PBM Transparency a Focus of New Legislation

Yesterday, Congressman Doug Collins (R-GA) introduced a bill that would require increased transparency from pharmacy benefit managers (PBMs). PBMs have recently been scrutinized for charging direct and indirect remuneration (DIR) fees to pharmacies months after the initial transaction. Many pharmacies receive bills that do not indicate which charges correspond with which transactions.

HR 1316, the Prescription Drug Price Transparency Act, would protect taxpayers and community pharmacists by demanding transparency in generic drug pricing, according to a press release from the senator.

PBMs negotiate deals with healthcare stakeholders to drive down costs, but their actions have been called into question. These companies have refused to disclose their processes for creating pharmacy reimbursement prices, according to Collins. While PBMs state that they pass savings to Medicare Part D, TRICARE, and the Federal Employees Health Benefits Program, a lack of transparency makes it impossible to determine if the federal programs are benefiting from PBM involvement, according to a press release.

“PBMs engage in predatory practices designed to boost their own profit margins at the expense of insurers, contracting pharmacies, patients, and—in their relationships with federal programs—taxpayers,” Collins said in the release. “The lack of transparency in their operations has allowed them to control the market unjustly, with the result that these companies withhold savings that they have promised to pass on.”

Specifically, when dealing with community pharmacies, Collin alleges that PBMs alter the prices on their maximum allowable cost (MAC) lists to those below a pharmacy’s costs, which forces pharmacists to take a financial loss to serve their customers. This causes pharmacies to take on significant debt, and can result in bankruptcy.

“I’m introducing a bipartisan bill to ensure that PBMs update their MAC lists for Medicare Part D, TRICARE, and FEHBP every 7 days to protect competitive pricing and to preserve pharmacy access and choice for patients,” Collins said. “The Prescription Drug Price Transparency Act provides essential oversight to prevent waste, fraud, and the abuse of taxpayer funds and better protects patient privacy.”

The bill has received bipartisan support from Democratic co-sponsors Congressman Dave Loebsack (IA), Reps Brian Babin (R-TX), Rod Blum (R-IA), Buddy Carter (R-GA), John Duncan, Jr (R-TN), Cathy McMorris Rodgers (R-WA), and John Sarbanes (D-MD), according to the press release.

“Whether it is in large cities, or small towns, pharmacists across the country serve as the first line of health care services for many patients. I appreciate all of their hard work to serve our communities and to provide quality, affordable and personal care,” Rep Loebsack said.

“However, I also recognize how challenging it can be for some small pharmacists to compete with bigger companies. One pressing challenge facing many community pharmacists is the ambiguity and uncertainty surrounding the reimbursement of generic drugs. To help address this problem, I am proud to join my colleague Rep Collins to reintroduce the Prescription Drug Price Transparency Act, which also helps ensure federal health plan reimbursements to pharmacies to keep pace with generic drug prices.”

The bill would require PBMs to provide updates and disclosures to pharmacies for MAC lists for Part D every 7 days. MAC lists are used to determine reimbursements for generic drugs. The law would prevent patient sharing information with pharmacies owned by PBMs without patient involvement.

Additionally, PBMs would not be allowed to require patients to fill their prescriptions at the PBM’s own pharmacy. Recently, certain PBMs have been accused of taking part in questionable activities in order to gain more patients for their pharmacies.

“I have always said that sunlight is the best disinfectant, and that is what this critical legislation will do with prescription drug pricing. For too long, pharmacy benefit managers have been able to hide behind a curtain in the drug pricing chain as families across the country watch the prices of their lifesaving medications soar,” Rep Carter said. “As a pharmacist for more than 30 years, I saw firsthand the distress of families attempting to balance their health care needs with their bottom line when the cost of their prescription medications was on the rise and unpredictable. That is why the Prescription Drug Price Transparency Act is so important. The legislation will provide some light to how PBMs determine the pricing reimbursement of prescription drugs, which will provide greater transparency on how drug prices are set so patients can finally get the truth about drug pricing increases.”

The goal of the legislation is to increase transparency among PBMs to benefit community pharmacies, which may provide prescription drugs to patients in rural or underserved areas. Without the involvement of community pharmacies, patients may have difficulties receiving proper treatment.

“I am pleased to join Rep. Collins in introducing this legislation that is critical to protecting our seniors and pharmacists from being ripped off by these PBMs, whose practices are unfair and wasteful. It's time for transparency, so we can hold PBMs accountable for their roles in our drug price crisis,” Rep Duncan said.

The bill has also garnered strong support from the National Community Pharmacists Association (NCPA), who has voiced opposition to non-transparent PBM actions in the past. They believe that HR 1316 would allow federal programs to run in a transparent and cost-effective manner.

"If enacted, HR 1316 would strengthen patient access to the pharmacies of their choice by curtailing the self-dealing of PBMs steering patients to the mail order and retail pharmacies they own; ensure pharmacies that sign take-it-or-leave-it contracts with PBMs are no longer ‘flying blind' when it comes to understanding the criteria for generic drug reimbursements; and create more accountability for how these federal health programs deliver prescription drug services,” NCPA CEO B. Douglas Hoey, RPh, MBA, said in a press release.