Broad employer coalition urges Senate action on PBM reforms 

A broad coalition of business groups is urging Senate leaders to act on bipartisan pharmacy benefit manager (PBM) reforms, though congressional approval of a stopgap bill this week to keep the government running into early 2024 ends chances for a big year-end package once seen as a vehicle for PBM and drug pricing legislation. But with another year left in this Congress, lawmakers will have a chance at creating a healthcare package next year that may include these and other employer health policy priorities.

In a November 8 joint letter to Majority Leader Chuck Schumer, D-NY, and Minority Leader Mitch McConnell, R-KY, more than 50 organizations urged the leaders to quickly merge and bring to a vote PBM and drug-pricing measures in a bill passed by the Health, Education, Labor and Pensions (HELP) Committee, and legislation from the Finance Committee that targets public programs.

Provisions in the HELP Committee bill – the Pharmacy Benefit Manager Reform Act (S1339) – propose changes affecting employer plans and the commercial market, including:  

• Extensive new annual disclosures by PBMs to plan sponsors about rebates and fees received from drugmakers and other third parties, the amount of prescription drug copayment assistance funded by drug manufacturers, total out-of-pocket spending by plan beneficiaries, formulary placement rationale, a list of covered drugs billed under the health plan, and the total gross and net drug spend by the health plan.
• A requirement to pass all rebates, fees, alternative discounts, and other remuneration related to utilization through to the health plan.
• A broad-based commercial market ban on “spread pricing,” where a PBM charges plans more for a drug than what the PBM pays the pharmacy to dispense the medication.

In addition, S1339 would direct the Department of Labor to conduct a study on whether PBMs should serve as ERISA fiduciaries to plans.

“Contrary to what some have incorrectly suggested, employers are not satisfied with the current state of their relationships with PBMs,” the groups told Schumer and McConnell in voicing support for the bill’s reforms.

Citing data from Mercer’s National Survey of Employer-Sponsored Health Plans 2023, the joint letter noted that “drug costs are a large part of America’s health care affordability problem.” The problem is partly a result of consolidation in the PBM industry, it said.

The “three largest PBMs process more than 80 percent of prescription drug claims in the U.S., giving them immense market power, and making it impossible for employers to negotiate contract terms on behalf of their employees. This market power drives higher costs – and employers, employees and patients are paying the price,” the group told Senate leaders.

The groups urged that the HELP bill’s reforms be coupled with the “complementary” PBM changes for government programs proposed in the Senate Finance Committee’s Modernizing and Ensuring PBM Accountability Act (S2973). The measure would delink PBM compensation from prescription drug list prices and set new reporting requirements for PBMs in Medicare, and ban spread pricing in Medicaid, among other things.

If Senate leaders can blend these proposals and move them through the upper chamber, they will need to be reconciled with bipartisan House versions contained in a wide-ranging legislation, the Lower Costs, More Transparency Act (HR 5378).