Bill would increase transparency in drug pricing & direct FTC to hold PBMs accountable for manipulation

WASHINGTON, D.C. – The Senate Committee on Commerce, Science, and Transportation today advanced the bipartisan Pharmacy Benefit Manager Transparency Act to the full Senate. The legislation was introduced by Sens. Maria Cantwell (D-Wash.), Chair of the Commerce Committee, and Chuck Grassley (R-Iowa), Ranking Member of the Judiciary Committee, to increase transparency in prescription drug pricing and hold pharmacy benefit managers (PBMs) accountable for deceptive and unfair practices that drive up prescription drug costs. The bill was approved 19-9.

Specifically, the legislation would ban deceptive and unfair pricing schemes, prohibit arbitrary claw backs of payments made to pharmacies and require PBMs to report to the Federal Trade Commission (FTC) how much money they make through spread pricing and pharmacy fees.

Prior to its passage, Sen. Cantwell spoke about the legislation’s importance for consumers:

“Senator Grassley and I introduced Pharmacy Benefit Manager Transparency legislation to shine a brighter light on the drug pricing marketplace and to prevent unfair and deceptive practices by PBMs that drive up the cost of medications at the expense of consumers. … Take insulin for example, a drug that has been available for patients for over 100 years. Insulin price hikes have become a matter of life or death for many Americans with diabetes.”

“Pharmacy Benefit Managers [are] a middleman in the drug pricing supply chain. Today, three PBMs control 80% of the prescription drug market, operating out of the view of regulators and consumers.  PBMs set prescription drug prices … determine whether drugs are covered by an insurance plan, and pocket unknown sums of money that might otherwise be passed along … [as] savings to consumers.

“During our subcommittee hearing, we learned how PBMs engaged in spread pricing, in which they reimburse pharmacists less than what they would charge insurance plans and keep the difference as profit. In some cases, the pharmacy is reimbursed below the drug purchase price, forcing these small businesses to close.

“Our legislation will make it clear that the FTC should use its authority to stop spread pricing, unfair claw backs and other deceptive practices. We've received letters from organizations representing millions of seniors, pharmacists and oncologists, biotech companies and consumers who've long called for increased transparency in today's PBM market.”

The Pharmacy Benefit Manager Transparency Act of 2022: 

• Prohibits Arbitrary, Unfair or Deceptive Practices. Prohibits PBMs from engaging in spread pricing, arbitrarily, unfairly or deceptively reducing or clawing back drug reimbursement payments to pharmacies, and unfairly charging pharmacies more to offset federal reimbursement changes. 
• Incentivizes Fair and Transparent PBM Practices. Provides 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. 
• Improves Transparency and Competition.  Requires PBMs to report the amount of money they obtain from spread pricing, pharmacy fees, and clawbacks; any differences in the PBMs’ reimbursement rates or fees PBMs charge affiliated pharmacies and non-affiliated pharmacies; and whether and why they move drugs in formulary tiers to increase costs. Directs the FTC to report to Congress its enforcement activities and whether PBMs engage in unfair or deceptive formulary design or placement. 
• Protects Whistleblowers.  Protects whistleblowers from being fired or reprimanded for bringing violations to light and ensures employers cannot force employees to waive such protections with pre-dispute arbitration agreements as a condition of employment.  
• Enhances Enforcement.  Authorizes the FTC and state attorneys general to enforce the Act. 

Text of the legislation is available HERE. Section-by-section HERE.