Legislation to expose PBM rebates filed in Senate
WASHINGTON — Senate Finance Committee Ranking Member Ron Wyden, D-Ore., along with Sens. Sherrod Brown, D-Ohio, and Heidi Heitkamp, D-N.D., on Wednesday introduced legislation that would, for the first time, require Pharmacy Benefit Managers in Medicare to disclose their aggregate rebates provided by drug manufacturers, as well as the amount of those rebates that are passed on to health plans, therefore lowering prices for people who need prescription drugs.
“Today is the first step of an effort to lift the veil of secrecy about prescription drug prices,” Wyden said. “This bill will shine a light on this opaque industry and promote competition to bring down the cost of prescription drugs.”
That level of transparency would disrupt the marketplace, the association representing pharmacy benefit managers countered.
"PBMs support the right kind of transparency that offers consumers and plan sponsors the information they need to make the choices that are right for them," the Pharmaceutical Care Management Association stated in a release issued Wednesday. "However, this bill will increase premiums by undermining the tools employers, unions, and public programs including Medicare, use to reduce prescription drug costs.
PBMs typically reduce prescription drug costs by 30% by using their scale and expertise to negotiate discounts from competing drug companies and drugstores, PCMA noted.
"NCPA agrees with Senator Wyden's goal for more transparency from pharmacy benefit managers," stated Douglas Hoey, CEO for the National Community Pharmacists Association. "There's mounting evidence that PBM profits grow in lock step with — and contribute to — rising prescription drug costs. A big part of that problem is the manufacturer rebate revenue retained by PBMs, which is this intended focus of this legislation."
The bill, the Creating Transparency to Have Drug Rebates Unlocked (C-THRU) Act, would take several steps to improve transparency, Wyden noted. It would require PBMs to disclose the aggregate amount of rebates they receive from pharmaceutical companies and what proportion of those rebates go to Americans in Medicare.
However, the C-THRU Act would grant the kind of transparency that the Federal Trade Commission and economists say will raise costs by giving drug companies and drug stores unprecedented pricing power that could help them tacitly collude with their competitors, PCMA argued.