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Powerful Senate duo drops a bipartisan PBM reform plan

The chair and ranking Republican on the Senate Finance Committee on Thursday unveiled a bipartisan list of overarching reforms to drug middlemen’s business practices that they would like to pursue.

A legislative package of mostly drug pricing policies is coming together in the Senate, and these policies were not expected to be part of it, four drug lobbyists said. It seems to be an effort by Finance Chair Ron Wyden (D-Ore.) to play catch-up, in an effort to be included in the package that Senate Majority Leader Chuck Schumer is pulling together.

“He has talked to me about these issues,” Wyden said Tuesday when asked whether he expects Schumer to include the Finance Committee proposals. “All of the committees are going to work together.”

PBMs negotiate rebates and fees with drugmakers as part of the drug formularies they create, and PBMs reimburse pharmacies for prescriptions. Thanks to this sector of the supply chain, net prices have remained stable for drugs.

However, much of the money that PBMs make from rebates and administrative fees are a percentage of drug list prices, which creates an incentive to keep those prices high. People with insurance, though, also pay coinsurance based on list prices, and the uninsured pay list prices at the pharmacy.

Wyden and Sen. Mike Crapo (R-Idaho) want to detach PBM revenue from drug prices. They also want Medicare beneficiaries to get the benefit of rebates and discounts that PBMs negotiate, and they say it should be easier for seniors to get prescriptions filled at any pharmacy willing to be part of insurance companies’ networks.

They also call for more PBM accountability to health plan clients. It’s not always clear to insurers how much money PBMs are taking from the middle of the supply chain, though that’s less of a problem for the three major insurance companies that own the three PBMs that control about 80% of the prescription drug market.

Transparency also is part of the senators’ legislative framework. A common complaint about PBMs is that their dealmaking is secretive. The lawmakers want to understand better how financial flows across the prescription drug supply chain impact government health care programs.The Health Committee, chaired by Sen. Bernie Sanders (I-Vt.), also is angling to reform PBM business practices as part of a package of policies he is working on with ranking Republican member Bill Cassidy (La.). Those policies include generic drug reforms and a cap on insulin costs for people with private insurance. Sander’s committee had planned a legislative markup for this week, but had to delay it. The legislation that Sanders’ committee is working is the centerpiece of the legislative package Schumer wants the Senate to vote on.

The Senate Commerce Committee also is in the mix of committees writing PBM bills. That committee passed the bipartisan bill, by Chair Maria Cantwell (D-Wash.) and ranking committee Republican Chuck Grassley (R-Iowa), to give the Federal Trade Commission more power to oversee PBMs.

“If you’re really going to modernize PBMs, and that is what we really feel strongly about, you can’t do it without looking at those particular agencies,” Wyden said.

STAT Reporter: John Wilkerson, Washington Correspondent


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