Published on Sep 30, 2024
Shortly after the Federal Trade Commission (FTC) filed its long-anticipated lawsuit against the “Big Three” pharmacy benefit managers (PBMs), lawmakers told The Capitol Forum that there’s a strong likelihood of Congress passing legislation that would overhaul the PBM business model in the lame-duck session.
Among the measures Congress is considering are transparency requirements that would shed light on PBM rebate practices and laws that would delink PBM compensation from drug pricing benchmarks. Some of the proposed rules overlap with the structural remedies proposed by the FTC.
Transparency measures like those in the Lower Costs, More Transparency Act, which passed the House last year, have garnered strong, bipartisan support. Meanwhile, sources said the FTC’s lawsuit increases the chances of Congress passing delinking legislation. Rep. Buddy Carter (R-GA) pointed to the must-pass Telehealth Modernization Act (H.R. 7623) that expires at the end of the year as a path forward for such measures.
“The Telehealth Modernization Act needs to be done,” Carter said. “Otherwise, the rules and regulations that were passed during the pandemic will expire.”
That bill includes the Protecting Patients Against PBM Abuses Act (H.R. 2880), which received a favorable score from the Congressional Budget Office. Carter said the legislation, which targets federal health care programs, would “delink the compensation that PBMs get from the drug price, and it will just give them a flat fee.”
PBMs will get “$5 or $10 per prescription, whatever that fee may be, but they won’t get a percentage as they have been in the past,” he added.
Structural remedies. On Sept. 20, the FTC in its lawsuit accused the so-called Big Three PBMs—Cigna’s (CI) Express Scripts; UnitedHealth’s (UNH) Optum Rx; and CVS Caremark (CVS), which together control about 80% of prescription drug benefits in the country—of favoring brand-name insulins over cheaper alternatives on their preferred drug lists, or formularies
The FTC said the PBMs and their affiliated group purchasing organizations (GPOs) lined their pockets with rebates from brand-name drugmakers at the expense of vulnerable patients.
Representatives for Express Scripts and Optum Rx didn’t respond to requests for comment. A spokesperson for CVS Caremark said high drug prices are the result of “pharma price gouging” and argued that “[a]ny action that limits the use of PBM negotiating tools would reward the pharmaceutical industry and return the market to a broken state, leaving American businesses and patients at the mercy of the prices drugmakers set.”
Although the FTC’s lawsuit focuses on insulin, the agency has made clear its interest in overhauling the entire PBM industry. The complaint lays out structural remedies, including prohibiting PBMs from accepting payments based on the list price of a drug.
The lawsuit “lend[s] momentum to putting muscular delinking clauses into PBM reform legislation,” Rep. Jake Auchincloss (D-MA) said to The Capitol Forum. “[The FTC] made their complaint about insulin, but then they requested, as relief, delinking all the drugs.”
Auchincloss and Rep. Diane Harshbarger (R-TN) introduced a separate bill, the Pharmacists Fight Back Act, which aims to overhaul the PBM business model. The bill has almost 30 sponsors, including support from Rep. Carter.
Other remedies proposed by the FTC include prohibiting PBMs from preferring a more expensive drug over a cheaper one made by the same manufacturer and designing insurance plans where the patient’s over-the-counter cost are based on that list price before rebates.
Sources said the suit could increase the pressure on PBM executives to respond to Congressional scrutiny and may result in Congress gaining a better understanding of the PBM business model alongside the role played by their rebate-aggregating GPOs.
Emily Donaldson, a health policy expert at Avalere, told The Capitol Forum that the bipartisan cooperation on PBM legislation suggests reforms may go farther than pro-transparency, information-sharing measures.
Though dialogue on PBMs has skyrocketed over the past few years, “there’s still going to be a range of understanding on what their business practices are,” she said.
The lawsuit expressly names the largest PBMs’ GPOs. Critics say these subsidiaries are meant to help PBMs avoid regulatory scrutiny and hide rebates.
“The inclusion of GPOs could increase questions in the minds of members of Congress on current legislation,” Donaldson said. “Is it drafted and crafted in such a way that incorporates those GPOs?”
FTC complaint widens bipartisan appeal. The FTC’s decision to not target the largest insulin makers in the lawsuit could help bring Republicans on board, policy experts told The Capitol Forum.
Rep. James Comer (R-KY) applauded the FTC’s action and described it as a “direct result of the House Oversight Committee’s investigation that has exposed PBMs’ anticompetitive tactics driving up the cost of prescription drug prices for Americans and jeopardizing patient care.” Comer, who’s aggressively scrutinized the PBM industry, recently released a report with the Committee’s findings on the largest PBMs’ business practices and has accused executives at the Big Three of lying before Congress.
“PBMs have created a perverse rebate system that drives up drug prices, and it’s time for Congress and federal regulators to hold them accountable.” Rep. Harshbarger said. “While it’s encouraging to see action being taken to address this broken system, we must ensure that any reforms prioritize patients.”
Some Republican lawmakers blame Democrats for not moving legislation quickly enough. Sen. Tommy Tuberville’s (R-AL) office told The Capitol Forum that he supported the FTC’s complaint but blamed Senate Democratic Majority Leader Chuck Schumer for stalling legislation. Schumer’s office didn’t respond to a request for comment.
Rep. Carter called on his colleagues in the Senate—Sen. Roger Marshall (R-KS), Sen. Bill Cassidy (R-LA), and Sen. John Boozman (R-AR)—to pass reforms similar to those in the Lower Costs, More Transparency Act.
In response, Ty Bofferding, a spokesperson for the Senate HELP Committee Republicans and Sen. Cassidy, highlighted the Committee’s efforts and called on Sen. Schumer to bring PBM legislation to the floor.
“Last year the Senate HELP Committee passed the PBM Reform Act with broad, bipartisan support. Cassidy’s legislation addresses many of PBMs’ misaligned incentives that are driving up the cost of medications,” Bofferding said. “We continue to urge Majority Leader Schumer to put this bill up for a vote where it will pass with overwhelming support in the Senate.”
A spokesperson for Sen. Marshall said, “While we appreciate the FTC highlighting the predatory price-gouging practices of PBMs, their lawsuit will take years to be resolved. We need immediate solutions for affordable medications and to lower employers’ prescription costs. Congress can act now and do what the Harris-Biden Administration will not, and pass bipartisan legislation to rein in the PBMs pricing tactics.”
Sen. Boozman’s office didn’t reply to a request for comment.
Education and public pressure. The FTC’s lawsuit adds weight to lawmaker efforts to reign in perceived excesses by PBMs, those familiar with Congressional PBM efforts said.
Emma Freer, a senior policy analyst for health care at the American Economic Liberties Project, told The Capitol Forum that the FTC’s case provides key statistics, such as historical data on the price of Eli Lilly’s Humalog, that “help us understand how egregious the Big Three PBMs’ behaviors are, and also that it didn’t always used to be this way.”
The complaint also adds to understanding of a “big uptick in formulary exclusion starting in 2012, and how that really turbo-charged this specific rebating strategy that has driven up this crisis and hurt patients,” Freer said.
Some think the lawsuit has already had demonstrable effects on the PBM industry, with sources pointing to how the PBM lobby reacted to a Sept. 24 Senate HELP Committee hearing on the cost of weight-loss drugs.
In a statement released ahead of the hearing, the Pharmaceutical Care Management Association (PCMA), a PBM lobbying group, suggested, as Rep. Auchincloss described it, that PBMs don’t control coverage decisions and are instead the “humble servants of the plan sponsors.”
But after the hearing, PCMA “publicly contradicted” itself by admitting in a press release that PBMs do determine which drugs get covered and which don’t, Auchincloss said. PCMA wrote in the press release, “In reality, PBMs would welcome lower list prices and would continue to provide the same coverage options.”
A spokesperson for PCMA told The Capitol Forum, “Ultimately, coverage decisions and the design of pharmacy benefits are decided by health plans and employers. The PCMA statement does not say PBMs make final coverage decisions.”
