A bipartisan coalition of lawmakers is taking aim at pharmacy-benefit managers (PBMs), proposing sweeping legislation to dismantle these drug middlemen and their intertwined relationships with health insurers and pharmacies. This move represents a significant step toward addressing concerns about rising drug costs and market manipulation.
The Legislation at a Glance
Senators Elizabeth Warren (D., Mass.) and Josh Hawley (R., Mo.) have introduced a Senate bill that would require companies owning health insurers or PBMs to divest their pharmacy businesses within three years. A companion bill, the Patients Before Monopolies Act, will be introduced in the House by Representatives Jake Auchincloss (D., Mass.) and Diana Harshbarger (R., Tenn.).
The proposed legislation seeks to:
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Break Up Consolidated Operations: Prevent joint ownership of PBMs, health insurers, and pharmacies to untangle conflicts of interest.
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Enhance Market Transparency: Address concerns that PBMs’ practices increase costs for patients and undermine independent pharmacies.
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Curb Anticompetitive Practices: Reinforce consumer protections by limiting PBMs’ ability to steer patients toward higher-cost, affiliated pharmacies.
Why Target PBMs?
PBMs play a pivotal role in the prescription drug market, determining which medicines insurance plans will cover and negotiating rebates and discounts with drug manufacturers. While these middlemen argue they help control costs, critics say their practices often have the opposite effect:
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Increased Costs for Patients: PBMs’ steering practices often lead patients to use higher-cost mail-order pharmacies, sometimes making it more expensive than local alternatives.
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Pressure on Independent Pharmacies: Small pharmacies struggle to compete with PBM-affiliated pharmacies, driving some out of business.
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Limited Patient Choices: PBMs’ control over drug formularies and dispensing can restrict access to affordable treatments.
Bipartisan Momentum for Change
The legislation has garnered unusual bipartisan support, reflecting widespread dissatisfaction with healthcare gatekeepers. Senator Warren stated that PBMs have "manipulated the market to enrich themselves—hiking up drug costs, cheating employers, and driving small pharmacies out of business." Senator Hawley added, "This bill will stop the insurance companies and PBMs from gobbling up even more of American healthcare."
Challenges to Passage
Despite the bipartisan support, the legislation faces hurdles:
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Timing: The current Congress is nearing the end of its session, making it unlikely for the bills to be enacted this year.
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Industry Pushback: The Pharmaceutical Care Management Association, representing PBMs, argues that the focus should be on addressing high drug list prices set by manufacturers rather than targeting PBMs.
Historical Context and Broader Implications
The bill’s proponents draw on precedents like the Volcker Rule from the 2010 Dodd-Frank Act, which prohibited certain banking practices. If passed, this legislation would represent one of the most significant government interventions in healthcare market structures.
Looking Ahead
Although immediate passage is uncertain, the introduction of these bills lays critical groundwork for future legislative action. The debate over PBMs and their role in drug pricing highlights a broader need to reform healthcare systems to prioritize patients over monopolistic practices.
As lawmakers prepare for further discussions in the next session, the focus remains on ensuring transparency, reducing costs, and enhancing access to affordable care for all Americans.
Original article from WSJ here.
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