Pharma-PBM Battles Escalates on Capitol Hill

As policymakers continue to scrutinize and criticize high drug prices, manufacturers are eager to shift some of the blame to pharmacy benefit managers (PBMs), hitting them for demanding high rebates and discounts that boost consumer costs. PBMs, in turn, insist that their efforts save money for health plans and patients by keeping outlays for medicines under control.

Now Congress is stepping in with a range of legislative proposals to further manage PBMs and the pharma market. Pharmaceutical companies, meanwhile, aim to sideline measures that would ratchet down certain drug prices, limit patents, and revise tax policy. In what has been a busy week on Capitol Hill, the legislators also discussed bills to advance generic drug competition, to revise corporate tax policy, and to lower prices on diabetes therapies for all patients.

Vermont independent Bernie Sanders led the charge at a hearing before the Senate Health, Labor, Education, and Pensions (HELP) committee Wednesday on the high cost of insulin.¹ Both Democrats and Republicans appeared receptive to price-lowering promises from leading diabetes drugmakers Eli Lilly, Sanofi, and Novo Nordisk, and ready to criticize executives from leading PBMs—CVS, Express Scripts, and Optum Rx—for huge profits and limited transparency. A telling issue was unfavorable PBM coverage of new biosimilars and charges that the middlemen serve their insurance corporate interests—and not patients. An ongoing complaint of too-low reimbursement from community pharmacists fueled Republican support for curbing PBM operations that appear to shift business to their own mail-order pharmacy operations and away from local retailers.

As a result, the HELP committee approved an extensive PBM reform bill along with three other measures involving FDA and drug policies. Two support generic drug development by curbing citizen petitions to FDA designed to delay competition (S. 1067) and by limiting “parking” strategies that similarly thwart competitive generic drug marketing (S. 1114). The RARE Act (S. 1214) addresses abuses of the seven-year exclusivity period for orphan drugs. And the hefty Pharmacy Benefit Manager Reform Act (S. 1339) swipes at multiple PBM practices, including “spread pricing” and the failure to pass rebates and fees to plans and patients.

These proposals follow similar House and Senate Committee efforts to curb PBM practices. The Senate Finance Committee held a hearing on PBM practices in March and issued a framework for legislation to curb abuses that limit access to affordable drugs.² Similarly, the House Energy and Commerce Health Subcommittee has heard testimony on dozens of legislative proposals to “increase transparency and competition in healthcare,” including measures requiring PBMs to disclose more detailed information on drug costs, coverage, and rebates.³

As the legislators have advanced reforms related to PBMs and other drug pricing issues, manufacturers, insurers, and PBMs have escalated their attacks on each other. The Pharmaceutical Research and Manufacturers of America (PhRMA) recently launched a wave of anti-PBM TV ads highlighting how the middlemen limit patient access to needed medicines and fail to pass on discounts to consumers.⁴ Conversely, America’s Health Insurance Plans (AHIP) has financed a million-dollar campaign blaming pharma companies for high drug costs. And the PBMs’ Pharmaceutical Care Management Association (PCMA) is airing ads to highlight the benefits of their operations and the need for drug patent reform.