As Congress Reconvenes, PBM Middlemen Remain on Defense as Questionable Practices, Bipartisan Transparency Legislation Drive Drug Pricing Discussion

DATE: April 26, 2017

Controversy Surrounding Anthem Dumping of Express Scripts Helps Validate, Spotlight CMS Report Finding PBMs Simply Keep “Rebates”

Washington, DC — As Congress reconvenes this week, the increasingly controversial role of Pharmacy Benefit Managers (PBMs) in the national drug pricing chain are again in the spotlight as bipartisan, bicameral bills to limit opaque PBM pricing practices drive the drug pricing discussion, and health insurer Anthem’s dumping of its PBM, Express Scripts — due to alleged overcharging — drives the headlines.

“We are pleased to see a growing bipartisan push in the U.S. House and Senate to affect more transparent drug pricing practices as PBMs’ façade as benevolent, pro-consumer actors in the pharmaceutical marketplace continues to crack,” stated Alan G. Rosenbloom, President and CEO of the Senior Care Pharmacy Coalition (SCPC).

Rosenbloom said the flood of headlines surrounding Anthem’s contract termination with its PBM, Express Scripts, also serves to resurrect into the Capitol Hill drug pricing discussion the recent Centers for Medicare & Medicaid Services (CMS) study finding that pharmacies and drug companies are paying increasingly larger rebates to PBMs, but keeping the money rather than translating savings into lower costs for government health care programs and consumers.

“Our mission of educating lawmakers about opaque PBM pricing practices — and their deleterious impact on seniors and LTC pharmacies’ ongoing ability to provide key clinical benefits and medication management services — has been helped by the avalanche of negative PBM publicity regarding their role in driving higher drug prices,” Rosenbloom observed. “The simple truth of the matter is that the more facts about PBM practices are revealed, the more questions will be asked. This is a positive development and dynamic for the LTC pharmacy sector and the patients under their care.”

Rosenbloom said the SCPC will continue to develop its research effort aimed at quantifying PBM reimbursement inequities driven by a Maximum Allowable Cost (MAC) pricing formula used to establish payment rates for a majority of generic drugs LTC pharmacies dispense to elderly Medicare beneficiaries.

An earlier SCPC study by Avalere Health show MAC prices paid for the same generic drugs on the same day by different payers can vary considerably, which SCPC contends raises questions about the relationship between price variation and actual market conditions.

In 2017, the following bipartisan legislation has been offered to both accelerate PBM drug pricing transparency, and to curtail retroactive PBM “clawbacks” and other egregious practices such as “switching fees”:

Bicameral Improving Transparency and Accuracy in Medicare Part D Drug Spending Act

1. 413, introduced by Sens. Shelley Moore Capito (R-WV) and Jon Tester (D-MT), and House companion bill, H.R. 1038, introduced by Reps. Morgan Griffith (R-VA) and Peter Welch (D-VT), is designed to curtail the ability of PBMs from extracting retroactive direct and indirect remuneration (DIR) fees in transactions with patients, long term care (LTC) pharmacies and the Medicare program.

Prescription Drug Price Transparency Act Introduced in House

U.S. Reps. Doug Collins (R-GA) and Dave Loebsack (D-IA) have introduced H.R. 1316, the Prescription Drug Price Transparency Act — a strong first step towards more equitable, transparent reimbursement for LTC pharmacies dispensing generic drugs to seniors. Opaque PBM pricing practices make it impossible for LTC pharmacies to predict how they will be reimbursed for the generic drugs they dispense under Medicare Part D.

Creating Transparency to Have Drug Rebates Unlocked Act (C-THRU) Introduced in Senate

S.637, introduced by Senate Finance Committee Ranking Member Ron Wyden (D-OR) requires PBMs to publicly disclose data regarding “rebates” and “discounts” — and their impact on Medicare Part D beneficiaries and the Part D program overall. Sen. Wyden has noted the recent CMS study, and C-Thru is as a key step toward pulling back the curtain on duplicitous PBM “rebates,” suspect pricing schemes, and related anti-competitive behavior.

“As the year unfolds, we are hopeful the drug pricing discussion continues to develop in a manner that thrusts heretofore secretive PBM pricing practices still further into the drug pricing discussion as consumers and taxpayers rightly demand accountability, reform and congressional action,” Rosenbloom concluded.

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The SCPC is the national association for independent LTC pharmacies. Our member pharmacies provide care and services to patients in LTC facilities in across the country occupying approximately 675,000 beds across the country.  Visit us at www.seniorcarepharmacies.org to learn more.