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Bipartisan Senate plan would regulate PBM compensation, target ‘unfair’ drug price hikes

Key takeaways:

  • The bipartisan plan would decouple pharmacy benefit manager compensation from drug prices, among other reforms.

  • The framework includes focus on increasing access and transparency.

Healio Rheumatology

“For years, drug pricing middlemen like pharmacy benefit managers have been engaging in practices that are driving up the cost of prescription drugs and clobbering American families at the pharmacy counter,” Sen. Ron Wyden, D-Ore., chair of the Senate Finance Committee, said in the release. “The Finance Committee is responsible for federal health programs that spend billions on prescription drugs each year, and we have a responsibility to seniors, working families and taxpayers to ensure these programs are strengthened and updated to keep up with the health care system of today.”

Leaders of the U.S. Senate Finance Committee have introduced a bipartisan framework aimed at regulating PBMs as well as to “modernize and enhance” federal prescription drug programs, according to a press release.

The framework, announced jointly by Wyden and Sen. Mike Crapo, R-Idaho, ranking member of the Finance Committee, follows a hearing in March in which committee members heard testimony on the practices of pharmacy benefit managers (PBMs) and their impact on drugs costs. The document identifies challenges and six potential policy goals.

The committee cited four problems facing current federal drug programs:

  • The existence of incentives that drive up prices and costs.

  • A lack of transparency that allows the market to be distorted.

  • Barriers to pharmacy access.

  • Events that occur behind closed doors that “impede competition and increase costs.”

The potential policy solutions included:

  • Decoupling PBM compensation from drug prices.

  • Increasing the accountability of PBMs to clients.

  • Ensuring that PBM-negotiated discounts result in “meaningful savings” for seniors.

  • “Addressing and mitigating” practices that “unfairly” increase prices patients and programs pay for prescription therapies.

  • Improve pharmacy access through “modernizing” Medicare’s “Any Willing Pharmacy” requirements.

  • Increase transparency regarding how the “financial flows” throughout the prescription drug supply chain impact federal health care programs.

The full framework is available here.

“Some of the most life-saving medications remain out of reach for far too many working families and seniors,” Crapo said in the release. “We need a bipartisan, all-of-the-above approach to modernization and transparency that empowers consumers, plans, providers and pharmacies to make informed, cost-effective and clinically appropriate decisions.”

According to Madelaine A. Feldman, MD, FACR, president of the Coalition of State Rheumatology Organizations, the most impactful plank in the announced framework would be dislodging PBM compensation from drug prices. This alone, she said, could have positive effects for rheumatologists and other providers related to non-medical switching and step therapy.

“Basically, the most important aspect of this framework is uncoupling, or delinking, PBMs’ compensation from the list price of the drug,” Feldman told Healio. “Non-medical switching and step therapy of ever-changing formularies are a direct result of PBMs looking for the highest price that will increase their fees and rebates. If they are paid a flat market-based fee for their services, there will be no more incentive to continue this merry-go-round of medicines never knowing what the PBMs will switch my patients to.”

Reporter: Erich Martin

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