LUGPA Policy Brief
Insurers May Face PBM Divestment Under Proposed Legislation

On December 11, 2024, bipartisan lawmakers introduced landmark legislation targeting Pharmacy Benefit Managers (PBMs). The legislation aims to address conflicts of interest and high drug costs. The Patients Before Monopolies (PBM) Act, spearheaded by Senators Elizabeth Warren (D-MA) and Josh Hawley (R-MO), along with Representatives Jake Auchincloss (D-MA) and Diana Harshbarger (R-TN), proposes the most sweeping PBM reform to date by mandating insurers divest their PBM businesses.

PBMs are intermediaries between insurers and pharmacies. They negotiate drug prices, administer plan benefits, and determine patient eligibility. While they have successfully reduced administrative costs, PBMs’ opaque pricing practices have been criticized for driving up drug costs and limiting patient access to affordable medications. These concerns have spurred growing regulatory interest at both state and federal levels.

Key Provisions of the PBM Reform Bill

• Divestment Requirement: Insurers would be required to sell their PBM businesses within three years.
• Enforcement: Violations of the Act would empower the Federal Trade Commission (FTC), Department of Health and Human Services (HHS), Department of Justice (DOJ), and state attorneys to recover revenue earned during non-compliance. Recovered funds would be directed to benefit harmed communities.
• Conflict of Interest: The legislation aims to establish a “firewall” between drug manufacturers and health plans to eliminate conflicts of interest when insurers own PBMs and pharmacies. According to Senator Warren, this practice prioritizes profits over patient needs and undermines independent pharmacies.

LUGPA supports efforts to reform PBMs to ensure patient access to high-quality, cost-effective care. Independent urologists have long been vocal about the challenges posed by PBM policies that restrict treatment options and increase patient costs.

PBM reform is a key component of LUGPA’s broader advocacy efforts, which include:

• Promoting Transparency: Supporting initiatives to unveil how PBMs set drug prices.
• Reducing Patient Costs: Advocating for legislation addressing step therapy and hospital price transparency.
• Protecting Independent Practices: Ensuring fair payment policies that allow urologists to provide necessary treatments without undue administrative burden.

While the current Congressional session ends soon, making immediate action on the PBM reform bill unlikely, the sponsors intend to reintroduce it in the new Congress. LUGPA will monitor developments closely and continue advocating for policies prioritizing patient care over corporate profits.