Senate committee passes PBM Reform Act

Committee procedures, however, prevented some amendments from moving forward.
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Francis Scialabba

· 3 min read

The Senate Health, Education, Labor, and Pensions (HELP) Committee advanced multiple bills aimed at increasing generic drug approvals and reforming pharmacy benefit managers (PBMs) on May 11 after the hearing was rescheduled earlier in the month over procedural disagreements. The markup comes the day after executives from top insulin makers and PBMs testified before the committee.

Many of the amendments to HELP Committee leaders Sens. Bernie Sanders and Bill Cassidy’s legislative package passed favorably, but this time procedural agreements kept some from moving forward. In an effort to push the package through Congress, Sanders told senators there will be more prescription drug markups in the future and tabled any amendments that would be “fatal to the bipartisan adoption” of the bills.

“We don’t have more years of hearings; it’s time to act. We don’t need to form another committee and pray about it,” Kansas Sen. Roger Marshall said.

Marshall, alongside Sens. Tim Kaine of Virginia and Mike Braun of Indiana, filed an amendment that would delink PBMs’ compensation from the cost of medications. For example, in a spread pricing model, PBMs receive a percentage of the rebates and fees attached to the list price they negotiate for the health plan, according to biopharma-focused Hayden Consulting Group.

This compensation model can incentivize higher list prices for PBMs, Marshall said.

“Delinking is the heart of the issue,” Marshall said. “We’re not saying PBMs can’t get paid; they just can’t get paid based off the value of someone else’s innovation risk.”

At the beginning of the session, however, Sanders and Cassidy said they agreed to table any amendments without a Congressional Budget Office (CBO) score, or cost estimate. Although Cassidy said that “moving toward a fee-based PBM system” is a priority of his, he could not support the amendment without a CBO score.

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Kentucky Sen. Rand Paul proposed amendments aimed at repealing the Robinson-Patman Act, a Depression-era antitrust law meant to prevent price discrimination.

“The rebate system isn’t a function of the marketplace. It’s a function of…this antitrust law. That’s why we have this bizarre, opaque thing that everybody complains about,” Paul said. “So instead of removing the primary cause, we want to add regulations to this which will further complicate it and may have unintended consequences.”

Sanders said that amending antitrust laws was outside the HELP Committee’s jurisdiction and ruled Paul’s amendment out of order.

Utah Sen. Mitt Romney offered an amendment that would compel PBMs to offer at least one non-spread pricing option for plans to choose from, instead of banning spread pricing entirely.

The controversy with spread pricing is that PBMs can charge health plans more for generic drugs than what they reimburse a pharmacy for them. “The PBMs then keep the difference,” according to The Commonwealth Fund, a nonprofit focused on health policy research.

Despite its having a CBO score, Sanders tabled the amendment without debate, saying it would be fatal to the bill’s passage in the Senate.

The PBM Reform Act passed in committee and included amendments to address step therapy, compel disclosures on PBMs’ drug price negotiations, and require drug manufacturers to provide justification before raising the medication price more than 10% in a year.

Next, the legislative package will move to the Senate floor for a vote.

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