Cantwell introduces drug pricing transparency bill

Sen. Maria Cantwell (D-Washington) joined Sen. Chuck Grassley (R-Iowa) in introducing a bill Tuesday that aims to increase drug pricing transparency.

 

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The Pharmacy Benefit Transparency Act of 2022 would ban unfair pricing schemes, prohibit the arbitrary reduction of payments made to pharmacies, and require pharmacy benefit managers (PBMs) to report how much money they make through spread pricing and pharmacy fees to the Federal Trade Commission (FTC).

“The increasing cost of prescription drugs has a devastating effect on the pocketbooks of American consumers,” Cantwell said in a press release. “PBMs are the middlemen in the prescription drug supply chain and it’s time for Congress to give the FTC the ability to shine a brighter light on any deceptive and abusive practices.”

PBMs were formed in the 1960s to process claims and negotiate lower drug prices with manufacturers. They administer drug plans for hundreds of millions of Americans.

Three PBMs—CVS/Caremark, Express Scripts, and OptumRx—control almost 80% of the prescription drug market. PBMs manage every aspect of the prescription drug benefits process for health insurance companies, self-insured employers, unions, and government programs. They decide which drugs are covered by insurance plans and how they are dispensed.

Some PBMs have engaged in spread pricing, which is a term used to describe a PBM charging a health insurance plan more to process a prescription than it reimburses the pharmacy, and pocketing the “spread.” Eliminating spread pricing in Medicaid would result in approximately $900 million in savings over 10 years, according to a recent Congressional Budget Office report.

The Pharmacy Benefit Manager Transparency Act of 2022 would:

  • Prohibit unfair or deceptive practices by blocking PBMs from engaging in spread pricing, unfairly reducing or “clawing back” drug reimbursement payments to pharmacies, and unfairly charging pharmacies more to offset federal reimbursement changes.
  • Incentivize fair and transparent PBM practices by providing exceptions to liability for PBMs that pass along 100% of rebates to health plans or payers and fully disclose prescription drug rebates, costs, prices, reimbursements, fees, and other information to health plans, payers, pharmacies, and federal agencies.
  • Improve transparency and competition by requiring PBMs to report the amount of money they obtain from spread pricing, pharmacy fees, and clawbacks. They would also be required to report any differences in reimbursement rates or fees charged to pharmacies, and whether they move drugs in formulary tiers to increase costs.
  • Direct the FTC to report its enforcement activities to Congress. It would authorize the FTC and state attorneys general to enforce the bill. It would also protect whistleblowers from being fired or reprimanded for bringing violations to light.