December 18, 2023

Government Legislation 2023

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The Inflation Reduction Act of 2022 triggered a flurry of Congressional bills to curb rising drug prices. The Congressional Budget Office (CBO) noted that the increased utilization of generics was not enough to offset the rising prices of brand drugs in recent years 1.

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.

Pharmacy Benefit Manager Transparency Act of 2023: Sponsored by Senator Grassley and approved by the Senate Commerce, Science, and Transportation committee with a vote of 19-1. It is similar to the PBM Reform Act but would exempt the bans in spread pricing if PBMs meet requirements including passing 100 percent of rebates on to the plan sponsor and comply with transparency requirements around their costs and reimbursements 6.

Modernizing and Ensuring PBM Accountability Act: Senator Wyden and the Senate Finance Committee voted to support this bill which focuses more on Medicare Part D and Medicaid, including increased reporting requirements, broader PBM auditing, eliminating spread pricing for Medicaid, delink PBM income from drug prices, and more 7. The committee also released a framework for a future bill that will set guidelines for pharmacies and other supply-chain participants of prescription drugs participating in Medicare Part D/Medicaid 8.

Medicare PBM Accountability Act: The Senate and the House have similar bills focusing on increasing transparency by requiring PBMs to provide more details on drug pricing and permitting plan sponsors to audit PBMs 9.

Health Care Price Transparency Act of 2023: The House Energy and Commerce committee addresses broader healthcare reporting requirements including hospital pricing and includes annual reporting requirements for PBMs to both plan sponsors and to the Government Accountability Office (GAO) 10.

PATIENT Act of 2023: Also introduced by the House Energy and Commerce committee, this bill mirrors the Health Care Price Transparency Act but with additional disclosures about rebates, fees, and other incentives from drug manufacturers 11.

Protecting Patients Against PBM Abuses Act: One of the most comprehensive bills that includes delinking, anti-spread, and anti-steering language along with additional reporting requirements under the Medicare Part D program 12.

Lower Costs, More Transparency Act: The third House Energy and Commerce bill requiring PBMs to post rebate/drug discounts, bans PBMs from implementing spread pricing for Medicaid, and enacts “site-neutral” pricing for medications administered in hospitals 13.

Title

Bill

Committee

Key Proposal

Title

Bill

Committee

Key Proposal

Pharmacy Benefit Manager Reform Act

S.1339

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