06.22.22

Cantwell Advances Bipartisan Bill to Combat Rising Prescription Drug Prices and Root Out Unfair Practices by Pharmacy Benefit Managers

Bill would increase transparency in drug pricing and hold PBMs accountable for manipulation

Today, the U.S. Senate Committee on Commerce, Science, and Transportation advanced Senator Maria Cantwell’s (D-WA) Pharmacy Benefit Manager Transparency Act, which would increase drug pricing transparency and hold Pharmacy Benefit Managers (PBMs) accountable for unfair and deceptive practices that drive up prescription drug costs at the expense of consumers. The Federal Trade Commission and state Attorneys General would be empowered to enforce the Act. The legislation was approved 19-9 and will head to the full Senate for approval. 

Senator Cantwell, who chairs the Senate Commerce Committee, said the following before today’s vote:   

“Senator Grassley and I introduced Pharmacy Benefit Manager transparency legislation to shine a brighter light on drug pricing marketplace and to prevent unfair and deceptive practices by PBMs that drive up the cost of medications at the expense of consumers. Since 2014, prescription drug prices have gone up 35% while the cost of the goods and services jump just 19%.

“Take insulin for example, a drug that has been available for patients for over 100 years. Insulin price hikes have become a matter of life or death for many Americans with diabetes. Pharmacy Benefit Managers, a middleman in the drug pricing supply chain, today three PBMs control 80% of the prescription drug market operating out of the view of regulators and consumers. PBMs set prescription drug prices to determine whether drugs are covered by an insurance plan and pocket unknown sums of money that might otherwise be passed along to savings to consumers.

“During our subcommittee hearing, we learned how PBMs engaged in spread pricing, which they reimburse pharmacists less than what they would charge insurance plans and keep the difference as profit. In some cases, the pharmacy is reimbursed below the drug purchase price forcing these small businesses to close.

“Our legislation will make it clear that the FTC should use its authority to stop spread pricing, unfair claw backs and other deceptive practices. We've received letters from organizations representing millions of seniors, pharmacists and oncologists, biotech companies and consumers who've long called for increased transparency in today's PBM market.”

The Pharmacy Benefit Manager Transparency Act of 2022: 

  • Prohibits Arbitrary, Unfair or Deceptive Practices. Prohibits PBMs from engaging in spread pricing, arbitrarily, unfairly or deceptively reducing or clawing back drug reimbursement payments to pharmacies, and unfairly charging pharmacies more to offset federal reimbursement changes. 
  • Incentivizes Fair and Transparent PBM Practices. Provides exceptions to liability for PBMs that pass along 100% of rebates 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. 
  • Improves Transparency and Competition.  Requires PBMs to report the amount of money they obtain from spread pricing, pharmacy fees, and clawbacks; any differences in the PBMs’ reimbursement rates or fees PBMs charge affiliated pharmacies and non-affiliated pharmacies; and whether and why they move drugs in formulary tiers to increase costs. Directs the FTC to report to Congress its enforcement activities and whether PBMs engage in unfair or deceptive formulary design or placement. 
  • Protects Whistleblowers.  Protects whistleblowers from being fired or reprimanded for bringing violations to light and ensures employers cannot force employees to waive such protections with pre-dispute arbitration agreements as a condition of employment. 
  • Enhances Enforcement.  Authorizes the FTC and state attorneys general to enforce the Act. 

Text of the legislation is available HERE. Section-by-section HERE.  

Video of Senator Cantwell’s remarks from today’s markup is available HERE, audio HERE, and a transcript HERE.  

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