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Lawmakers from both parties introduced a new bill Tuesday aimed at cracking down on the business practices of drug supply chain middlemen widely accused of inflating prescription drug prices and harming patients and pharmacies in the United States.
The legislation aims to ensure that community pharmacies can provide care to patients enrolled in federal health care programs and are reimbursed “fairly and transparently” by so-called pharmacy benefit managers. Under the Pharmacists Fight Back Act, seniors covered by Medicare and Medicaid, government employees and active duty service members, among other patients, would see lower health care costs and have more freedom to choose where they get their prescriptions filled, according to a fact sheet about the bill.
Reps. Jake Auchincloss, D-Mass., and Diana Harshberger, R-Tenn., unveiled the bill ahead of a House Oversight and Accountability Committee hearing on drug broker tactics on Tuesday. United Health Group's Optum Rx, CVS HealthCaremark Brand SignaExpress Scripts, a subsidiary of Express Scripts, will testify against allegations that they play a role in rising health care costs, as federal scrutiny of their practices increases.
The new bill joins dozens of other bipartisan efforts at the federal and state levels to reform pharmacy benefit management companies, which negotiate discounts with drug manufacturers on behalf of insurers, large employers and federal health plans. These middlemen also create lists of drugs, also known as formularies, that insurance covers and reimburse pharmacies for prescriptions.
But lawmakers and drug companies alike allege that PBMs overcharge plans for which they negotiate discounts, underpay pharmacies, and fail to pass on the savings from those discounts to patients. These practices have allowed PBMs to siphon off $300 billion in revenue in the middle of the drug supply chain between manufacturers and patients, Auchincloss said.
Meanwhile, pharmacy benefit management experts claim that drug companies are responsible for setting high drug prices, and argue that their tactics protect patients from high health care costs.
Last year, the House and Senate passed legislation targeting PBMs with bipartisan support, and the House overwhelmingly passed one proposal in December. But that legislative momentum has stalled since Congress excluded PBM reform from a massive government spending package earlier this year.
Meanwhile, the Biden administration has ramped up pressure on pharmacy benefit managers as Americans struggle to afford prescription drugs. The Federal Trade Commission plans 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 do some of the same things as the previous legislation, such as increasing transparency around some pharmacy benefit management business practices and banning predatory pricing, or charging plans more than they pay pharmacies for a drug.
But Auchincloss, who co-led another pharmacy benefits bill that passed the House last year, said his new legislation is “bigger and tougher” and focuses on pharmacies. A statement Tuesday called the bill “the most comprehensive reform of pharmacy benefits management ever enacted at the federal level.”
“This bill is about taking the pharmacists’ perspective and saying, ‘What makes it impossible for pharmacists to thrive as small business owners and provide clinical and medication advice to the patients they serve?’” Auchincloss told CNBC. “We’re systematically addressing the barriers to that mission… This bill is about those pharmacists standing up to corporate greed.”
Auchincloss pointed to a new model for pharmacy reimbursement under the bill, which would focus largely on what’s called the national average drug acquisition cost, or NADAC. This measures the average price pharmacies pay to buy a drug from manufacturers or wholesalers based on a survey of invoices.
“This would ensure that the actual cost of the goods is the price at which they were based,” Auchincloss said, adding that the reimbursement model in the bill is more appropriate for generic drugs than brand-name prescription drugs.
Pharmacies typically get paid through a complex system that is not directly based on what you spend on your medications. This model, which involves a multi-tiered network of insurers, manufacturers, pharmacy benefit management companies, and pharmacies, creates uncertainty about copays and increases in addition to the original cost of the medication.
Other efforts under the bill include requiring PBMs to share 80 percent of rebates with patients and banning a range of other practices. The bill would prevent patients from being forced to get brand-name drugs when a cheaper generic version is available, directing patients to PBM-affiliated pharmacies, and excluding any in-network pharmacy from filling prescriptions, among other tactics.
“This bill would put in place the necessary reforms to stop the exploitation of independent pharmacies, make life-saving medications more affordable for patients, and implement solutions that would deliver savings to taxpayers,” Harshberger said in a statement.
