placement, benefiting both parties but not necessarily patients.
While PBMs argue they help lower prescription drug costs, critics point out that rebates do not directly benefit patients at the pharmacy counter. The focus on PBMs may also shift attention away from other stakeholders in the pharmaceutical industry.
Ultimately, the pricing of pharmaceuticals is determined through negotiations between drug manufacturers and Pharmacy Benefit Managers (PBMs). This dynamic can sometimes prioritize the interests of these two parties over those of patients. For example, manufacturers may engage in “product hopping” by introducing reformulated versions of their products to prevent competition from lower-cost alternatives. PBMs, in turn, may support this practice by favoring the new formulations on their formularies.
The absence of PBM reform in recent legislative proposals suggests a potential division among lawmakers in 2025, highlighting the challenges of overcoming political gridlock. Moving forward, a more focused approach on standalone proposals targeting PBMs may be more effective than broad legislation. For instance, the Protecting Patients Against PBM Abuses Act, introduced by Earl “Buddy” Carter, Lisa Blunt Rochester, and Jake Auchincloss, aims to separate PBM compensation from medication list prices to eliminate incentives for driving up costs. Additionally, the bill aims to enhance transparency and address conflicts of interest within the PBM industry.
Despite past resistance to reform, the future remains uncertain. It will be interesting to see how efforts to regulate PBMs evolve in the coming years.
