Over recent years, there has been a concerted attempt from Congress to bring transparency to the pharmacy benefit manager industry, which serves as intermediaries between drug manufacturers and insurers. However, these initiatives suffered a major blow as the final federal funding package excluded them. Originally, the proposal sought to shed light on the rebates PBMs receive, their drug pricing strategies, and the payments made to pharmacies.
The reform aimed to disentangle the relationship between drug prices and PBM compensation within Medicare Part D plans. By shifting to a fixed fee model, the measures intended to pass on all rebates to health plan sponsors, which include insurers and employers. The concept of spread pricing in Medicaid, where PBMs keep a portion of the payments from pharmacies, would also have been eliminated. Ross Margulies, a healthcare legal expert, indicated that the goal was to foster transparency and restructure compensation in the industry, which is currently skewed towards higher-cost drugs due to larger rebate possibilities.
The Pharmacy Benefit Management trade association contended that these legislative efforts would hamper their capacity to lower drug costs, potentially driving up premiums for seniors. Meanwhile, opponents such as B. Douglas Hoey from the National Community Pharmacists Association, expressed disappointment, highlighting that the reforms could have saved taxpayers $5 billion and assisted struggling independent pharmacies.
The Federal Trade Commission (FTC) had also taken a stance against leading PBMs, launching a lawsuit in September against major players like CVS Health and UnitedHealth, accusing them of inflating insulin prices. According to FTC’s Rahul Rao, this move was a pivotal step towards fixing what he described as a broken system. PBMs, on the other hand, defended their role by stating that they have contributed to lowering insulin costs through enhanced competition.
Moving forward, these reform efforts are not expected to end with this setback. With the current administration’s focus on healthcare costs, it is anticipated that discussions and legislative attempts to regulate these middlemen more stringently will continue.
The exclusion of pharmacy benefit manager reforms from the federal funding package underscores ongoing challenges in healthcare regulation. As stakeholders on both sides prepare for continued debate, the quest for transparency and cost reduction in drug pricing remains a pressing issue.
