Increased transparency claims have done little to quell outrage over drug pricing.
Pharmacy benefit managers, or PBMs, manage prescription drug benefits by acting as the third-party between drug manufacturers and health plans. PBMs often boast about their expertise in the industry, which allows them to negotiate lower prescription drug prices on behalf of health plans.1
As of late, many PBMs have come under scrutiny for their drug pricing strategies, as their benefits are rarely reaching consumers and drug prices have been adversely impacted. With drug manufacturers increasing out-of-pocket costs at the consumer level, the impact of the benefits of PBMs is significantly reduced.1
Investigations Heat Up
The frustration with PBMs’ actions is at an all-time high as the government widens various investigations into the drug pricing system.
In June 2022, the Federal Trade Commission (FTC) launched inquiries into the largest PBMs in the industry, citing anti-competitive practices. While the FTC’s investigation is ongoing, Congress has introduced the Pharmacy Benefit Manager Transparency Act.2
The bipartisan bill’s goal is to increase pricing transparency and to hold PBMs accountable for deceptive practices. In March 2023, the Senate Committee on Commerce, Science, and Transportation approved the bipartisan bill to advance to the Senate.3
Pressure Builds on the State Level
Not only is the federal government stepping in, but two senators are creating a bipartisan framework to address the challenges PBMs are creating and proposing possible legislative solutions.
Senators Mike Crapo (R-Idaho) and Ron Wyden (D-Oregon) highlighted four main problems that PBMs have perpetuated – “misaligned incentives,” a lack of transparency, the adverse impact of vertical integration, and anti-competitive practices such as spread pricing. Their most powerful solution is to “delink” drug pricing from PBMs’ revenues so that there is no incentive to raise prices further.4
Contact us to learn more about the push for greater transparency from PBMs regarding prescription drug pricing.
Sources:
- “Pharmacy benefit managers claim to lower drug costs. Congress isn’t convinced,” Harvard Public Health Magazine, accessed May 3, 2023, https://harvardpublichealth.org/health-policy-management/pbms-face-scrutiny-from-congress-over-drug-prices/
- “Pharmacy Benefit Managers Are Again In The Crosshairs Of Congress and The FTC: Action To Reform Drug Pricing Increasingly Likely,” Forbes, accessed May 3, 2023, https://www.forbes.com/sites/joshuacohen/2023/04/02/pharmacy-benefit-managers-are-again-in-the-crosshairs-of-congress-and-the-ftc-action-to-reform-drug-pricing-increasingly-likely/?sh=57d7245d447f
- “Commerce Committee Approves Cantwell, Grassley Bipartisan Bill to Combat Rising Prescription Drug Prices,” U.S. Senate Committee on Commerce, Science & Transportation, accessed May 4, 2023, https://www.commerce.senate.gov/2023/3/commerce-committee-approves-cantwell-grassley-bipartisan-bill-to-combat-rising-prescription-drug-prices
