Senate Committee Advances PBM Transparency Bill Over Employer Concerns

The Senate Commerce Committee passed a bipartisan PBM reform bill this week, but GOP concerns over the power it gives to the FTC and employer concerns over the bill’s transparency provisions may limit its chances of becoming law.

The Pharmacy Benefit Manager Transparency Act (S. 127) would:

• Prohibit certain PBM practices including spread pricing (charging more for a drug than it reimburses the pharmacy) unless the PBM passes all drug discounts, known as rebates, to health plans and discloses certain information regarding the discounts, fees and payments they receive; and
  
  
• Require PBMs to file an annual report with the Federal Trade Commission authorizing the FTC and state attorneys general to enforce the bill’s requirements, including by seeking civil penalties from PBMs.

HR Policy Letter: HR Policy and other employer associations sent a letter to the committee noting numerous  meaningful PBM reforms are missing from the bill. For example, the bill does not adequately address drug rebates, nor does it address growing concerns about the creation and offshoring of group purchasing organizations and rebate contracting or aggregator entities. Despite being touted as a transparency bill, the letter notes that “transparency for the primary customers of PBMs--employers—is a critical aspect to reform and is completely missing in this bill.”

Eight Republicans voted against the bill partly over their concerns that FTC Chair Lina Khan has overstepped her authority in other areas.

PBMs are concerned the bill would grant the FTC unprecedented power to pick industry winners and losers, and set a precedent for allowing the FTC to regulate prices and dictate the terms of common business practices in any industry.

Outlook: Given the GOP opposition to the bill in committee, it is unclear if the legislation can get 60 votes in the Senate to overcome a filibuster.