Senators Unveil Bipartisan Bill to Enhance PBM Oversight

Senate Finance Committee Chairman Mike Crapo (R-Idaho) and Ranking Member Ron Wyden (D-Oregon) introduced a bipartisan bill on March 15, 2024, aimed at increasing oversight of pharmacy benefit managers (PBMs). This legislation seeks to enhance transparency in the pharmaceutical industry, responding to growing concerns about PBMs’ role in inflating drug prices and their integration with insurance companies.

The proposed legislation, titled the PBM Price Transparency and Accountability Act, addresses the significant market dominance of the top three PBMs—CVS Caremark, Cigna’s Express Scripts, and UnitedHealth Group’s Optum Rx—which collectively control approximately 80% of the prescription drug market. By delinking PBM compensation from negotiated rebates, the bill aims to discourage PBMs from favoring higher-priced medications.

Key Provisions of the Legislation

Among its various provisions, the bill would impose stricter reporting requirements on PBMs, mandating that they provide detailed information to Medicare Part D plan sponsors and the Department of Health and Human Services (HHS). This increased oversight would enable plan sponsors to conduct thorough audits of their PBMs, fostering greater accountability within the sector.

Additionally, the legislation seeks to protect rural independent pharmacies by requiring plan sponsors to contract with any willing pharmacy that meets standard terms. This measure aims to prevent harmful practices that could lead to the closure of these essential healthcare providers.

Another significant requirement would compel retail community pharmacies to participate in the National Average Drug Acquisition Cost (NADAC) survey, thus ensuring more accurate Medicaid reimbursement rates. The bill also mandates that PBMs pass Medicaid payments directly to pharmacies, enhancing transparency regarding drug costs for both states and taxpayers.

Crapo emphasized the importance of the bill, stating, “Pharmacy benefit managers should not profit from overcharging patients for their prescriptions. This bipartisan legislation is a decisive step toward making the prescription drug market easier to navigate for both patients and pharmacies.”

Wyden reinforced this sentiment, asserting, “It’s long past time to go after middlemen who are making Americans’ prescription drugs more expensive. The Finance Committee has put forward a comprehensive approach to stop the pharmacy benefit manager business practices that are harming seniors and taxpayers.”

Bipartisan Support and Previous Attempts

The legislation has garnered support from a group of 19 co-sponsors, including prominent senators like John Barrasso (R-Wyoming), Michael Bennet (D-Colorado), Marsha Blackburn (R-Tennessee), Catherine Cortez Masto (D-Nevada), and Bill Cassidy (R-Louisiana).

Efforts to regulate PBMs have been ongoing, but many past initiatives have not succeeded. For instance, a federal spending bill last year that included measures to restrict PBM practices was ultimately revised, removing those provisions at the last moment. States have also taken action; California recently passed legislation to regulate PBMs, while Arkansas enacted a law prohibiting PBMs from owning pharmacies, though a federal judge has temporarily blocked its implementation.

As the legislative process unfolds, the introduction of the PBM Price Transparency and Accountability Act marks a significant step towards addressing the complexities of prescription drug pricing and enhancing transparency in a sector crucial to millions of Americans.