Side Effects

A bipartisan Congress is moving quickly on pharmacy benefit managers

May 1, 2019

WASHINGTON — Both Republicans and Democrats in the U.S. House and Senate are coming together on measures designed to pry the lid off pharmacy benefit managers after complaints from Ohio and other states about a secretive setup that hides questionable business practices.

For example, the House and Senate are now moving forward with a bill that would require the Federal Trade Commission to investigate whether the PBM process is competitive enough.

By a voice vote Tuesday, the normally divided House Judiciary Committee approved the measure, which calls on the FTC to determine if PBMs are relying on their dominance in the supply chain to discourage use of less-expensive prescription drugs.

The bill is similar to one introduced this week by Senate Finance Committee Chairman Charles Grassley, R-Iowa, and Democrat Maria Cantwell, D-Wash. That proposal is backed by Ohio Republican Sen. Rob Portman and Democrat Sherrod Brown.

In a conference call with reporters Wednesday, Brown said he supports “greater scrutiny any time we see increased consolidation among powerful entities, whether we’re talking about PBMs or big banks. We need more transparency in drug pricing across the board.”

But Brown added “as we continue to press for greater transparency from PBMs, we must also aggressively work to lower drug prices. That means going after the drug companies who set the prices.”

House Judiciary Committee Chairman Jerrold Nadler, D-N.Y., said in a statement that the pharmacy benefit marketplace is “highly concentrated — in fact, only three companies control the vast majority of the market — and the biggest PBMs also own the nation’s largest retail pharmacy chains.”

Nadler added that “as a result of this concentration of market power and inherent conflict of interest, these firms have the incentive and the ability to leverage their dominance in the PBM marketplace to steer business to their own pharmacies and away from competitors, or to raise their rivals’ costs.”

JC Scott, president of the Pharmaceutical Care Management Association — which represents the PBM industry — said “we welcome a thorough examination by the Federal Trade Commission into competition in the prescription drug supply chain that includes other entities, including prescription drug wholesalers and drug manufacturers."

The rare bipartisanship is a sign that lawmakers are under intense political pressure because of rising drug prices. But the PBM industry points the finger of blame for high prices directly at drug companies.

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It was not clear when legislation will reach the floors of the Senate and House.

PBMs have been the topic of a year-long investigation by The Dispatch, which has helped spur sweeping changes in Ohio. In one year, PBMs got about $225 million from what is known as "spread pricing" in the state's Medicaid setup. The rate used to get that amount was three to six times the industry standard, a state consultant found.

Last month, Grassley and Sen. Ron Wyden, D-Ore., asked the U.S. Department of Health and Human Services inspector general to examine spread pricing, in which pharmacy benefit managers buy prescription drugs from a pharmacy and charge a higher price to Medicaid.

A Grassley spokesman said Wednesday that "we haven't received a response yet" from HHS.