U.S. Senator Sherod Brown says he thinks the federal government will crack down on PBMs, lowering prescription drug costs as well as saving tax dollars for Americans
Despite years of unfulfilled promises and plans to pare Americans' prescription drug prices, Sen. Sherrod Brown says this time it's different.
"I understand the skepticism," the Ohioan said during a press call Wednesday. "I know it's frustrating to the public. They hear politicians say they're going to work to cut drug prices. Well, this is the first time we are close to getting real action."
His comments stemmed from a pre-Christmas announcement by the Centers for Medicare and Medicaid Services of a probe of controversial fees charged by pharmacy benefit managers, or PBMs — middlemen in the drug supply chain — in response to requests from Brown and other Democratic senators.
The move could result in savings of $7 billion to $9 billion, Brown said.
Americans typically rate the high cost of prescription drugs near the top of lists of issues most important to them.
The new federal effort will center on huge increases in direct and indirect remuneration fees that PBMs charge pharmacies on Medicare prescriptions. These DIR fees were implemented as a way to incentivize U.S. pharmacies collecting millions of Medicare dollars to do more than simply push pills.
But the DIR assessment — charged well after a prescription drug sale is supposedly complete — evolved into a system that today penalizes pharmacies through higher and higher fees, even if every PBM performance standard is achieved. The fees now total $11.2 billion a year, up from $200 million in 2013.
The Dispatch took a deep dive investigation into the cloudy world of DIR fees in July, noting the PBMs assess seemingly arbitrary penalties on pharmacies.
“I’m not even sure if Christ himself" could have avoided a penalty, said former GOP state Sen. Dave Burke of Marysville, who ran a pharmacy until late 2020. "I've never seen a study that this added to the quality or longevity of people’s lives."
Administrator Chiquita Brooks-LaSure said in a four-paragraph letter last month that "CMS agrees that the significant growth in DIR amounts is troubling and is planning to use our administrative authority to issue proposed rulemaking addressing (pharmacy) price concessions and DIR." The agency calculated the increase of DIR fees at a stunning 91,500% from 2013-19.
Brown said senators would be monitoring the responsiveness of CMS, which traditionally had rejected requests for price probes of PBM practices.
“With so many seniors on fixed incomes worried about rising drug prices, we need to stop these corporate middlemen from making the problem worse,” he said.
“Prescription drugs are also often among the most overpriced products people buy," Brown said. "There is no reason most of these drugs need to be as expensive as they are, and this is an important step forward to lower costs for older Ohioans.”
Ernie Boyd, executive director of the Ohio Pharmacists Association, was with Brown on the call. “Consumers are … being ripped off by many of these fees,” Boyd said.
He said the typical bill for small pharmacies is about $80,000 a year.
“That wipes out the profits,” Boyd said.
“Prescription drug prices are higher, and pharmacies are being closed due to the pricing practices of pharmacy benefit managers. Thousands of independent and chain pharmacies have closed their doors when the public needs greater access to pharmacists, not less."
Brown said tackling DIR fees is only the first step. He hopes CMS also will go after the "clawbacks" by PBMs. Like the DIR fees, they are assessed weeks or even months after the consumer has supposedly finalized a prescription drug purchase. But clawbacks also are charged on Medicaid and commercial insurance transactions as well — meaning billions more in drug costs are at stake.
"We think this is the first step to act more expansively," Brown said. "This is a several-step process."
He lamented the gridlock holding up President Joe Biden's Build Back Better bill, which would empower Medicare to negotiate prescription drug prices. All 50 GOP senators, plus West Virginia Democrat Joe Manchin, currently oppose the bill.
"Too many of my colleagues — including one Democrat — seem to be in the pocket of the drug companies on this," Brown said.
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