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Legislation Introduced to Break Up Pharmacy Benefit Managers
A bipartisan coalition of lawmakers has taken a significant step towards regulating the increasingly scrutinized role of pharmacy benefit managers (PBMs) in the healthcare industry. The proposed legislation aims to dismantle the entangled interests of insurance companies and their associated pharmacy operations, reflecting growing concerns over the influence of PBMs on drug pricing and patient access to medications.
Senators Elizabeth Warren (D-Mass.) and Josh Hawley (R-Mo.) are spearheading a bill in the Senate that would mandate the separation of PBMs from pharmacies owned by their parent companies. Under this bill, such companies would be required to divest from their pharmacy businesses within a three-year timeframe.
The lawmakers described the current scenario as a “gross conflict of interest,” arguing that these practices allow corporations to profit at the expense of patient care and the viability of independent pharmacies.
In a parallel initiative, Representatives Diana Harshbarger (R-Tenn.) and Jake Auchincloss (D-Mass.) are leading a corresponding measure in the House of Representatives.
PBMs are facing heightened scrutiny as lawmakers and regulatory bodies investigate claims that they operate under incentives that exacerbate drug costs. Warren emphasized, “PBMs have manipulated the market to enrich themselves — hiking up drug costs, cheating employers, and driving small pharmacies out of business.”
These entities play a critical role in the healthcare system by negotiating drug prices for millions of Americans, managing payments to pharmacies, and establishing formularies that dictate medication access and pricing structures. Nonetheless, as the industry has consolidated, concerns have escalated over the extent of PBMs’ control over drug distribution and access.
The leading PBMs—CVS Health’s Caremark, Cigna’s Express Scripts, and UnitedHealth Group’s OptumRx—are integrated within larger insurance conglomerates that also own various types of pharmacies. Critics argue that this vertical integration further exacerbates issues of access and cost.
A report by the Federal Trade Commission (FTC) has highlighted troubling practices among PBMs, such as imposing restrictions that hinder access to more affordable meds and inflating prices for critical treatments like cancer drugs. A similar investigation by House Republicans echoed these findings and also noted that some PBMs financially incentivize patients to use specific pharmacies affiliated with the PBM, effectively steering them away from independent options.
Hawley remarked, “The insurance monopolies are ruining American health care. Patients and independent pharmacies are paying the price.” He expressed that the proposed legislation would curtail the growing dominance of these entities in healthcare and alleviate rising costs for American families.
While it may be too late in the legislative session for this bill to progress immediately, the bipartisan effort signals a commitment to reforming PBM practices in the future. Additionally, President-elect Trump has voiced support for initiatives aimed at curbing the business practices of PBMs.
Efforts are also underway to include provisions in the upcoming year-end spending bill that would modify how PBMs are compensated, potentially removing incentives to prioritize higher-cost drugs.
Last summer, Harshbarger and Auchincloss collaborated on legislation addressing PBM practices that direct patients toward preferred pharmacies. However, the current legislation represents the most comprehensive attempt thus far to regulate the industry.
Source
thehill.com