Senate chair wants to see PBM reform bill passed this year

The chairman of the Senate Finance Committee doubled down on his commitment to have a pharmacy benefit manager reform bill passed during Congress’ lame duck session later this year.

At a committee hearing Tuesday, Sen. Ron Wyden, D-Ore., said, “I'm going to do everything I can to get PBM cost containment on medicine. It's good for seniors, good for taxpayers. This committee has shown a lot of support for it and we’re going to do everything we can to get back to some kind of common-sense principles with respect to cost containment.

“This is going to save money for seniors and it's going to save money for taxpayers. I believe that if we get it through in the lame duck session, President Biden will sign it.”

Sen. Chuck Grassley, R-Iowa, another finance committee member, said, “We know PBMs are getting away with shady anti-competitive practices that are costing patients more and taking a toll on rural drug stores.”

Proposed reforms include requiring extensive disclosure of business practices to plan sponsors and the government; a ban on “spread pricing;” 100% pass-through of rebates, fees and discounts to plan sponsors; and requirements for PBM and third-party administrators to disclose direct and indirect compensation to plan fiduciaries.

The comments on PBM reform came during a committee hearing on whether the Inflation Reduction Act has lowered health care costs for Americans. Witnesses at the hearing gave mixed reviews on how the law has affected costs. The two main points of contention concerned the cost of Medicare Part D prescription drugs and enhanced tax credits enabling more Americans to purchase health insurance through the Affordable Care Act marketplace.

Congress must act to extend the enhanced tax credits, which are due to expire in 2025, Wyden said.

“I'm all in to extend these credits to help millions of working families make sure that they don't see a premium increase that would be coming up soon. Why in the world would we say we're not going to do something for working families who are getting hit with another round of premium increases?”

But Sen. Mike Crapo, R-Idaho, ranking Republican on the committee, disagreed with Wyden’s views on the tax credits.

“By doubling down on the costly and inflationary enhanced premium tax credits, the IRA uses hardworking taxpayer funds to camouflage the ongoing flaws with the individual health insurance market. The Congressional Budget Office notes permanently extending these enhanced subsidies, which have contributed to growing waste, fraud and abuse, would increase the deficit by over $325 billion in 10 years. Instead of perpetuating a tax and spend agenda, we can and should work together to improve health care, choice, affordability and reliability.”

Price controls put access at risk

The IRA gave the Centers for Medicare and Medicaid Services the ability to negotiate prices for the most expensive prescription drugs covered by Medicare Part D. Earlier this year, CMS announced the first 10 drugs whose prices are subject to negotiation.

This ability to negotiate prescription drug prices “puts clinical development for new and existing medicines and affordable access to medicine at risk,” said Kirsten Axelsen, nonresident fellow at the American Enterprise Institute. She told the committee that many of those 10 drugs “will cost seniors exactly the same, with or without price controls.”

She cited a survey that showed health care payers who sponsor Part D drug plans say the Inflation Reduction Act will lead them to have more restrictive formularies. “Cost control is important, but it can be done better than it is being done with the Inflation Reduction Act,” she said.

Increasing seniors’ access

The Medicare reforms included in the Inflation Reduction Act “should increase seniors' access to needed medicines and consequently contribute to better health,” said Rena Conti, dean’s research scholar and associate professor, markets, public policy and law, at Boston University.

“These reforms also support innovation in a number of ways. First, by expanding the use of drugs, greater profits in the industry should follow. Second, by creating stronger incentives for long-lived brand drugs to go generic,” she said.

“IRA reforms are bringing more affordability, more transparency, more competition and even more innovation to Americans,” she said.

Hiding the true cost of ACA plans

The enhanced tax credits enabling more Americans to purchase ACA coverage “has resulted in an expensive Affordable Care Act … and will undermine the quality and value of health care in the long run,” said Theo Merkel, senior research fellow at the Paragon Health Institute.

He cited a Paragon Health paper that assessed the change in the value of ACA plans, looking at the broadness of networks, associated cost sharing and premiums. “All have steadily become worse over time,” he said.

“New enrollment has been driven by people that now pay $0 in premium for a standard plan under the IRA enhancements,” Merkel said. “More than half of enrollees in some states fall into this category.”

Merkel contended that instead of trying to increase the value of ACA health plans, “the IRA simply gives away the same plans completely paid for by the taxpayer.

“In fact, almost no one is willing to pay the full cost of an ACA plan these days without a government subsidy.”

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Susan Rupe is editor in chief, magazine, for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected].