The Department of Health and Human Services's (HHS) proposed rule to get rid of most pharmacy benefit managers (PBM) rebates and require the remaining rebates to be passed on to consumers is an excellent proposal to lower drug costs. However, it is incomplete since this rule will only apply to Medicare Part D and Medicaid, and not to the commercial health insurance market.
But in the last couple of weeks Senator Mike Braun (R-IN) introduced S. 657, the Drug Price Transparency Act, which would extend this rule to the commercial insurance market. It would prohibit PBMs from getting any rebates or price reductions from drug manufacturers and explicitly requires any rebates or price reductions to be reflected at the pharmacies for consumers. This bill would lower out of pocket prescription drug costs for consumers and make the drug market far more transparent. It is a good bill that should be passed into law.
The bill is cosponsored by Senator Marsha Blackburn (R-TN) and has been assigned to the Senate Committee on Health, Education, Labor, and Pensions (HELP). The Senate Finance Committee has held two hearings on the rising costs of prescription drugs and possible solutions, and the Senate HELP Committee will hopefully follow suit.
Before he came to the Senate, Braun spent many years as a business owner and had to fight with the health insurance industry in order to make sure his employees received adequate health insurance coverage. It was at the time that he became aware of PBMs and how they contribute to higher drug costs.
Health and Human Services is taking comments on their proposed rebate rule until April 8, 2019. HHS Secretary Alex Azar has spoken about the need to drastically reform the rebate system to end perverse incentives that increase drug prices, and he requested that Congress step in and take action. S. 657 is a welcome response to that request, and Senator Braun has been working with HHS to ensure the bill helps consumers. HHS's proposal to get rid of PBM rebates is great and will bring down the prices of medicines, but it only applies to Medicare and Medicaid. We hope that Congress will enact this bill as soon as possible, and that rebates that result in higher list prices and out of pocket costs will soon be a thing of the past.