Action on PBMs Not Likely Before Post-Election Lame Duck Session

WASHINGTON — Congress last week abandoned plans to try to reform how pharmacy benefit managers operate, casting aside bipartisan proposals many had hoped would be included in the package being taken up this week to fund the federal government.

Drugmakers and pharmacy owners have long maintained that the primary reason drug prices are so high are the opaque practices of the so-called PBMs, who decide which medicines are covered by insurers and employers, and what prices are paid at pharmacy counters. 

Pharmacy benefit managers counter by arguing that it’s their job to keep costs down and manage patient care for health insurers, plan sponsors and employers, and that they’re being unfairly blamed for exorbitant health care costs.

According to the White House, the cost per person for health care in the United States is double that of other advanced countries. As a result, the average American household spends about 8% of its yearly income on health care, while seniors pay even more — as much as 15% of their overall spending.

Upon receiving the massive spending plan on Sunday, sans any attempt at reforming how PBMs operate, Senate Finance Committee Chair Ron Wyden, D-Ore., said he was “extremely disappointed” it left behind “major reforms that would lower prescription drug costs for America’s seniors.”

“It is a real missed opportunity that these critical, bipartisan provisions will be unnecessarily delayed until December or longer,” he added, referring to the lame duck session.  

But not everyone agrees the issue can wait that long. On Monday, the White House hosted a roundtable discussion on pharmacy benefit managers that included Neera Tanden, domestic policy advisor to President Biden, Federal Trade Commission Chair Lina Khan, Kentucky Gov. Andy Beshear, and billionaire entrepreneur Mark Cuban, among others. 

At the opening of the session, National Economic Advisor Lael Brainard noted that while work on lowering health care costs is just getting started, there is already evidence that “some middlemen, some pharmacy benefit managers and group purchasing organizations, are not passing along the savings they negotiate to patients, pharmacies and payers.

As a result, she said, “we need to consider new business models, enforce transparency and accountability, and examine tactics like “spread pricing” and non-pass through rebates [that keep prices elevated].”

On Tuesday, during a meeting of the White House competition council, Brainard announced the launching of a multi-agency “strike force” to curb unfair and illegal pricing across the economy including, presumably, drug pricing.

Meanwhile, the FTC is already more than a year and a half into an inquiry into the business practices of PBMs and how they impact independent community pharmacies.

The Pharmaceutical Care Management Association, a trade group for pharmacy benefit managers, said it was not invited to the listening session. 

As a result, it said, the White House would only hear from “people and groups with vocal anti-PBM agendas,” the end result being “a biased and unproductive discussion.”

“Unfortunately, today’s event serves to promote only one model and one perspective,” the association said. “We share the administration’s goal of lowering prescription drug costs and would welcome the opportunity to work together to make prescription drugs more affordable for patients and employers.

“Rather than take the bait from Big Pharma and those with self-serving agendas, policymakers should hear directly from the PBMs who are actually negotiating against Big Pharma to lower drug costs,” it added.

Dan can be reached at [email protected] and @DanMcCue