Proposals on PBMs and medical devices advanced by House subcommittee

The House Committee on Energy and Commerce health subcommittee pushed forward 21 proposals on Tuesday, some of which will restrict the power of pharmacy benefit managers (PBMs).

Democrats supported many of the proposals put forward by Republicans, including legislation reining in PBMs that had support from 60 organizations representing patients, providers, pharmacists, small businesses and advocates, but expressed disapproval of proposals regarding durable medical equipment and the breakthrough products pathway.

Still, all proposals discussed were passed and will head to full committee for a future vote.

PBM proposals

Mirroring the Senate Finance Committee earlier this month, the House agreed that PBMs are engaging in unfair practices. The Protecting Patients Against PBM Abuses Act would delink PBM compensation from cost of medications, ban spread pricing and require PBMs to reimburse network pharmacies the same as affiliated pharmacies. Several transparency and enforcement provisions are included in the proposal including a requirement to submit an annual certification of compliance.

“I'm in full support of addressing entities that distort drug prices such as the ability of PBMs to link their fees to the list price of a drug, and their ability to extract large rebates from drug companies, manufacturers and pharmacies,” said Rep. Neal Dunn, R-Florida. “ It is abundantly clear that PBMs have a financial interest in high list prices and flat compensation fees, and a move towards transparency will better incentivize the PBMs to compete on the value that they provide the patients.”

“I don’t think they [PBMs] do a thing for patients,” said Rep. Anna Eshoo, D-California. “When PBMs choose more expensive drugs for prescription drug plans, they really rake in the profits. Almost 80% of all prescription drug claims were filed by three PBMs, and their revenues exceeded $400 billion last year.”

The PBM space is dominated by three large firms, all of which are vertically integrated with major health plans: CVS Caremark, a sister company to Aetna; Optum Rx, which is owned by UnitedHealth Group; and Express Scripts, which is owned by Cigna.

Another proposal, brought forward by Rep. Morgan Griffith, R-Virginia, and Rep. Buddy Carter, R-Georgia, would require the Centers for Medicare & Medicaid Services (CMS) to create public quality measures for health plans and PBMs to use when determining direct and indirect remuneration payments to pharmacies. The representatives said pharmacists are currently required to pay subjective fees, sometimes retroactively applied months after medicine is dispensed, and the proposal is designed to add more transparency to the process.

“PBM pharmacy measures that are unfairly applied against all pharmacies have contributed to over 107,000% growth in pharmacy DIR fees, according to CMS, undercutting pharmacy reimbursement and increasing patient drug cost,” said Griffith, adding that small pharmacies that operate in his district worry they might have to close their doors if DIR fees aren’t addressed.

Unsurprisingly, industry groups came out in favor of the committee’s work to limit PBMs’ power.

“We are seeing clear alignment between committee action in the House and in the Senate on PBM reforms for Medicare and Medicaid,” said Steven Anderson, National Association of Chain Drug Stores (NACDS) president and CEO, in a statement to Fierce Healthcare. “NACDS also voices the critical importance of the Neighborhood Options for Patients Buying Medicines (NO PBMs) Act and vital enforcement provisions, which have been included in legislation passed by the Senate Finance Committee and which merit a commitment to action in the House.”

Democrats push back

Perhaps the most contentious proposal of the day was the DMEPOS Relief Act of 2023, introduced by Rep. Mariannette Miller-Meeks, R-Iowa. The act is designed to adjust Medicare payment for durable medical equipment, for home treatments such as oxygen wheelchairs, that used to be included in the DMEPOS competitive bidding program.

Miller-Meeks said the bidding program, which still utilizes rates from five years ago when the bidding program was put on hold, has caused a significant decrease in payment rates, leading to DMEPOS location closures in rural districts and “far less patient access and choice.” The act would extend certain expiring Medicare reimbursement programs that provided relief to DME suppliers during the pandemic and increase the adjusted payment amount to 90%.

Rep. Frank Pallone, D-New Jersey, argued that the bill would artificially prop up payment rates for DME, exempting them from the program. He said extending the higher rates will result in higher out-of-pocket costs.

“I think there’s more work to be done on this bill,” said Eshoo. “I think some of the sentiments that have been expressed by members on behalf of their constituents have merit, but I don't think the way the bill is structured is really the right way to go.”

Several Democrats disagreed with a proposal that speeds up coverage of breakthrough devices under the Medicare program by temporarily covering products for four years while CMS works to make a permanent coverage determination. While Rep. Brett Guthrie, R-Kentucky, said the legislation would help seniors access care sooner when no alternative treatments exist, Pallone said it would hamper CMS’ ability to prioritize member safety.

He said the agency should continue utilizing the TCET pathway (the pathway that succeeded CMS spiking a Trump-era rule in 2021) or risk undermining safety in the name of fast-tracking devices. Eshoo, however, believes action needs to be taken now and that it’s unsafe to not speed up the process.

“Three administrations have worked on this issue, the issue of CMS dragging their heels,” she said. “So, we have really fixed the FDA side. But it takes five to six years on average for CMS to weigh in and to do what they do. This is not timely, and it's not access. While Medicare beneficiaries wait for Medicare to cover these lifesaving technologies, they're either denied care or they face high out-of-pocket costs while their doctors fight through the paperwork to get Medicare to pay the claim.”

Democrats were also frustrated their priorities were not extended like state health assistance programs and their agencies on aging, as well as the National Center for Benefits Outreach and Enrollment.

Other proposals

Starting in 2025, certain biosimilar products can be added to insurance plan formularies during the middle of the year, improving seniors’ access to the Part D program and potentially saving the Medicare program money, according to a memo (PDF) released before the hearing.

Advocacy group Accountable for Health praised the House’s willingness to extend the expiring 3.5% incentive payment for clinicians participating in advanced alternative payment models (APMs). The group noted the MACRA bonus had already been reduced from 5% to 3.5%.

“There is bipartisan agreement that fee-for-service reimbursement is at the root of some of the worst problems in American health care—and that APMs are critical to the transformation of our delivery system,” said Mara McDermott, CEO of Accountable for Health, in a statement. “Yet, recent proposals ignore the flawed Merit-Based Incentive Payment System (MIPS) that layers incentives on top of a flawed fee-for-service system that does nothing to control costs or improve quality. As we debate additional reductions to the APM bonus, MIPS retains a maximum bonus of 9%. This disparity sends the wrong message to providers and is why we believe any changes to APMs should be done in the broader context of MACRA reform.”

NAACOS also praised the subcommitte's work to extend APM incentives.

“NAACOS is encouraged that the House Energy and Commerce Health Subcommittee unanimously advanced legislation today that provides a short-term extension of Medicare’s value-based care incentives,” said Clif Gaus, president and CEO, in a statement. “Eligibility to earn this critical support expires at the end of the year. We’re pleased to see lawmakers recognize the important role these incentives play in improving our health care system and providing better patient care at lower costs.”

Of the remaining proposals voted on, there was largely bipartisan support for cutting generic copays to $0 and expanding coverage for diabetes outpatient self-management training, among other bills.

Editor's Note: The article has been updated to provide correct context to NAACOS President and CEO Clif Gaus' quote.