Pharmacy Benefits Manager Reform Fails to Reduce Federal Funding

For a while, it looked like Congress would actually pass reforms in controversial areas. pharmacy benefit managers after several years of introducing bills and holding hearings.

But that wasn’t the case. The series of measures that would have injected more transparency into the industry and changed some of its practices were removed from the government’s massive bipartisan funding plan that was put in place. torpedo by the president-elect Donald Trump and billionaire Elon Musk on Wednesday.

The final, largely lighter legislationwhich prevented the federal government from closing its doors, was signed by President Joe Biden SATURDAY.

However, efforts to restructure the PBM industry will likely continue into next year. Trump blasted the industry at a recent press conference at Mar-a-Lago, after declaring that Americans were paying too much for their drugs.

“We have a thing called intermediary. You know the middleman, right? » Trump said at his Florida estate. “The horrible middleman who frankly makes more money than the drug companies, and they don’t do anything except they’re middlemen. We will eliminate the middlemen.

Healthcare intermediaries

Pharmacy benefit managers serve as intermediaries between drug manufacturers and insurers, employers and governments. They negotiate discounts with pharmaceutical companies, determine which drugs are covered by insurance plans, and pay pharmacies. But they have angered Congress and others with their opaque practices.

The now-dead funding agreement would have required PBMs to provide more information about the discounts they negotiate and retain, as well as what they pay for drugs and how much they compensate pharmacies. This would have removed the link between drug prices and the compensation PBMs receive in Medicare Part D drug plans and shifted the payment model to flat fees.

The agreement also would have required the industry to pass on any discounts to health plan sponsors, which include insurers and employers, in the commercial insurance market. This would have effectively eliminated so-called tiered pricing — in which PBMs withhold part of the payment they receive for drugs from pharmacies — in Medicaid.

The effort aimed to increase transparency and change the industry’s compensation structure, said Ross Margulies, a partner at Manatt, Phelps & Phillips, a health care law firm. The concern is that PBMs may be incentivized to prefer more expensive drugs since they can negotiate deeper discounts on them.

The PBM trade group argued that the legislation would have weakened its ability to reduce drug costs and could have resulted in higher premiums for seniors.

“This bill does nothing to reduce costs, nothing to improve access to pharmacies, nothing to benefit patients,” the Pharmaceutical Care Management Association said in a statement earlier this week.

But industry opponents said they were disappointed by the removal of these provisions.

“PBM reform would rein in the big health insurance lobby, save taxpayers $5 billion, and provide a lifeline to the thousands of small mom-and-pop pharmacies that are on the verge of closing,” B. Douglas Hoey, CEO of the National Community. Pharmacists Association said Friday in a statement.

Federal Trade Commission Lawsuit

Congress is not alone in trying to curb PBM practices.

In September, the Federal Trade Commission sued the largest PBMs – CVS Health’s Caremark Rx, Cigna’s Express Scripts and UnitedHealth Group’s Optum Rx – for allegedly inflate insulin prices. These three companies administer about 80% of all prescriptions in the United States, according to the FTC.

“Millions of Americans with diabetes need insulin to survive, but for many of these vulnerable patients, the cost of their insulin medications has skyrocketed over the past decade, thanks in part to powerful PBMs and their greed,” said Rahul Rao, deputy director of the FTC Bureau. Competition said in a statement at the time, adding that the agency’s action “marks an important step in repairing a broken system — one that could reverberate beyond the insulin market and restore healthy competition to lower drug prices for consumers.”

The industry trade group has argued that PBMs reduce insulin costs by taking advantage of greater competition.

“The FTC’s action ignores the significant progress PBMs have made in reducing costs in the insulin market and is another example of the agency conducting a biased investigation with predetermined anti-industry results” , declared the association in a press release.

For more CNN news and newsletters, create an account at CNN.com