House lawmakers seek to ban spread pricing in Medicaid in latest PBM reform effort

A group of House lawmakers is hoping to outlaw the use of spread pricing by pharmacy benefit managers in the Medicaid program. 

The Drug Transparency in Medicaid Act, reintroduced Friday, is the latest PBM reform bill launched by this Congress. 

The bipartisan bill would ban spread pricing in Medicaid managed care plans, a tactic where PBMs can charge health plans more for a drug than what they reimburse the pharmacy for. The legislation would also require any pharmacy reimbursements for Medicaid managed care programs to be at a rate for the pharmacy’s average acquisition costs of the product.

The legislation is led by Reps. Buddy Carter, R-Georgia, and Vicente Gonzalez, D-Texas, and was introduced in the last congressional session but did not advance. 

It is the latest bid by lawmakers to address the PBM industry, which has gotten bipartisan support even in a divided Congress where the GOP controls the House. 

The legislation has earned plaudits from pharmacy groups who have tangled with PBMs over such tactics. 

“Through spread pricing in Medicaid alone, PBMs can hoard hundreds of millions of dollars each year,” said Douglas Hoey, CEO of the National Community Pharmacists Association, in a statement. 

Rep. Brett Guthrie, R-Kentucky, chairman of the House Energy and Commerce Committee’s Health Subcommittee, also called for greater transparency in the PBM market.

“Shining a light on these middlemen who are making prescriptions more expensive is one important step to bolster competition and allow for affordable new drugs, such as generics and biosimilars, to be made available for patients,” Guthrie wrote in an op-ed for the Washington Examiner. 

Over in the Senate, Commerce Committee Chairwoman Maria Cantwell, D-Washington, held a hearing on the PBM marketplace last month. Several lawmakers complained over a lack of transparency in the marketplace as well as tactics such as clawback fees where a PBM recoups some of the payments to pharmacists for particular drugs. 

Cantwell and Sen. Chuck Grassley, R-Iowa, reintroduced legislation earlier this year that also took aim at spread pricing and other PBM tactics. Another piece of legislation would direct the Federal Trade Commission to probe the industry. The commission has already initiated a probe into PBM business practices and has subpoenaed six of the largest PBMs in the industry. 

The PBM industry group Pharmaceutical Care Management Association has pushed back on these reform efforts, arguing that drug companies are to blame for high drug prices. 

While the legislative efforts did not get through Congress last session, the bipartisan support could lead to a different result this time around as lawmakers turn to areas of common ground for legislative activity.