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On Tuesday, lawmakers from both parties introduced a new bill that would crack down on the business practices of middlemen in the drug supply chain, who are often accused of driving up prescription drug prices and harming patients and pharmacies across the United States.
The bill is designed to ensure that local pharmacies can treat patients enrolled in government health programs and that they are reimbursed for their costs by so-called pharmacy benefit managers (PBMs) in a “fair and transparent” manner. According to a fact sheet on the bill, the Pharmacists Fight Back Act will allow seniors covered by Medicare and Medicaid, government employees and active-duty soldiers, among others, to have lower health care costs and greater freedom to choose which pharmacy they buy their prescriptions from.
Representatives Jake Auchincloss (D-Massachusetts) and Diana Harshbarger (R-Tennessee) introduced the bill Tuesday before a House Oversight and Accountability Committee hearing on drug broker tactics. Executives from three of the largest PBMs – UnitedHealth Group's Optum Rx, CVS Health's Caremark and Cigna's Express Scripts – will testify on allegations that they play a role in rising health care costs as their practices come under increasing scrutiny.
The new bill joins dozens of other bipartisan efforts at the federal and state levels to reform PBMs, which negotiate rebates with drug manufacturers on behalf of insurers, large employers and government health plans. These middlemen also create drug lists that are covered by insurance and reimburse pharmacies for prescriptions.
But both lawmakers and drug companies argue that PBMs overcharge for the rebates they negotiate, underpay pharmacies and fail to pass on the savings generated by those rebates to patients. Auchincloss said these practices have allowed PBMs to tie up $300 billion in revenue in the middle of the drug supply chain between manufacturers and patients.
Meanwhile, PBMs claim that drug manufacturers are responsible for setting high list prices for drugs, arguing that their tactics protect patients from high health care costs.
A bill on PBMs moved through House and Senate committees last year with bipartisan support, and a proposal passed the House overwhelmingly in December. But that legislative momentum has stalled since Congress removed PBM reform from a massive government spending package earlier this year.
Meanwhile, the Biden administration has increased pressure on PBMs as Americans struggle to afford prescription drugs, with the Federal Trade Commission planning to sue Caremark, Express Scripts and OptumRx, CNBC previously reported.
Pedestrians walk past a CVS store in San Francisco, California in November.
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The new bill would seek to achieve some of the same goals as previous legislation, such as increasing transparency regarding certain PBM business practices and prohibiting price gouging, which is charging plans more than they pay pharmacies for a drug.
But Auchincloss, who co-authored another PBM bill that passed the House last year, said his new law is “more comprehensive and strict” and focuses on pharmacies. A Tuesday press release about the bill also called it “the most comprehensive PBM reform ever introduced at the federal level.”
“It's designed to take the pharmacist's perspective and ask, 'What is making it impossible for pharmacists to be successful as small business owners and provide clinical and pharmacological advice to the patients they care for?'” Auchincloss told CNBC. “We are systematically addressing the obstacles that stand in the way of that mission… This bill is designed to empower pharmacists to stand up against corporate greed.”
Auchincloss pointed to a new pharmacy reimbursement model under the bill that would be largely based on the so-called national average drug acquisition cost (NADAC) of a drug, which measures the average price that pharmacies pay to buy a drug from manufacturers or wholesalers, based on an invoice survey.
“This will ensure that the price is based on the true cost of the goods,” Auchincloss said, adding that the bill's reimbursement model is more relevant to generics than brand-name prescription drugs.
Pharmacies are typically paid through a complicated system that is not directly based on drug spending. This model, which involves a multi-tiered network of insurers, manufacturers, PBMs and pharmacies, creates confusion about the fees and markups added to the original cost of a drug.
Other measures in the bill include requiring PBMs to pass on 80% of rebates to patients and banning several other practices, including forcing patients to purchase brand-name drugs when a cheaper generic version is available, banning the referral of patients to pharmacies affiliated with PBMs, and banning any pharmacy in the network from filling prescriptions.
The bill would “introduce much-needed reforms to stop rip-offs of independent pharmacies, make life-saving medicines more affordable for patients and implement solutions that result in savings for taxpayers,” Harshbarger said in a statement.
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