LUGPA Policy Overview - Pharmacy Benefit Manager Reform in 2024Pharmacy Benefit Managers (PBMs) serve as intermediaries between insurers and pharmacies, aiming to reduce administrative costs for insurers. PBMs determine patient eligibility, administer plan benefits, and negotiate prices between pharmacies and health plans. They collaborate with drug manufacturers, wholesalers, pharmacies, and health insurance providers but do not handle the physical distribution of prescription drugs; their role is limited to negotiations and payments. A recent report released in July by the Federal Trade Commission (FTC) highlighted the vast power and scale of Pharmacy Benefit Managers (PBMs) and their negative impact on consumers and independent pharmacies. The report details how consolidation and vertical integration among PBMs lead to higher prescription drug prices and reduced accessibility for consumers. Although the FTC stops short of recommending breaking up PBMs, it calls for further scrutiny and potential regulation of certain business practices. Key findings from the report included:
While PBMs have effectively reduced administrative costs, concerns have been raised by regulators and healthcare advocacy groups about their profit mechanisms and impact on drug costs, particularly generic drugs. The increasing cost of drugs and lack of transparency in PBM pricing have prompted both state and federal governments to introduce new regulations. These reforms include new licensing rules, pharmacy audit requirements, and pricing reforms for generic drugs to shift some pricing control away from PBMs. According to a Wall Street Journal report, the FTC will file lawsuits against the major PBMs for their prescription rebate tactics for several drugs in addition to this report. This policy brief provides an overview of the Pharmacy Benefit Manager (PBM) legislation introduced in the 118th Congress. Several bills in the House and Senate address PBM operations, transparency, and drug pricing. The summary below highlights key provisions of each bill and their status within their respective committees. Key Provisions of PBM Legislation: ASC Price Transparency: H.R. 4822 mandates Ambulatory Surgery Centers (ASCs) to publish prices, a requirement not included in other bills. PBM Transparency to Plan Sponsors: All bills require PBMs to report various drug-related information to plan sponsors. Delink Rebate from Price of Drug in Part D: Only the Senate MEPA Act includes this provision, aiming to separate rebates from drug prices. Cost-sharing Cap for Highly Rebatable Drugs: H.R. 4822 and Senate S. 1339 include caps on out-of-pocket costs for certain drugs. Spread Pricing Ban: Spread pricing and clawback fees, which increase medication costs for patients and providers, are targeted by H.R. 3561 (for Medicaid) and the Senate MEPA Act (for group health plans and Medicaid). Pass-through Requirements: Both Senate bills require a pass-through pricing model, where the price charged by the pharmacy to the PBM is passed through to the plan sponsor, along with a per-claim administrative fee. Site Neutrality for Part B Drug Administration: Only House bills include provisions for site neutrality, ensuring the same payment for rehabilitation regardless of the treatment location. Prior Authorization Reforms in Medicare Advantage: Only the Senate HELP bill includes reforms for prior authorization in Medicare Advantage, requiring approval for healthcare services or medications before care is provided. Reporting of Ownership: Only H.R. 3561 includes provisions for reporting the ownership of health providers. Manufacturer Justification of Drug Price Increases: Only Senate S. 1339 requires manufacturers to justify price increases. LUGPA's Position LUGPA supports legislative efforts targeting PBMs to address unfair policies that negatively impact patient access to care and the ability of urologists to provide appropriate treatment. The PBM legislation introduced in the 118th Congress addresses transparency, drug pricing, and PBM operations. As these bills progress, LUGPA will monitor developments and respond to any new legislation accordingly. House Bills: H.R. 3561 - The PATIENT Act of 2023
H.R. 4507 - Transparency in Coverage Act
H.R. 4822 - The Health Care Price Transparency Act of 2023
H.R. 5378 - The Lower Costs, More Transparency Act
H.R. 6283 - The Delinking Revenue from Unfair Gouging Act
H.R. 6844 - The Ensuring PBM Competition Act
H.R. 6856 - Prescription Drug Rebate Reform Act of 2023
Senate Bills: S. 127 - The Pharmacy Benefit Manager Transparency Act of 2023
S. 1339 - The Pharmacy Benefit Manager Reform Act
S. 2973 - The Modernizing and Ensuring PBM Accountability (MEPA) Act
S. 3548 - Health Care Prices Revealed and Information to Consumers Explained Transparency Act
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