Grassley, Cantwell Introduce Bipartisan Bill to Combat Rising Prescription Drug Prices and Provide More Transparency

WASHINGTON – Sens. Chuck Grassley (R-Iowa), ranking member of the Judiciary Committee, and Maria Cantwell (D-Wash.), chair of the Committee on Commerce, Science and Transportation, have introduced legislation that would empower the Federal Trade Commission (FTC) to increase drug pricing transparency and hold pharmacy benefit managers (PBMs) accountable for unfair and deceptive practices that drive up the costs of prescription drugs at the expense of consumers.

 

The Pharmacy Benefit Manager Transparency Act of 2022 would ban deceptive unfair pricing schemes; prohibit arbitrary claw backs of payments made to pharmacies; and require PBMs to report to the FTC how much money they make through spread pricing and pharmacy fees.

 

“I hear stories about rising drug costs all the time at my 99 county meetings, and middlemen pocketing consumer and taxpayer money is a big reason for those high costs,” Grassley said. “Pharmacy benefit managers and other intermediaries in the pharmaceutical supply chain must be held accountable for increasing the cost of health care in the United States. It is critical for Congress to direct the Federal Trade Commission to go after these arbitrary, unfair and deceptive practices while also establishing more transparency and accountability.”

 

“The increasing cost of prescription drugs has a devastating effect on the pocketbooks of American consumers,” Cantwell said. “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 initially formed in the 1960s to process claims and negotiate lower drug prices with drug makers. Now, PBMs administer prescription drug plans for hundreds of millions of Americans.

 

Today, three PBMs control nearly 80 percent of the prescription drug market. They serve as middlemen, managing every aspect of the prescription drug benefits process for health insurance companies, self-insured employers, unions and government programs. They operate out of the view of regulators and consumers — setting prescription costs, deciding what drugs are covered by insurance plans and how they are dispensed – pocketing unknown sums that might otherwise be passed along as savings to consumers and undercutting local independent pharmacies. This lack of transparency makes it impossible to fully understand if and how PBMs might be manipulating the prescription drug market to increase profits and drive-up drug costs for consumers.

 

Some PBMs have been known to engage in “spread pricing” in which a PBM charges a health insurance plan more to process a prescription than it reimburses the pharmacy, keeping the difference – the spread.  For example, when a pharmacist fills a prescription, a PBM handles the process, informing the pharmacy it will be reimbursed $90. The PBM then charges the health insurance plan $100 for processing the same prescription. The spread of $10 is pocketed by the PBMs.

 

In some cases, the pharmacy is reimbursed below its cost, driving independent pharmacies out of business, creating pharmacy deserts and increasing costs for health plans that can result in higher premiums. PBMs can also practice unfair claw backs, retroactively rescinding reimbursement payments made to pharmacies based on arbitrary guidelines and evaluations.

 

Specifically, the legislation:

 

Grassley and Cantwell’s bipartisan proposal is supported by the National Community Pharmacists Association, Community Oncology Alliance, Biotechnology Innovation Organization, American Pharmacy Cooperative, Association of Mature American Citizens, American Pharmacists Association, Autoimmune Association, Iowa Pharmacy Association, Hy-Vee, Inc., Hartig Drug Company and Partnership for Employer-Sponsored Coverage.

“PBM-insurers have manipulated our complex health care system so they can set their competitors’ prices, dictate their competitors’ reimbursements, use competitors’ data to steer patients to PBM-affiliated retail, specialty and mail-order pharmacies, and limit where and what consumers can buy,” said National Community Pharmacists Association CEO B. Douglas Hoey, pharmacist, MBA. “There are plenty of PBM actions for policymakers and regulators to address in order to ease the havoc they have wreaked on patients and small business independent pharmacies. NCPA is grateful to Sens. Cantwell and Grassley for their ongoing support of PBM reform. We’re proud to endorse their latest effort, the Pharmacy Benefit Manager Transparency Act, and will work to help it advance.”

 

“Senator Cantwell and Senator Grassley’s critical legislation will help stop PBM abuses and bring much-need transparency to the shroud of secrecy they operate in,” said Ted Okon, executive director of the Community Oncology Alliance. “The top PBMs use their inordinate market leverage to delay and even deny patients their cancer medications, lowball payments to pharmacists resulting in pharmacy closures, and fuel drug health care costs for all Americans. The Senators’ leadership is so critical and appreciated.”

 

Full bill text is available HERE.

 

A summary of the bill is available HERE.

 

 

In 2018, Grassley called for the FTC to investigate PBMs. Grassley saw the ongoing consolidation in the pharmaceutical supply chain and its impact on drug prices. A lot has changed since the FTC last studied the PBM industry in 2005 when they looked at ownership of mail-order pharmacies.

 

In 2021, Grassley completed a two-year landmark bipartisan insulin investigation with Sen. Ron Wyden (D-Ore.), which studied why and how the price of insulin has increased so dramatically in recent years. The investigation found that manufacturer rebates are associated with high list prices in the insulin therapeutic class. PBMs leverage their size to extract higher rebates, discounts and fees from insulin manufacturers because PBMs consider insulin products to be interchangeable. While rebates are used to keep insurance premiums low, for those patients with high-deductible health plans, no insurance or for those who are underinsured, the practice of offering rebates results in high list prices at the counter. This causes some patients to ration their medication or forgo their medication entirely.

 

In April 2021, Grassley and Cantwell introduced the Prescription Pricing for the People Act, a reintroduction of their 2017 bill. The bill unanimously passed out of the Judiciary Committee in July 2021. The bill would direct the FTC to issue a report addressing whether PBMs charge certain payers a higher price than reimbursement rates for competing pharmacies and steer patients to pharmacies in which the PBM has an ownership stake.

 

Earlier this month, the Commerce Committee held a hearing on “Ensuring Fairness and Transparency in the Market for Prescription Drugs.” The hearing recognized Grassley’s leadership multiple times on prescription drug pricing reform.

 

Recently, Grassley submitted public comments with Sens. Ron Wyden (D-Ore.) and Mike Braun (R-Ind.) to the FTC, pressing the agency for a rigorous review of the impact that PBM business practices have on the price of insulin. Grassley has also pressed the FTC to investigate PBMs’ role in consumer drug prices. He urged the FTC to find consensus and move forward on a study examining bipartisan concerns about competition within the PBM industry.

 

 

In addition, Grassley has never stopped working to pass his balanced, bipartisan and comprehensive drug pricing bill, the Prescription Drug Pricing Reduction Act (PDPRA). Beginning in 2019, as chairman of the Senate Finance Committee, Grassley held three hearings on lowering the cost of prescription drug prices and conducted numerous meetings to advance a bipartisan solution. Under Grassley’s leadership, PDPRA passed the Finance Committee on a bipartisan vote, 19 to 9. According to the nonpartisan Congressional Budget Office (CBO), PDPRA would lower costs for seniors, saving $72 billion, and it would save taxpayers $95 billion.

 

The bill also establishes robust transparency and accountability for PBMs by requiring public disclosure of drug discounts and PBM financial audits to account for the true net cost of a drug. It is the only comprehensive prescription drug bill that could pass the U.S. Senate with more than 60 votes. You can find additional details about the bipartisan PDPRA by clicking HERE.

 

Throughout 2021 and 2022, Grassley has spoken about his bipartisan efforts to lower prescription drugs costs with President Biden, Speaker Pelosi, HHS Secretary Becerra, members of the Problem Solvers Caucus Health Care Working Group, rank-and-file members of Congress and White House staff.

 

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