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Senators decry lack of 'sunlight' on PBM processes, push for reforms in transparency

Senators blasted the PBM industry for charging pharmacies direct and indirect remuneration fees after the facility has dispensed drugs to patients.

Several bipartisan senators are clamoring for more transparency into how pharmacy benefit managers conduct their business, potentially foreshadowing action on legislation to require new disclosures for the industry.

A subcommittee of the Senate Commerce Committee held a hearing Thursday on PBMs and their role in the pharmaceutical marketplace. Senators claimed there is an absence of competition in the industry and potential conflicts of interest.

“PBMs are not the only cause of drug price inflation and excessive pricing, but they are integral to this system,” said Sen. Richard Blumenthal, D-Connecticut, the subcommittee’s chairman. “They are part of an increasingly integrated, uncompetitive system involving PBMs owned or owning insurers and constraining pharmacies in the amount of information that they give to consumers. That is one slice of a broken system.”

Senators said they have heard of pharmacies complaining about direct and indirect remuneration (DIR) fees where the PBM takes back some of the money paid to a pharmacy for filling a prescription.

“Pharmacists tell me this is done without transparency or accountability by the PBMs,” said Sen. Marsha Blackburn, R-Tennessee, the leading Republican on the subcommittee.

Blackburn also chided the Biden administration for issuing a final rule that deals with DIR fees but not until 2024.

“That is unacceptable,” she said. “This delay gives PBMs another year to play games for future clawbacks.”

Blackburn pointed to a bill she submitted in February 2021 that would require the Government Accountability Office to report on the role of PBMs in the drug supply chain. The report would look into rebates, average prior authorization times and fees.

“Sunlight is the best disinfectant, and it's time for more impact,” Blackburn said.

The Federal Trade Commission has also asked for public input on the impact of PBMs on physicians and businesses. Blumenthal said a new study on PBM impact was needed as the previous version in 2005 is now out of date.

Several states are already taking action to address transparency, including laws requiring PBMs to report pricing and rebate data, said Sen. Maria Cantwell, D-Washington, chairwoman of the full committee.

“We in Congress must do more to ensure all Americans are protected,” she said.

The PBM industry has pushed back, saying its efforts to negotiate with health plans have led to lower prices for Americans and that high launch prices set by manufacturers are the reason for high prices.

The industry has vociferously fought other efforts to introduce reforms, chief among them a Trump-era rule that would have removed the safe harbor that protects Medicare Part D rebates from prosecution under federal anti-kickback laws. The rule would have replaced the safe harbor with a new one for discounts offered at the point of sale, but it has been delayed until 2026 by Congress.


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