Around 90% of retail prescription fills are generics, but only account for 20% of total spend 2. Even when inflation peaked around 8.5% between 2021 and 2022, the average increase in drug price was 11.5% 3.
With pressure from constituents, the Senate and the House have introduced several bills to combat rising drug prices by proposing to ban spread pricing, mandate pass-through rebates, increase reporting, or reduce pharmacy clawbacks. The various bills include:
Pharmacy Benefit Manager Reform Act: Sponsored by Chairman Bernie Sanders and advanced by the Senate Health, Education, Labor, and Pensions Committee with bipartisan supporting vote of 18-3. Key propositions are banning spread pricing, mandating pass-through rebates, and reducing pharmacy clawbacks 4. Notably, the bill does not include language to delink PBM compensation from drug prices 5.
Title
Bill
Committee
Key Proposal
Title
Bill
Committee
Key Proposal
Pharmacy Benefit Manager Reform Act
Senate Health, Education, Labor, Pensions
1. Ban spread pricing
2. Mandate pass-through rebates
3. Reduce pharmacy clawbacks
Modernizing and Ensuring PBM Accountability Act
S.2973
Senate Finance
1. Delink PBM income from drug prices
2. Increase PBM reporting
3. Permit additional auditing of PBMs by plan sponsors
Pharmacy Benefit Manager Transparency Act of 2023
S.127
Senate Commerce, Science, Transportation
1. Ban spread pricing
2. Mandate pass-through rebates
3. Ban pharmacy clawbacks
Medicare PBM Accountability Act
S.2254
H.R.5358
Senate Finance
1. Increase PBM reporting
2. Permit additional auditing of PBMs by plan sponsors
Health Care Price Transparency Act
H.R.4822
House Energy and Commerce
1. Increase PBM reporting to Plan Sponsors and to the GAO
PATIENT Act of 2023
H.R.3561
House Energy and Commerce
1. Increase PBM reporting including rebates, fees, alternative discounts, manufacturer incentives
Protecting Patients Against PBM Abuses Act
H.R.2880
House Energy and Commerce
1. Ban spread pricing
2. Limit PBM fees for Part D plans to flat dollar fees
3. Mandate PBMs reimburse network/affiliate pharmacies equally
4. Delink PBMs to drug prices for Part D other than flat dollar fees
Lower Costs, More Transparency Act
H.R.5378
House Energy and Commerce
1. Ban spread pricing for Medicaid
2. Require semi-annual PBM disclosures on rebate/drug discounts to health plans
3. Site neutral medication pricing for Medicare
4. Require FDA to provide more accurate generic guidance to manufacturers
Industry Insight
Most bills do not become law but there is a clear movement to curb rising drug prices. Each bill proposed by the Senate/House and their respective sponsors varies in detail but there is a consistent target of eliminating spread pricing, mandating pass-through rebates, and increasing reporting and transparency.
The Inflation Reduction Act and the Medicare Drug Price Negotiation Program are pressuring PBMs to find new avenues of growth and profitability. Proper Consulting Group creates approaches for navigating the ongoing legislative push aimed at reformulating the practices of the industry.
Sources:
1 Prescription Drugs: Spending, Use, and Prices – CBO
3 Changes in the List Prices of Prescription Drugs, 2017-2023 – ASPE
4 S.1339 – Pharmacy Benefit Manager Reform Act
5 PBM Reform Legislation May Be One Step Closer To Reality – Forbes
6 Pharmacy Benefit Manager Transparency Act of 2023 – Summary
7 Modernizing and Ensuring PBM Accountability Act
8 Framework for Reducing Drug Custs by Modernizing the Supply Chain
9 S.2254 – Medicare PBM Accountability Act
10 H.R.4822 – Health Care Price Transparency Act of 2023
11 H.R. 3561: PATIENT Act of 2023