For community pharmacists who have been engaged in advocacy efforts at the federal level, this congressional session likely feels like a breakthrough moment. While have been some bright spots over the years, this just feels different.
The bills introduced, the hearings held, the attention of Committee leaders, and even the media attention all seem to point to a time of change. It is important here to note that this moment has not just “happened.” Rather, it is the result of years of effort from community pharmacists at the state and federal level with state pharmacy associations leading the charge in the states and NCPA spearheading efforts at the federal level. Over the last several years APhA has proved to be a powerful ally in the fight for PBM reform as have other groups including the Community Oncology Alliance. Of course, the work of 3 Axis Advisors has been a huge needle mover in terms of exposing the warped pricing incentives in the market and PBM pricing games. Others are also joining the fight and we anticipate the coalition supporting PBM reform to grow and this is a good thing because success against PBMs will require a team effort with strong coalitions.
In the business of advocacy and legislation, details matter and with so much activity, it is becoming harder and harder to keep up with legislation introduced and other developments.
And, so, in light of the flurry of activity and APCI’s commitment to advocacy on behalf of community pharmacy and its members, APCI will begin providing quarterly updates to its members on legislative and policy developments in D.C., as well as some other notable items of interest which may include information about agency developments, state developments, legal developments, and recent studies. We hope you enjoy, and, most importantly, we hope this inspires you to join the fight. If you would like you would like to be more involved in advocacy efforts at the state or federal level please reach out to APCI’s government affairs team.
APCI’s DC Advocacy Team at ArentFox Saw PBMs Coming
APCI’s GA team in DC proved to have their finger on the pulse, forecasting significant attention to the issue of PBMs. Members can read more about it here: https://ecomms.afslaw.com/rv/ff009e559f6ef7e651b6187d414cbbc59d76149f.
The GA team is continuing their focus and analysis with this Midyear Update on PBM Reform: https://www.afslaw.com/perspectives/alerts/midyear-update-pbm-reform
PBMs in the Hot Seat in the House
April and May proved to be a significant month on the PBM reform front in the U.S. House of Representatives with the U.S. Committee on Energy and Commerce Subcommittee on Health holding a hearing on PBMs and the broader Committee advancing legislation detailed below.
In addition, the House Committee on Oversight held a multi-hour meeting focused on PBM practices and featuring, among others, Florida Independent Pharmacist Kevin Duane who did an excellent job speaking up for community pharmacists and the patients they serve. For anyone interested in PBM reform, this hearing is a must watch: https://oversight.house.gov/hearing/the-role-of-pharmacy-benefit-managers-in-prescription-drug-markets-part-i-self-interest-or-health-care/.
Coming Soon: Senate Committee on Finance PBM Reform Legislation
APCI is anxiously awaiting the Senate Committee on Finance’s bipartisan PBM reform package which is expected to look to reform PBM practices in Medicare Part D. In April Committee leadership set forth a framework of policy solutions to address PBM abuses including delinking PBM compensation from drug prices to align incentives for lower costs, enhancing PBM accountability, ensuring discounts negotiated by PBMs produce meaningful savings for seniors, updating any willing pharmacy requirement to improve access for seniors, and increasing transparency. You can read the bipartisan framework here: https://www.finance.senate.gov/imo/media/doc/042023%20SFC%20Framework%20for%20Rx%20Supply%20Chain%20Modernization.pdf.
APCI Advocacy in Action
APCI and/or its lobbying team at ArentFox have been busy in 2023. Aside from significant work in the states, APCI has participated in more than 20 in-person meetings with U.S. Congressional Hill visits, has had the opportunity to offer substantive comments on several pieces of legislation in advance of their introduction and/or markups.
Many of the PBM bills APCI is following are summarized below (not an exhaustive list). While there are many pieces of legislation which APCI is strongly supporting, including Representative Carter’s Medicaid managed care bill, APCI is also advocating for legislation which removes the ability of PBMs to set pricing, create networks, and steer patients across large federal plans. This initiative includes reimbursing pharmacies at NADAC plus a fair dispensing fee not only in Medicare Part D but also in Tricare and Medicaid managed care.
While there is unprecedented momentum in terms of hearings and APCI is supportive of transparency reporting requirements, APCI also believes now is the time to push for meaningful reform in practices as well and will continue to advocate for the same.
APCI also remains engaged with the FTC on issues including vertical integration and PBM practices that APCI believes constitute unfair methods of competition.
APCI to Large PBM Investors: Join the Fight for PBM Reform
In a May letter to Vanguard, one of the largest investor’s in the Big 3 PBMS, APCI set forth problematic PBM practices centered around drug pricing, rebates, and patient steering, and called on Vanguard, as a large investor, to work to put a stop these practices. Read the APCI press release and letter here: https://finance.yahoo.com/news/apci-calls-major-institutional-investor-152400216.html.
You can also read PUTT’s coverage of APCI’s letter to Vanguard here: https://puttrx.medium.com/bravo-to-american-pharmacy-cooperative-inc-7d37daa50ef8.
FTC Keeps the Pressure on PBMs
In 2022 the FTC initiated a 6(b) study into a range of
practices employed by the six largest PBMs in the nation. While that study is ongoing, the FTC is ramping up the pressure by including three PBM owned/affiliated GPOs in the study and has issued compulsory orders for documents.
PBMs 101
APCI joined APhA and 3 Axis Advisors to help educate U.S. Congressional staffers on PBM practices.
46 Brooklyn Report: What Makes “Specialty Drugs” So Special?
In May, our friends at 46 Brooklyn released a bombshell report lifting the veil on how PBMs manipulate specialty drug pricing guarantees. The Report’s findings make a major dent in the PBM narrative of “specialty medications.” The Report can be found here: https://www.46(b)rooklyn.com/news/2023/5/10/new-report-reveals-how-pbms-distort-and-undermine-specialty-drug-pricing-guarantees.
Coming Soon: APCI-Sponsored 3 Axis Advisors Report – Made Up Pricing?
Those APCI members who attended the APCI Convention in March got a sneak peak at a soon to be released 3 Axis Advisor’s report sponsored by APCI. This report focuses on price disparities resulting from manipulations by PBMs and takes both a macro and micro view of these practices including highlighting examples of the same drug being priced wildly differently by the same PBM during the same relevant time period based on states and/or plan types. We expect that this Report will drive conversations and policy solutions at both the state and federal level once released.
APCI’s Bill Eley Recognized for His Contributions to Pharmacy
APCI’s Legislative Affairs Director Bill Eley was honored for his contributions to independent pharmacy at the Georgia Pharmacy Association’s 2023 Convention where he received the GPhA PharmPAC Lifetime Achievement Award. Congratulations, Bill and thank you to GPhA for recognizing his work and great contributions to the profession of pharmacy.
Change Starts with You
While it is important to have sound policy solutions and sophisticated advocates, the most important ingredient in PBM reform is the voice of independent pharmacists themselves. There are many examples of sweeping change in state law with those legislative initiatives born out of a single pharmacy visit. Bills have been freed from committees and signed by governors as a result of independent pharmacists answering calls to actions. At APCI we know that you are busy, laboring under extraordinary conditions, and that your time is at a premium. However, change cannot happen without you. Here are a few things you can do to help effect positive change in the fight against abusive PBM practices:
- Please be on the look-out for state and federal APCI calls to action and take action when asked.
- Invite a state or federal legislator to your pharmacy for a visit and share some of your experiences.
- File complaints with applicable regulatory agencies when you see violations of state law.
- Be on the look out for PBM abuses and share examples (redacted of PHI) with the APCI government affairs team as well as legislators.
- Let us know if you would like to get more engaged including offering testimony at state or federal hearings or arranging a visit to Congress members in DC.
Congressman Soto Visits APCI Board Member Eric Larson’s Pharmacy
U.S. Rep. Darren Soto (r) recently visited Eric Larson and his staff at Prescriptions Unlimited in St. Cloud, Fla., to discuss pharmacy issues.
Senate PBM Legislative Watch
S113: Prescription Pricing for the People Act
- Summary: The Senate kicked things off with the introduction of the Prescription Pricing for the People Act (S113) introduced by Senator Grassley (R) and the Pharmacy Benefit Manager Transparency Act (S127) introduced by Senator Maria Cantwell with each the primary cosponsor on the respective bills. S113 requires the Federal Trade Commission (FTC) to report about anticompetitive practices and other trends within the pharmaceutical supply chain that may impact the cost of prescription drugs. The bill contemplates the FTC completing the report within 1 year of enactment of the legislation and also requires a 180-day interim report. The report would be made to appropriate committees of congress. While the report would focus heavily on PBM practices it would not do so exclusively and would include some focus on PSAOs as well.
- Status: This bill was reported to the Senate with amendment by the Senate Judiciary Committee but has yet to receive a vote in the Senate.
- Comments: At its heart this is a transparency bill brought by one of pharmacy’s champions and APCI is supportive of transparency efforts. However, in light of the FTC’s pending 6(b) study which has a wider window than the relatively narrow 1 year contemplated in this bill, this is not one of APCI’s high priority bills. Interestingly, this bill is currently being supported by PCMA, the PBM trade organization.
S127: Pharmacy Benefit Manager Transparency Act (Sen. Cantwell)
- Summary: This bipartisan bill prohibits spread pricing, retroactive recoupment from pharmacies, and increase fees or lower reimbursements to pharmacies to offset reimbursement changes instructed by the federal government. However, it reopens the door to certain of these practices if a PBM passes back 100% of rebates to the payer and provides certain disclosures to payers focused around transparency reporting. It also requires certain transparency reporting to the FTC, provides significant enforcement powers, and preserves the ability of states to regulate PBMs.
- Status: This bill was heard by the full committee, markup was held and the bill was reported to the senate by the Committee on Commerce, Science, and Transportation. It has yet to receive a vote in the Senate.
- Comments: Putting an end to spread pricing, prohibiting retroactive fees, and increasing transparency are admirable and this is a bill that APCI strongly supports. There are certain exceptions but at the committee hearing the bill was amended to remove an exception in connection with the retroactive fee prohibition. This was a positive development.
S1038: Drug Price Transparency in Medicaid Act
- Summary: This is a companion bill to Rep. Carter’s bill. Please see below for summary and comments.
- Status: This bill was assigned to the Senate Finance Committee. A hearing has yet to be held.
S1269: The Insulin Act of 2023 (Sen. Shaheen)
- Summary: This bill, amongst other things, caps insulin cost sharing in the commercial market. In addition, it requires PBMs to pass 100% of rebates to the applicable group health plan.
- Status: Assigned to Senate HELP Committee.
- Comments: This bill is narrow in scope but appears to build on actions taken in 2023 to cap insulin cost shares in Part D. Insulin continues to get significant attention in light of rising list prices and games played by PBMs.
S1217: Ending the Prescription Drug Kickback Act (Sen. Hawley)
- Summary: This bill prohibits distribution and receipt of rebates for prescription drugs paid by drug manufacturers to PBMs and payors. It does so via an outright prohibition for commercial insurance plans and ERISA plans and via excluding prescription drug rebates paid by manufacturers to PBMs and payors for federal plans.
- Status: Assigned to Senate Committee on Health, Education, Labor, and Pensions.
- Comments: So far this bill does not appear to have traction. While not identical, it is similar in concept to the Trump Executive Order on drug maker rebates which was disfavored by democrats and used to offset spending in several legislative packages.
S1339: Pharmacy Benefit Manager Reform Act (Sen. Sanders)
- Summary: This is a sweeping piece of bipartisan PBM legislation championed by Senator Bernie Sanders and Republican Senator Bill Cassidy. This bill contains significant transparency reporting requirements, bans spread pricing, requires rebates to be passed through to plan sponsors, and prohibits PBM clawbacks.
- Status: This bill was advanced by the Senate HELP Committee via amendment
- Comments: While this bill would act on PBMs in the commercial market, it does not contain language preserving states ability to regulate PBMs in the commercial and self-funded markets. Without such language it is likely PBMs would argue this legislation reshuffles the deck in terms of ERISA preemption. Without language protecting the ability of states to regulate PBMs in the fully insured and self-insured markets, APCI is not in support of this legislation.
S1542: Delinking Revenue from Unfair Gouging Act (Sen. Marshall)
- Summary: This bill provides that a PBM may charge a flat fee for their services but prohibits a PBM from engaging in spread pricing, reimbursing a network pharmacy less than it reimburses an affiliate pharmacy, and from steering. This bill provides for steep civil penalties for violations.
- Status: Assigned to Senate HELP Committee.
- Comments: This legislation is aggressive on the issues of delinking and steering which is a good thing. However, while this bill would act on PBMs in the commercial market, it does not contain language preserving a state’s ability to regulate PBMs in the commercial and self-funded markets. Without such language it is likely PBMs would argue this legislation reshuffles the deck in terms of ERISA preemption.
S1543: PBM Disclosure (Sen. Marshall)
- Summary: This bill calls on the Secretary of Labor to promulgate regulations clarifying ERISA reporting requirements for PBMs and brokers regarding disclosure of direct and indirect compensation and provides that a PBM may charge a flat fee for their services but prohibits a PBM from engaging in spread pricing, reimbursing a network pharmacy less than it reimburses an affiliate pharmacy, and from steering. This bill provides for steep civil penalties for violations.
- Status: Assigned to Senate HELP Committee.
- Comments: This legislation is narrow in scope focusing solely on reporting of direct and indirect compensation. However, while this bill would act on PBMs in the commercial market, it does not contain language preserving a state’s ability to regulate PBMs in the commercial and self-funded markets. Without such language it is likely PBMs would argue this legislation reshuffles the deck in terms of ERISA preemption.
S1697: Patients Before Middlemen Act (Sen. Menendez)
- Summary: This bill prohibits PBM compensation based on the price of a drug and requires compensation would be limited to a flat fee for their services provided in connection with benefit administration in Medicare Part D.
- Status: Referred to Senate Finance Committee
- Comments: This bill is likely to be included in a bigger PBM reform package introduced by Senate Finance Committee leadership pursuant to the framework they set forth which was discussed above.
S2052: Protect Patient Access to Pharmacies Act (Sen Tester)
- Summary: This bill addresses Medicare Part D and, amongst other things, tasks the Secretary with requiring total payments to a pharmacy for covered Part D drug cover the pharmacies net costs to acquire and dispense the drug. It tasks the Secretary with utilizing NADAC in carrying out the net cost requirement. It also tasks the Secretary with establishing an appeal process for pharmacies to appeal reimbursements when reimbursed below their net costs. This legislation also tackles performance measures in Part D tasking the Secretary with evaluating the use and implementation of performance measures and requiring PDP sponsors with implementing standardized performance measures by January 2025. It also requires that on and after January 2025, pharmacies receive all pricing components related to a claim submitted for payment.
- Status: Assigned to Senate Finance.
- Comments: This bill's obvious positives include that it looks to ensure pharmacies are not under-reimbursed in Medicare Part D and that pharmacies are provided with all pricing components when a claim is submitted which should prevent surprises. However, APCI believes that the price of a drug should not be tied to patient outcomes, scores, or metrics. Rather, pharmacies should be reimbursed a fair price for the drug and a fair dispensing fee and should be paid for providing patient care independently of the price of the drug and the cost to dispense. Nonetheless, APCI is in support of this legislation and will work to advance and improve the bill.
U.S. House PBM Legislative Watch
HR1613: Drug Price Transparency in Medicaid Act (Rep. Carter)
- Summary: Introduced by pharmacy champion Representative Buddy Carter this bill looks to reform Medicaid managed care by requiring that pharmacies be reimbursed utilizing NADAC plus a fair dispensing fee based on the applicable state survey. In addition, this bill strengthens NADAC by requiring pharmacies to respond to the survey.
- Status: This bill was assigned to the House Committee on Energy and Commerce and was included via amendment in HR 3281 as part of a larger package. While this bill as a standalone will be stagnant, it lives on through HR 3281.
- Comments: APCI strongly supports this bill as it represents true reform to the country’s broken Medicaid managed care system.
HR2679: Pharmacy Benefit Manager Sunshine and Accountability Act (Rep. McLane-Kuster)
- Summary: This bill requires insurers/PBMs to provide reports no less than annually to plan sponsors. These reports must have certain information reported including but not limited, gross spend for drugs under a plan, net spend for drugs under a plan, rebate assistance received from drug makers under a plan, and total out of pocket spending by beneficiaries.
- Status: Referred to multiple committees including House Committee on Ways and Means and House Committee on Energy and Commerce. The House Energy and Commerce Committee included it via amendment in HR 3281 as part of a larger package. While this bill as a standalone will be stagnant, it lives on through HR 3281.
- Comments: This is a fairly standard transparency bill and one which APCI supports.
HR2816: Pharmacy Benefit Manager Sunshine and Accountability Act (Rep. Harshbarger)
- Summary: Introduced by pharmacy’s own Representative Harshbarger, this legislation deepens existing PBM reporting requirements and expands that reporting beyond simply in Medicare to virtually all insurance markets. The reporting is fairly robust and requires reporting to include aggregate dollar amounts of all rebates the PBM receives from drug manufacturers, aggregate amount of all administrative fees that the PBM receives from drug manufacturers, aggregate amount of all administrative fees that the PBM receives from health insurers or plan sponsors, aggregate dollar amount of all administrative fees that the PBM receives but does not pass through, and total post-claim adjudication payments that a PBM extracts from pharmacies.
- Status: Assigned to Energy and Commerce and Ways and Means.
- Comments: As far as transparency reporting goes, this bill is important as it both expands markets reported and what must be reported by PBMs. APCI is in strong support of this legislation.
HR2880: Protecting Patients Against PBM Abuses Act (Rep. Carter)
- Summary: This bill, introduced by Representative Carter establishes certain requirements for PBMs administering prescription drug benefits in Medicare Part D with a goal of removing certain conflicts of interest. This bill requires that PBMs in Part D (1) derive no income in connection with covered Part D drugs other than flat service fees; (2) cannot make fees contingent on drug price or discounts, rebates, fees, or other remuneration; (3) cannot charge a plan sponsor more for a drug than what a pharmacy is reimbursed; and (4) cannot reimburse a pharmacy less than it would reimburse an affiliate pharmacy for a drug.
- Status: Assigned to Energy and Commerce and Ways and Means
- Comments: This bill goes beyond mere transparency and actually prohibits certain practices by PBMs operating within Medicare Part D and seeks to remove conflicts of interest. APCI is in strong support of this legislation.
HR3281: To promote hospital and insurer price transparency
- Summary: Now a sweeping healthcare bill that has seen the language of 10 separate bills rolled into this piece of legislation. Included in this bill now is language from Representative Carter’s Drug Price Transparency in Medicaid Act and Representative McLane-Kustor’s Pharmacy Benefit Manager Sunshine and Accountability Act.
- Status: Advanced by Energy and Commerce via Amendment.
- Comments: There is now much in this bill to advance transparency in connection with prescription drug pricing and, as a vehicle for Representative Carter’s Medicaid bill language, represents and chance to truly reform this nation’s broken Medicaid managed care program.
HR3285: Patient protections with respect to highly rebated drugs (Rep Griffith)
- Summary: This bill establishes cost-sharing limits for highly rebated drugs which is defined as a drug for which all rebates and remuneration exceeds 50% of total annual spending across all commercial markets. Beginning January 1, 2025 this bill requires commercial health plans and PBMs to cap patient cost-sharing for highly rebated drugs at the net price paid by the plan. The bill would also require plans and PBMs to pass through discounts to patients for newly covered drugs with the exception of a service fee paid by the manufacturer.
- Status: Advanced by Energy and Commerce.
- Comments: This bill takes a material step towards patient copays being based on net prices as opposed to gross prices. This is important as lower costs at the counter increase adherence and outcomes. APCI is in support of this legislation.
HR 3561: Patient Act (Rep. McMorris Rodgers)
- Summary: This bill, amongst other things, via amendment requires cost sharing limits for highly rebatable drugs (drugs where all rebates and remuneration exceed 50% of total annual spending for such drugs). It would also require plans and PBMs to pass along discounts for newly covered drugs. It also implements transparency reporting requirements in connection with PBMs. It also looks to strengthen NADAC.
- Status: Advanced by Energy and Commerce Committee via amendment.
- Comments: This bill is focused on saving beneficiaries money at the counter via cost sharing limits and sharing discounts as well as increasing transparency. While this bill would not end PBM games, it would save beneficiaries money at the pharmacy counter and increase transparency. It acts in several markets including not only governmental plans but also the self-funded market and so preemption concerns exist.