PBM reform bill that boosts FTC powers inches closer to passage in Senate

Legislation aimed at curbing several pharmacy benefit manager practices such as spread pricing cleared a key obstacle to passage in the Senate.

The Senate Committee on Commerce advanced 19-9 the Pharmacy Benefit Manager Transparency Act on Wednesday to the full Senate. The package is the latest bid by Congress and the federal government to ramp up scrutiny of the industry. 

“Pharmacy benefit managers [are] a middleman in the drug pricing supply chain,” said Sen. Maria Cantwell, D-Washington, the lead sponsor of the legislation alongside Sen. Chuck Grassley, R-Iowa. “Today, three PBMs control 80% of the prescription drug market, operating out of the view of regulators and consumers.”

The legislation would prohibit several PBM practices such as reducing or clawing back reimbursement payments to pharmacies and charging pharmacies more to offset federal reimbursements. It would also prohibit the use of spread pricing, wherein a PBM will reimburse pharmacies at one price for a product and the health plan for another.

Another part of the legislation is to improve transparency around PBMs. It would offer liability exceptions for PBMs that pass along 100% of their rebate dollars to health plans or payers and “fully disclose prescription drug rebates, costs, prices, reimbursements, fees and other information to health plans, payers, pharmacies and federal agencies,” according to a release on the bill. 

The Federal Trade Commission (FTC) would also receive enhanced powers to go after PBMs. The FTC has already sought documents and records from six major PBMs and announced an effort last week to go after drug rebates.

This is the latest foray by Congress into the PBM industry. A group of three House Republicans sent a letter last week to the Government Accountability Office seeking a study on PBMs’ role in the pharmaceutical supply chain. 

It remains unclear whether the Cantwell and Grassley bill would make it through the Senate chamber. The legislation has fierce opposition from the PBM industry.

The Pharmaceutical Care Management Association, which represents the industry, said the legislation would create an “egregious and unprecedented expansion of power” for the FTC. 

“The legislation is designed to award pharmacies and drug manufacturers an increase to their bottom lines, rather than lowering prescription drug costs for consumers,” the group said in a statement Wednesday.