The Senate Finance Committee voted Wednesday nearly unanimously to pass legislation regulating pharmacy benefits managers, or PBMs, whom critics claim are the middlemen largely responsible for high prescription drug prices.
“Every single member of the committee has been working in a constructive way,” Chairman Ron Wyden (D-OR) said in his opening statement lauding the bipartisan effort.
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The Modernizing and Ensuring PBM Accountability Act, which passed committee 26-1, requires Medicare Part D insurance plans to have a written contract with PBMs to regulate pricing of prescriptions and increase transparency in pricing negotiations.
PBMs act as third-party administrators that negotiate drug prices between consumers and insurance companies. Critics argue, however, that there are perverse incentives for PBMs to negotiate higher prices for their benefit.
In response to these problems, the committee’s bill decouples the revenue stream of PBMs from the sticker price.
The bill also requires PBMs to report pricing data and processes to the Department of Health and Human Services for oversight. Under current law, PBMs participating in Medicare Part D submit data to HHS on a voluntary basis.
Sen. Ron Johnson (R-WI) was the only dissenting vote on the committee. He said there was already not enough free market competition in healthcare, which contributed to high prices across the system.
Sen. James Lankford (R-OK) noted that he is “not opposed to free markets. I am opposed to running my rural pharmacies out of business.”
PBMs are also accused of shutting smaller, independent pharmacies out of the market.
Sen. Elizabeth Warren (D-MA), who was not present at the mark-up on Wednesday, offered an amendment to the bill that would have required the large pharmacy chains, such as CVS, to separate from their vertically integrated PBMs. This controversial amendment was not debated during the committee meeting.
The House Oversight Committee in May held a panel hearing investigating the role of PBMs in the healthcare system, during which time they heard testimony from small pharmacists and price transparency advocates.
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Ranking member of the Finance Committee Mike Crapo (R-ID) praised Wednesday’s legislation as “common sense, market-driven, and fiscally responsible” and a “decisive first step to reducing costs.”
Both Republicans and Democrats in the Senate expressed interest in working with their House colleagues to get legislation on PBM regulation to President Joe Biden.