Bipartisan bill would address PBM business practices, empower FTC

Sens. Maria Cantwell (D-WA) and Chuck Grassley (R-IA) introduced the Pharmacy Benefit Manager Transparency Act of 2022, which would address long-standing problems with PBM business practices and outlaw “spread pricing”—and BIO supports it.

The PBM Transparency Act of 2022 would “make it illegal for PBMs to engage in ‘spread pricing’ in which they charge health plans and payers more for a prescription drug than what they reimburse to the pharmacy, and then pocket the difference,” says the fact sheet. “The bill would also prohibit PBMs from arbitrarily, unfairly, or deceptively clawing back payments made to pharmacies…or lowering reimbursements to offset reimbursement changes in federally-funded health plans.”

The background: PBMs manage prescription drug benefits for insurance plans and payers. They’re often vertically integrated with insurance plans, and the three largest PBMs handle 80% of all prescriptions in the U.S. They receive rebates and discounts on drug prices and they're supposed to pass savings on to patients—but they often don’t, and in fact limit access via formulary exclusions.

The result: This system harms the sickest patients the most, BIO’s Dan Durham explained on a recent episode of the I am BIO Podcast.

Read: What are PBMs, anyway?

PBM formulary exclusions are “skyrocketing,” says a new white paper from health policy consulting firm Xcenda. The three largest PBMs’ formulary exclusion lists increased from 850 unique drugs in 2020 to 1,156 unique drugs in 2022— “often excluding medicines for conditions where it is particularly important for patients and physicians to have multiple treatment options, such as oncology and autoimmune disorders.”

BIO applauds the introduction of the bill—telling the co-sponsors in a letter yesterday it “will further bolster the FTC’s authority to address”…“the role PBMs play in the market for medicines and whose interests they serve.” 

The context: The Federal Trade Commission (FTC) has been soliciting comments on PBM business practices, which were due yesterday—here’s what BIO said. The pressure is increasing on both the FTC and Congress to take action on PBMs.