New bipartisan legislation introduced in the Senate aims to empower the Federal Trade Commission (FTC) to crack down on pharmacy benefit manager practices such as spread pricing.
The legislation, introduced Tuesday, comes as the PBM industry faces other areas of reform, including a proposed rule to get rid of clawback fees PBMs can charge pharmacies after the drug is dispensed.
Lawmakers said federal agencies need more power, though, to rein in PBM practices.
“Pharmacy benefit managers and other intermediaries in the pharmaceutical supply chain must be held accountable for increasing the cost of healthcare in the United States,” said Sen. Chuck Grassley, R-Iowa, who co-sponsored the bill alongside Sen. Maria Cantwell, D-Washington.
The legislation would eliminate a practice called spread pricing wherein a PBM can charge an insurance company more for processing a prescription than it reimburses the pharmacy for the product, according to a release on the legislation called the Pharmacy Benefit Manager Transparency Act of 2022.
It would also ban PBMs from clawing back reimbursement payments to pharmacies via direct remuneration fees and would prevent PBMs from “unfairly charging pharmacies more to offset federal reimbursement changes,” the release said.
The legislation also empowers the FTC and state attorneys general to enforce the provisions in the bill. PBMs must report on the amount of money they get from several practices such as spread pricing or clawback fees and any fees “PBMs charge affiliated pharmacies and non-affiliated pharmacies; and whether and why they move drugs into formulary tiers to increase costs.”
Grassley and Cantwell hope to incentivize PBMs toward certain behaviors, giving liability exceptions to PBMs that pass along 100% of rebates to plans or payers and “fully disclose prescription drug rebates, costs, prices, reimbursements, fees and other information to health plans, payers, pharmacies and federal agencies,” the release noted.
The legislation drew major plaudits from pharmacy and provider groups that charge PBM practices have hindered delivering care.
“The top PBMs use their inordinate market leverage to delay and even deny patients their cancer medications, lowball payments to pharmacists resulting in pharmacy closures and fuel drug healthcare costs for all Americans,” said Ted Okon, executive director of the Community Oncology Alliance, which represents independent oncology practices.
The National Community Pharmacists Association also said in a statement that the legislation is sorely needed as PBM practices have steered patients to “PBM-affiliated retail, specialty and mail-order pharmacies and limit where and what consumers can buy.”
But the PBM industry group Pharmaceutical Care Management Association charges the bill "fundamentally misconstrues the role of PBMs, whose primary mission is to reduce the cost of prescription drugs for patients," according to a statement to Fierce Healthcare.
“PCMA is currently reviewing legislation introduced today by Sens. Cantwell and Charles Grassley. However, it appears that the legislation fundamentally misconstrues the role of pharmacy benefit managers, whose primary mission is to reduce the cost of prescription drugs for patients.
"PBMs have a proven track record of leveraging competition in the marketplace to reduce drug costs for patients," the group said. "Any proposals that would limit the ability to drive competition and that seek to increase payments to pharmacies or others in the drug supply chain only accomplishes one thing: raising costs for patients."
Despite the pharmacy and provider support, it remains unclear whether the legislation will become law as prior efforts at reform have stalled. The FTC deadlocked on whether to look into PBMs' contracting practices earlier this year despite fervent lobbying from pharmacist groups.
The FTC did ask for comment on the impact of PBMs' practices on the ability of patients to afford prescriptions. The deadline for comment is Wednesday. The Centers for Medicare & Medicaid Services also issued a final rule earlier this month that would get rid of the clawback fees.