PBM reform looms in end-of-year US legislation package

A bundle of healthcare legislation that would introduce greater oversight of the pharmacy benefit manager (PBM) sector is reported to be close to an agreement by US lawmakers.

The package – which also includes text that would raise payment rates for Medicare physicians, extend telehealth insurance coverage and flexibilities, fund community health initiatives, and reauthorise substance abuse recovery services – includes measures that would crack down on PBMs, according to media reports.

Specifically, that could include a ban on spread pricing – when a PBM reimburses pharmacies one price for a medicine, but charges a health plan another – and 'delink' PBM fees from the list price of a medicine, instead tying their payments to the services they provide.

Some claim those measures would eliminate incentives for PBMs to select higher-priced medicines that make them more money through rebates and fees over lower-cost alternatives that could save patients money.

The trade organisation representing the PBM sector – the Pharmaceutical Care Management Association (PCMA) – is lobbying hard to get those elements stripped from the legislation, saying they "would undermine the role that […] PBMs play in lowering costs and providing choices for employers in the prescription drug marketplace."

"The healthcare provisions included in the latest draft, as reported in the media, risk increasing costs for health plan sponsors, like employers and labour unions, patients, and families, and hiking up premiums for seniors," it claims, asserting that the delinking measures would increase premiums and benefit pharma manufacturers with a "$10 billion profit-boosting windfall."

A Federal Trade Commission (FTC) document published earlier this month blamed anticompetitive practices at PBMs for driving up prescription drug costs, claiming that the concentrated market structure – with six major players – allows them to profit at the expense of patients and independent pharmacists. Lawsuits have been filed challenging that report.

A text of the healthcare package is said to have been agreed in principle over the weekend, but still needs to be voted through in the House and Senate this week to come into effect, meaning there is no guarantee it will make it through.

At the same time, Congress is also racing to agree legislation to keep funding the government for 90 days beyond Friday 20th December, when the current cycle comes to an end.

Trump weighs in

If the PBM industry is hoping that the change in administration coming up in the New Year will make the ongoing scrutiny of its practices go away, that may be a mistake.

Yesterday, President-Elect Donald Trump described PBMs as "horrible middlemen that [make] more money, frankly, than the drug companies" at a press conference at his Mar-a-Lago club in Florida reported by Reuters.

"We're going to knock out the middleman. We're going to get drug costs down at levels that nobody has ever seen before," he said.