Experts Urge Congress to Curb PBM Power for Drug ⁤Reform

Washington,D.C. ‍- Bipartisan efforts in‍ Congress to lower prescription drug costs by targeting pharmacy benefit managers,or PBMs,may face challenges due to the significant control the three largest PBMs have over the U.S. drug market, industry experts said this week.

lawmakers are considering proposals to increase transparency, decouple PBM compensation from drug rebates,⁣ and prohibit PBMs from profiting from price differences between payers and pharmacies.

Tho, CVS’ Caremark, Cigna’s Express Scripts, and UnitedHealth’s ⁢Optum Rx, known⁤ as the “Big⁣ Three,” control a large⁤ share of ‍how ‍patients ⁣obtain medications and at what⁤ cost.

According to experts at the Transparency is Rising event, ⁤reforms targeting specific business practices ⁤without addressing this market dominance may ⁤prove ineffective.

“The solution can’t just⁤ be to ‍ban existing practices. It ⁤has to be to⁢ remove the choke points that people have over particular parts of⁢ the supply ⁢chain,” said Reed Showalter,former White House advisor and attorney ‍wiht the federal Trade Commission.

PBMs’ Ability to Adapt

Caremark, Express Scripts, and Optum Rx manage 80% of ⁤U.S.prescriptions. As subsidiaries of ⁣major healthcare corporations that also own⁣ health insurers and pharmacies,⁢ they can influence multiple stages of a drug’s journey, creating profit opportunities,⁤ experts say.

The Big Three PBMs ⁤claim they use their market ⁢power to lower drug prices for clients.

Antonio Ciaccia, president of 3 Axis Advisors, noted that the Big Three have been able to sidestep‍ previous attempts to change their business‍ model. He cited Ohio’s ‍2018 ban on spread ⁤pricing in its Medicaid program after the state discovered it overpaid PBMs by nearly $225⁤ million in one ⁣year.

Ciaccia said that ohio did not save money as‍ PBMs⁤ began ‍paying pharmacies beyond the contractually ‍agreed price and clawing back the difference afterward.

“What we’re talking about is essentially this: ⁤the nimbleness of the industry to ⁤pivot around policy reforms,” Ciaccia said.

Instead⁤ of targeting specific practices, ‍Congress ⁢and antitrust regulators should weaken⁣ the Big Three’s control by reversing years of integration that have ‍allowed PBMs to find arbitrage ⁣opportunities, speakers ⁤said.

Alejandro Molina, former White House policy advisor, suggested⁣ Washington follow Arkansas’ lead. In April, Arkansas passed a law preventing PBMs from owning pharmacies⁤ to ⁢protect autonomous pharmacies.

The law, which would force companies like CVS to divest either⁤ their PBM or pharmacy businesses, has faced legal challenges⁣ from the PBM industry.

Similar bills have been introduced in Vermont, Texas, and New York, according to the national community Pharmacists Association.

Some federal lawmakers also support breaking up PBMs. A bipartisan bill introduced in December‍ would force PBMs to sell their pharmacy businesses.

Experts said there ‍is a window for reform, given Congress’ attention and interest from the FTC and DOJ in cracking⁣ down on the Big Three’s actions.

The FTC is suing Caremark, Express Scripts, and Optum Rx for⁣ allegedly inflating insulin costs, while the DOJ is reportedly investigating ⁣UnitedHealth ⁣over antitrust concerns.

“I‍ think there’s a lot of opportunities,” said Charlie⁤ Katebi, deputy director for health at ‍the America First Policy‍ Institute.

Meaningful PBM reform⁣ at ⁤the federal ⁢level is ⁢uncertain. The House included PBM policies in its reconciliation bill, ⁤but the⁢ Senate removed them in its version.

Conor Sheehey,⁢ director at Leavitt Partners, said ⁢legislators are more likely to pass PBM reform in appropriations legislation later this year.

Rebates and ⁣Transparency

Panelists said some policies have merit even without breaking up the Big Three PBMs.The Trump administration signaled interest in reforming rebates that PBMs negotiate with pharmaceutical companies.

During the Trump administration, regulators ⁤attempted to require PBMs and insurers to pass through all rebates in Medicare’s prescription drug benefit⁤ to⁢ patients, but that rule has yet to be implemented.

CMS Administrator Dr. Mehmet Oz said pbms should voluntarily move away from the rebate system.

Experts cautioned that targeting rebates will not solve systemic issues.⁣ The Big three claim they already ‍pass‍ through‍ most savings to clients.

Research⁤ indicates that rebates no longer⁣ make up the majority of PBM profits; manufacturer fees and ‍specialty pharmacy dispensing are becoming more significant.

“As long as the ⁤Big Three PBMs⁤ have the covered lives‍ of their insured parents ‍they⁤ are going to⁣ find a way to influence formularies,reimbursements,networks in whatever configuration they want,” Molina said.

Sheehey said transitioning away from ‍compensation tied to drug prices ⁢may be beneficial.

In the absence of an overhaul,PBM transparency reform to shed ⁣light on contracting practices⁣ and pharmacy fees is a good starting point,panelists said.

The CMS is moving toward this, with Oz saying the agency could issue ⁢rules forcing payers to share more information on drug transactions⁢ this year.

As Washington steps in,lawmakers and regulators must consider the root problem to avoid creating new ones. Experts said regulatory scrutiny is one reason major pbms have spun off affiliated⁣ companies that live offshore, adding complexity.

“We need to⁣ realign incentives more structurally, and in any efforts to change transparency we need to be very careful that ⁤we are not ⁤basically emboldening the next layer of opacity, because the unfairness hides in the opacity of the system,” said Showalter.