Congressional momentum is building for comprehensive pharmacy benefit manager (PBM) regulation, with House Ways & Means Committee staff expressing optimism about passage in 2024. The legislation, which narrowly missed inclusion in last year's budget package, aims to fundamentally reshape how PBMs operate in the pharmaceutical supply chain.
Proposed Regulatory Framework
Preston Bell, professional staff member on the House Ways & Means Committee, emphasized the strong political will behind PBM reform during an American Enterprise Institute (AEI) event. The proposed legislation includes several key provisions:
- Mandatory disclosure of detailed drug spending data to group health plans
- 100% pass-through of drug rebates and discounts to employers/health plans
- Implementation of "reasonable" contract terms for Medicare Part D plans
- "Any willing pharmacy" provision for Medicare patient services
- Elimination of drug price-linked compensation for PBMs in Medicare
Market Challenges and Innovation Costs
Industry experts at the AEI event highlighted several systemic challenges in the current pharmaceutical market. Kirsten Axelsen, AEI nonresident fellow, pointed to the complex dynamics of pricing breakthrough treatments:
"If tomorrow we had three different new drugs that were really effective against Alzheimer's or Parkinson's disease, we know that would be good for society," Axelsen noted. "However, we don't know how much it would save, and the premiums would spike that year, and that would be seen as a crisis."
Prior Authorization Reform
The discussion also addressed concerns about prior authorization practices and their impact on patient care. Recent data from Iqvia revealed that many oncology patients fail to receive treatment due to prior authorization requirements. Axelsen advocated for a more nuanced approach:
"We need to be smarter about how these tools are used to control utilization," she emphasized. "When we do have utilization tools, they should not result in patients walking away without care - that's not prior authorization, that's care denial."
Short-term Insurance Dynamics
The current insurance market structure presents additional challenges for long-term patient care. Bell highlighted how insurers' short-term focus affects treatment decisions: "If you knew from age 21 that you were going to cover somebody with hepatitis C for 30 years, then yeah, that upfront investment in treating their hepatitis C and curing it makes a ton of sense. But if they're going to take that drug and move off your plan in a year, the risk adjustment changes."
Path Forward
Despite previous setbacks, including the last-minute removal of PBM provisions from the 2023 budget deal following intervention from key stakeholders, the political appetite for reform remains strong. The focus on transparency and fair market practices suggests a balanced approach to addressing both industry and consumer concerns.
