PBGH: What employers want to see as Congress aims to reform PBMs

A key Senate committee last week advanced a bill that includes a number of significant reforms to pharmacy benefit managers, including a ban on spread pricing.

However, one provision that was left on the cutting room floor is a change that many employers are still hopeful to see, Alan Gilbert, vice president of policy at the Purchaser Business Group on Health (PBGH), told Fierce Healthcare. And that's establishing PBMs as fiduciaries.

While the Senate Health, Education, Labor and Pensions (HELP) committee considered a similar policy change, what made the final cut was instead a directive to the Department of Labor to study the issue to enable legislation in the future.

Gilbert said that making PBMs fiduciaries in the pharmacy benefits process would hold them as accountable as health plans and plan sponsors. Pushing these companies to have more skin in the game would be key to curbing the worst of their behavior, he said.

"The way to end these kinds of shenanigans is to make them the same way we are," he said.

PBGH released a paper (PDF) at the end of last year that highlights several priorities the group has for reforming the PBM space. Gilbert said the group's key policy proposals boil down to four central themes:

  1. Eliminate spread pricing
  2. Institute radical transparency
  3. Ensure 100% of discounts are pass-through
  4. Make PBMs fiduciaries

Aside from the fiduciary piece, several of those priorities were incorporated into the Senate bill. Despite pushback from some Republicans, the bill kept a ban on spread pricing and includes a slew of transparency elements aimed at shining a greater light on how these companies function.

The PBM market is dominated by three large companies—CVS Caremark, Express Scripts and Optum Rx—and all have made strides toward passing rebates directly to payers, with most rebates deployed this way.

During the committee markup last week, Republican Sens. Ron Paul and Mitt Romney argued against banning spread pricing as smaller employers and startup PBMs rely on that model to keep up with the much larger market leaders. While PBGH's membership is larger employers, Gilbert said the fact that PBMs are fighting hard to preserve spread pricing should say something.

"This is what the priority of the PBMs is, and that should tell us they clearly have staked out spread pricing as the issue they cannot live without," he said.

While the bill has passed out of committee, there's still a long road ahead before these reforms are codified into law. Gilbert said the hard work for his team at PBGH is just beginning as it prepares to continue to advocate for changes in both chambers of Congress.

However, he said that seeing the HELP committee move some of its most-wanted changes forward made for "a great week" at PBGH.

"We look forward to working on this as we move to the Senate floor for action," Gilbert said.