There has been no shortage of conversation around pharmacy benefit managers this year, but actual action from legislators has been slow.
What's the likelihood we see significant reform in 2024? Experts say it's clearly a priority, but it's hard to say how fast policymakers will actually move. For one, there are plenty of other issues on the table, said Alan Gilbert, vice president of policy for the Purchaser Business Group on Health.
It's a presidential election year, which is known to suck the air out of the room. Plus, legislators are also responding to the ongoing war in Gaza, and other budget priorities will be a focus in the early part of the year.
Gilbert said the reforms could be incorporated into an early-year continuing resolution that keeps the government running, as groups like PBGH have argued that changes to how pharmacy benefit managers run could help pay for other healthcare-related updates, such as those for community health centers.
Or, the can could be kicked down the road, and then kicked again, and again, he said.
"There's every indication from Congress leadership, rank and file members, that they really want to get this done," he said. "But I'm also realistic ... there's a lot of other things on the table."
The reforms in play
Policymakers have been particularly concerned about the lack of transparency around pharmacy benefits, especially as drug prices continue to rise.
Most of the bills that are seeing momentum in Congress focus on this area. For example, the House of Representatives passed a bill last week that advances multiple reforms around price transparency. The Lower Costs, More Transparency Act would also ban spread pricing, an approach that has garnered controversy, though changes there have seen major pushback from PBMs and lobbying organizations.
Employer groups have also pushed for PBMs to be considered fiduciaries in the same way that they are which, they argue, could lead to greater accountability.
"Real accountability requires more than transparency," Gilbert said. "We need it, [but] it's not alone sufficient enough to really bring accountability and fundamental change to the PBM industry."
Alongside the push for greater transparency, both legislators and federal regulators have been taking a closer look at vertical consolidation in the industry, which is heavily dominated by three companies: CVS Health's Caremark, Cigna's Express Scripts and UnitedHealth Group's Optum Rx.
All three of these major PBMs are vertically integrated with a large national health plan—Aetna, Cigna and UnitedHealthcare, respectively—and also have relationships with group purchasing organizations. The Federal Trade Commission is currently investigating the business practices of these firms as well as Prime Therapeutics, a PBM jointly owned by several Blues plans, and Humana Pharmacy.
Chris Blackley, CEO and co-founder of the PBM Prescryptive Health, told Fierce Healthcare that the growing interest in this concentration from policymakers is worth watching.
"We're starting to see a little bit of interest in that connection and that relationship between concentration on the pharmacy side of the business together with the medical plan, and the vertical integration," he said, "and it's that combination that I believe policymakers are starting to kind of pick up on and recognize that maybe there's more to dig in there."
He said conversations he's had on the Hill have dug into the potential for growing vertical integration to drive greater consolidation among health plans.
"It forces other health plans to consolidate because they won't be able to counterbalance the pricing power of the PBMs," Blackley said.
Independent pharmacies have also pushed for support around reimbursement, and regulators have heard the message. Earlier this week, the Centers for Medicare & Medicaid Services sent a letter to major payers and PBMs, urging Part D plans and pharmacy benefit managers to make necessary network changes to prepare for new payment updates taking effect next year.
CMS finalized in its rule governing Medicare Advantage a provision that includes key pharmacy price concessions. The agency added in a letter that it's heard from independent pharmacies that they're feeling the squeeze from vertically consolidated companies.
"We urge plans and PBMs to engage in sustainable and fair practices with all pharmacies—not just pharmacies owned by PBMs—and we are closely monitoring plan compliance with CMS network adequacy standards and other requirements," they wrote.
There are indications in the market, too, that some insurers are less than satisfied with traditional PBMs. Blue Shield of California, for example, announced plans to end its existing relationship with Caremark and instead develop a new pharmacy model that leans on multiple firms to handle different elements.
Blue Shield will still work with Caremark under the Pharmacy Care Reimagined program for specialty pharmacy but will also bring Mark Cuban Cost Plus Drugs, Amazon, Prime Therapeutics and Abarca into the fold.
Blackley said that PBMs established their dominance in the market by the strength of "bundling," but that can drive up costs. So now the market is beginning to see interest in breaking up those bundles.
"It's a very natural evolution for a marketplace," he said. "Markets bundle and then unbundle, bundle and then unbundle all the time."
How PBMs have responded
The top brass at large PBMs as well as smaller firms have gone before legislators at multiple hearings throughout the year, angling to have their voices heard in the reform discussion.
While it may not come as a surprise that the main companies have chafed at the suggestion of eliminating long-standing industry practices like spread pricing, they have taken some steps of their own accord to launch more transparent models and work more directly with independent pharmacies.
Take Express Scripts as an example. In April, the PBM launched a new model called ClearCareRx. In this approach, plan sponsors will pay for a drug while the PBM pays a pharmacy, and all rebates are passed back to the insurer.
Under the model, clients pay Express Scripts a per-member per-month fee for its services, and the fees will be reduced if the PBM doesn't meet set targets for value and health improvement.
Building on that, Express Scripts unveiled its ClearNetwork model in November, which embraces the "cost-plus" approach.
Adam Kautzner, president of Express Scripts, told Fierce Healthcare that the ClearNetwork launch is a "continuation of the journey" the company has been on to drive greater transparency. Many clients expressed interest in a cost-plus approach.
ClearNetwork, he said, is the "most comprehensive cost-plus model in the market by far."
"This is about providing a new, flexible model, that our clients now have a different option in how they want to continue to contract with us," he said.
In addition, Express Scripts unveiled an initiative earlier this year that aimed to support independent pharmacies that operate in more rural areas, called IndependentRx. Through the program, Express Scripts will increase payouts to pharmacies that are the only locations within 10 or more miles of a member of the PBM.
He said that he's also made at least half a dozen trips to the Hill to discuss the PBM market and reforms on the table.
"I would also say that in the private market, we're continuing to move at a very nimble and quick pace that delivers on real solutions for our clients," Kautzner said. "And we're much, much faster than where Capitol Hill could certainly go for our clients."
And Express Scripts is certainly not alone. Its peers Caremark and Optum Rx have also made similar moves over the year. CVS unveiled its own cost-plus model in early December, called CostVantage.
Optum, meanwhile, also launched a program that seeks to support independent pharmacies. As part of the initiative, the PBM will partner with local pharmacies to assist them in addressing care gaps. The program will initially focus on several key areas: helping patients access community resources, improving maternal and fetal health and addressing care deserts.
That said, there is plenty of skepticism as to whether PBMs can be trusted to make key changes of their own accord.
"I feel like that's a little too cute by half here," Gilbert said. "The devil's in the details, and the market is obviously, I believe, reacting to these efforts."