There is a Bi-Partisan Bill to Rein in PBMs and Lower Drug Costs. It’s a Step in the Right Direction.
Pharmacy benefit managers’ business practices have led to soaring prescription drug prices that make life-saving medications unaffordable for millions of Americans.
Members of Congress from both political parties have joined forces to reintroduce a bill aimed at reforming how pharmacy benefit managers (PBMs) make their money at the expense of patients. As reported by ALM Benefits Pro, the Delinking Revenue from Unfair Gouging Act, or DRUG Act, would halt PBMs from tying their payments to the retail or wholesale prices of prescription drugs. Instead, PBMs would have to charge flat fees for their services — an approach that could reduce the financial incentives for PBMs to drive up drug prices.
As a reminder, PBMs are the middlemen between drug manufacturers and patients. While they have been around for years, the biggest are now owned by big insurance companies. Cigna, CVS/Aetna and UnitedHealth Group. Collectively, those companies control 80% of the market, and they have figured out how to maximize profits in numerous ways.
For many drugs, the PBMs are taking more money out of the pharmacy supply chain than either the drugs’ manufacturers or our local pharmacies., The big insurer-owned PBMs often pocket a cut of the very price hikes they claim to negotiate down. Critics — like myself — have pointed out that PBMs benefit when drug prices go up because their fees are often based on a percentage of those inflated costs.
In more layman’s terms: It’s not in the PBMs financial interest to keep prices down.
The DRUG Act was reintroduced by Rep. Mariannette Miller-Meeks, M.D. (R-IA) along with her colleagues Rep. Nannette Barragan (D-CA), Rep. Nicole Malliotakis (R-NY), Rep. Brad Schneider (D-IL), Rep. Rick Allen (R-GA), and Rep. Donald Norcross (D-NJ).
“Pharmacy benefit managers have excessive influence over the prices patients pay at the pharmacy counter,” said Rep. Miller-Meeks. “Local Iowa pharmacies are closing due to greedy PBM practices, impacting proximity and access to medications for Iowans. The DRUG Act will put downward pressure on prescription drug prices and insurance premiums by removing the incentive for PBMs to drive up the list price of medications.”
The PBM’s PR and lobbying organization, the Pharmaceutical Care Management Association, insists, of course, that the industry’s critics are wrong, even as an untold number of Americans walk away from the pharmacy country without their medications even with an insurance card in their wallets.
A Step in the Right Direction
The bipartisan nature of the DRUG Act signals growing recognition — on both sides of the political aisle — that PBMs are part of the problem. Several other bipartisan bills have or soon will be introducted to rein in the unchecked power of PBMs and the insurance giants that own them. We will keep you posted on whether some or all of them can finally get across the finish line this year. You can be certain PCMA and the big insurance companies will be spending enormous amounts of the money we pay in premiums to kill them, but there appears to be real momentum.
It is good news that reining in the PBM's is a bipartisan issue. This should have been solved months ago. Trump should be told by Congress, if it passes, any veto will be overturned.
PBMs are in business to profit from positioning themselves as the middlemen of every Rx transaction. The more they spend (of a client's Healthcare dollars), the more they make., facilitating a misaligned incentive when it comes to reducing Rx costs . Their role should simply be to process the Rx claims on a per Rx fee basis with no incentive or capacity to influence the price of those claims. True savings in prescription medications will come when there is no correlation between profit from processing the medication claim and the True Cost of the product. Example: The exact same prescription product from a Canadian Pharmacy at $168 costs $8710 in the USA. No PBM interference. I am NOT suggesting we purchase Rxs from Canada as a fix. Remove unnecessary price influence by the PBMs; pay PBMs claims processing fees; ensure Pharma accommodates the now reduced need for Rebates, fees, etc formerly paid to the PBMs, and maybe we can start paying that $168 right here at home and pass the savings back to the employers and our government programs currently being exploited.