U.S. Congress Drops PBM Reform from Year-End Funding Package Despite Bipartisan Support

Key Insights

• Critical pharmacy benefit manager (PBM) reform legislation, including bans on spread pricing and fee restructuring, was removed from the U.S. Congress' end-of-year funding bill despite broad bipartisan support.
• The Federal Trade Commission's recent report highlighted how anticompetitive PBM practices have increased prescription drug costs, with six major players dominating the market at the expense of patients and independent pharmacies.
• The National Community Pharmacists Association criticized the decision, stating the reforms could have saved taxpayers $5 billion and supported struggling independent pharmacies.

President Biden has signed into law a three-month federal funding package that notably excludes previously agreed-upon reforms to regulate pharmacy benefit managers (PBMs), despite widespread support across party lines.

The last-minute budget agreement, which averted a government shutdown that would have left federal employees without pay, shed several key healthcare initiatives in the process. Among the casualties were proposed strict controls over the PBM sector that had garnered support from both major political parties.

Proposed PBM Reforms Left Behind

The dropped reforms included two significant measures aimed at increasing transparency and fairness in prescription drug pricing. First was a ban on spread pricing, where PBMs charge health plans more for medications than they reimburse to pharmacies. Second was a proposal to delink PBM compensation from drug list prices, instead basing their fees on actual services provided.

These changes were designed to eliminate incentives for PBMs to favor higher-priced medications that generate larger rebates and fees, rather than selecting lower-cost alternatives that could benefit patients financially.

Industry Impact and Reactions

Douglas Hoey, CEO of the National Community Pharmacists Association (NCPA), expressed strong disappointment, characterizing the decision as a "missed opportunity." According to NCPA, the reforms would have:

• Generated $5 billion in taxpayer savings
• Protected thousands of small, independent pharmacies from closure
• Curtailed the influence of large insurance companies and PBMs

The Federal Trade Commission's recent market analysis revealed concerning practices within the PBM sector. Their report identified that the market's concentration among six major PBM players has led to:

• Increased prescription drug costs for patients
• "Confusing, unfair, arbitrary, and harmful" contractual terms for independent pharmacists
• Profit generation at the expense of patient care

Industry Defense and Future Outlook

The Pharmaceutical Care Management Association (PCMA), representing PBM interests, opposed the reforms, arguing that including "costly, unvetted healthcare provisions" would harm employers, patients, families, and taxpayers.

Despite this setback, the strong bipartisan support for PBM reform suggests these measures are likely to resurface in future legislative sessions. Both current President Biden and President-Elect Trump have previously endorsed such reforms, indicating continued political momentum for PBM regulation in the coming year.