PBM Reform Momentum: Trump, Warren, Carter and Year-End Package Call for Big Insurance Middlemen Reforms

Many in Washington think it's time to untangle the web that makes prescription drugs so unaffordable.

The fight to reform pharmacy benefit managers (PBMs) — those shadowy middlemen who profit handsomely while patients and pharmacies struggle — has reached a pivotal moment. Recent actions on Capitol Hill and beyond make it clear: we’re no longer debating whether PBM reform is necessary. The only question now is how bold lawmakers will be in dismantling these profiteering schemes.

As I wrote recently in HEALTH CARE un-covered, PBMs have morphed from intermediaries meant to lower drug costs into critical cogs in Big Insurance’s profiteering machine. The "Big Three" — CVS/Aetna’s Caremark, Cigna’s Express Scripts, and UnitedHealth Group’s OptumRx — control 80% of the PBM market.

Their vertical integration with insurers and pharmacies has enabled them to manipulate drug pricing, steer patients to corporate-owned pharmacies, and pocket billions in rebates that should have lowered costs for patients. 

In the last few weeks, a bipartisan push for reform has taken center stage in Washington. Several key developments have made it clear that the momentum is real — and the stakes couldn’t be higher.

Lame Duck and PBM Reform

Sens. Elizabeth Warren (D-MA) and Josh Hawley (R-MO) – notable opposites in many ways – are leading a bill with other lawmakers to divorce health insurance companies like UnitedHealth, Cigna and Aetna from their pharmacy businesses. If made law, the legislation would be the most significant effort to regulate insurers’ drug middlemen activities which have become huge profit centers for big insurers. There is also a companion bill in the U.S. House of Representatives being led by Reps. Diana Harshbarger (R-TN) and Jake Auchincloss (D-MA).

In addition to the Warren-Hawley coalition, Rep. Earl “Buddy” Carter (R-GA), a pharmacist himself, continues to prove why he is one of Congress’s most consistent and effective voices on PBM reform.

On top of his letter last month to Attorney General Merrick Garland regarding PBMs’ role in the opioid epidemic, Carter, alongside 120 bipartisan cosigners, sent a new letter calling on leadership in Washington to pass PBM reforms.

In the letter, legislators write: 

We have heard directly from our constituents that the harmful and aggressive tactics of some PBMs have only gotten worse, and that action is needed now to protect pharmacies and lower patient costs.

Rep. Earl “Buddy” Carter’s (R-GA) letter to Congressional leaders calling for PBM reform.

Yesterday, President-elect Donald Trump pledged to eliminate the "middleman" in the prescription drug supply chain (aka PBMs) to lower costs for Americans. His statement sent shockwaves through Wall Street, causing stock prices of major PBMs — CVS Health’s Caremark, Cigna’s Express Scripts, and UnitedHealth Group’s Optum — to tumble. The market’s reaction was swift: CVS’s stock dropped 3%, Cigna’s fell 1.2%, and UnitedHealth Group saw a 2.8% decline. These shifts reflect increased focus on PBMs as political will for reform and public scrutiny in the wake of recent online outrage focussed on health big health insurance companies' business practices converge.

Furthermore, recent press reports have revealed that Congress has reached a bipartisan deal on an end-of-year health package that would, among other things, impose significant regulations on PBMs – including ending the ways PBMs game Medicare and Medicaid reimbursements through a practice called “spread pricing.”

Grassroots Momentum, Bipartisan Solutions

The urgency for PBM reform has drawn support from across the advocacy spectrum. A recent letter led by the American Economic Liberties Project to Senate Majority Leader Chuck Schumer and Senate Minority Leader Mitch McConnell calls for immediate action to address PBMs’ stranglehold on prescription drug pricing. The letter highlighted the devastating consequences of PBM-driven pharmacy closures, which have turned nearly “800 ZIP codes into pharmacy deserts since 2015.”

The letter proposed actions on PBM reform including:

• The Pharmacists Fight Back Act (H.R. 9096), which would establish baseline reimbursement rates to protect independent pharmacies.

• The Lower Costs, More Transparency Act (H.R. 5378), which would prohibit spread pricing and mandate fair pharmacy reimbursements in Medicaid managed care programs.

• A “Glass-Steagall” for Health Care, which would structurally separate PBMs from pharmacies to eliminate conflicts of interest.

As HEALTH CARE un-covered has written before, we need structural changes that disrupt PBMs’ ability to manipulate markets and exploit patients. Americans need Washington to take measures that address the core issues of vertical integration and profiteering with big health insurers and pharmacy benefit managers.

Other Tidbits

• Last week, at the National Association of Attorneys General Capital Forum in Washington, D.C., Republican Ohio Attorney General Dave Yost, who has called PBMs “modern gangsters”, moderated a panel on PBM reform.

• Research by an independent pharmacist found that 2,275 pharmacies closed this year alone – noting that much of the closures are because of PBMs.

• Something to watch: The Pharmaceutical Care Management Association (PCMA), the trade group for PBMs that handle lobbying and advocacy activities for the companies in Washington, are making their rounds on Capitol Hill and in the media. In a recent Newsweek article, PCMA pushed back against the Warren-Hawley legislation. "With this and any piece of legislation, it's important to first take a step back from the rhetoric around health care and recognize that PBMs exist to serve patients by enabling employers and others to offer benefits," PCMA said. 

• Just today: A new investigation by Chris Hamby for the New York Times details how PBMs put profits over patient safety and contributed to the opioid epidemic and the premature deaths of countless Americans.

The Stakes Are High

If PBMs are allowed to continue unchecked, we risk cementing a system that prioritizes corporate greed over human lives and Main Street America. Independent pharmacies will keep closing, leaving vulnerable communities without access to care and storefronts empty. Patients will continue to pay more for their medications while already massive insurance companies and their PBMs pocket billions.

The solution is clear: Congress must pass comprehensive PBM reform. Among other remedies, this includes ending spread pricing, banning patient steering and structurally separating PBMs from insurers and pharmacies.