Earlier this week, the House of Representatives, in an encouraging step for consumers, unanimously passed a bipartisan bill to lower drug prices by regulating pharmacy benefit managers (PBMs) and bringing more transparency to the PBM market.
The Public Disclosure of Drug Discounts Act was sponsored by Democratic Representative Abigail Spanberger (VA-7) and it requires PBMs to report their aggregate rebates, discounts, and other price concessions for prescription drugs to a public website. PBMs serve as intermediaries between drug companies, health insurance companies, and pharmacies. They claim to be lowering drug prices but mounting evidence suggests they are increasing them because they have incentives to raise prices and choose more expensive drugs. And the PBM market lacks even the most basic transparency standards.
Three PBMs-CVS Caremark, Optum Rx, and Express Scripts-control almost 75% of the PBM market. In 2016 PBMs made $22.6 billion in gross profits. They are already required to report their aggregate rebates and discounts and other fees, but the data is not publicly available. This bill would change that and ensure that policymakers can see where the money is going, and to what extent PBMs are actually lowering drug costs.
In a speech on the House floor, Rep. Spanberger said that "by shedding light on the practices of PBMs, our bipartisan legislation would allow patients, physicians, and pharmacists to better understand the economic impacts of decisions made by PBMs. At a time when PBMs are raking in record profits, we need to make sure we have public information on-hand that can help us hold them accountable for potentially passing on price increases to America’s families and seniors."
This bill is similar to a bipartisan bill cosponsored by Senators Chuck Grassley (R-IA) and Ron Wyden (D-OR), which was approved by the Senate Finance Committee. Both bills are a step forward but they could be greatly improved. Aggregate PBM rebates and discounts are useful information, but for complete transparency, the rebates and discounts should be broken down and reported in greater detail. Nevertheless this is a good sign. The Senate should pass the House's bill and ensure that policymakers and ordinary people have access to information about the PBM market.