Capito sponsors bill to regulate pharmacy benefit managers

A bill was recently introduced in Congress that would limit the ability of pharmacy benefit managers to ask for additional prescription fees from pharmacists long after the point-of-sale transaction.

The Protect Patient Access to Pharmacies Act would ensure that all pharmacy price concessions are assessed at the point-of-sale and eliminate the retroactive nature of direct and indirect remuneration “claw-back” fees imposed by pharmacy benefit managers, according to a statement released Thursday by U.S. Sen. Shelley Moore Capito, R-W.Va., one of the bill’s sponsors.

The Centers for Medicare and Medicaid Services estimates this change will save Medicare beneficiaries an estimated $7.1 to $9.2 billion in reduced cost sharing, according to Capito.

Pharmacy benefit managers (PBMs) are companies that act as third-party administrators of prescription drug programs for commercial health plans, self-insured employer plans, Medicare Part D plans, the Federal Employees Health Benefits Program, and state government employee plans like the Public Employees Insurance Agency.

In recent years, pharmacy benefit managers have increasingly returned to pharmacies days or even weeks after the point-of-sale to demand more in direct and indirect remuneration fees, according to Capito. From 2010 to 2019, the Centers for Medicare and Medicaid Services documented a 91,500% increase in direct and indirect remuneration fees paid by pharmacies.

“Pharmacists, including those in our small towns and rural areas, play a vital role in keeping our communities healthy,” Capito said in a released statement. “I’m proud to join my colleagues in introducing the Protect Patient Access to Pharmacies Act, which will help ensure pharmacies remain open and our Medicare patients will continue to have access to the medications and information they need from those they trust.”

Representatives of the state’s independent pharmacies brought their concerns to state lawmakers in interim committee meetings in April and May, saying that smaller pharmacies are being pushed to the point of closure by the practices of pharmacy benefit managers operating in the state.

The West Virginia Independent Pharmacy Association represents 100 of the state’s 200 independent pharmacies and, since the organization’s inception in 2016, has been working on issues related to pharmacy benefit managers, Director Matt Walker said in testimony in May before the Joint Standing Committee on Insurance and PEIA.

Walker said the state’s pharmacies are reimbursed well below cost for more than 95% of name-brand prescriptions, often obliterating any profits they make filling generic prescriptions.

“You fill one bad brand prescription and ... you’re underwater for the entire day. That’s just not something that’s sustainable,” Walker said.

In December 2022, Kroger Pharmacies announced it would no longer work with Express Scripts, the pharmacy benefit manager the state uses to manage prescription benefits for PEIA. As a result, those with PEIA plans are no longer covered at the store’s pharmacy locations.

The move cost Kroger $100 million in monthly income, Walker said.

“That doesn’t just happen, right? A business doesn’t just give up that kind of revenue unless they’re being seriously, seriously mistreated or underpaid,” Walker told lawmakers. “I feel like West Virginia independent pharmacies are next to go off the cliff.”

On Thursday, Walker said he is in favor of any oversight that increases the transparency of pharmacy benefit managers.

“The steering of patients away from an independent pharmacy to a PBM-owned or affiliated pharmacy is always a concern. When you’re talking about PBMs, whether it’s through fees or reimbursement or other issues, the problem is one and the same,” Walker said. “It’s dollars being pickpocketed away from our local pharmacies.”

Several pharmacy organizations, including the National Association of Chain Drug Stores, the National Community Pharmacists Association, the National Association of Specialty Pharmacy, the National Grocers Association, FMI — The Food Industry Association and the American Pharmacists Association released a statement in response to the bill’s introduction.

According to the statement, the bill would help preserve Medicare beneficiaries’ access to their pharmacy of choice and help stop “pharmaceutical benefit manipulation” that harms patients and pharmacies alike. These fees would be impossible to bear for any business and put pharmacy access in peril in all areas.

“For more than a decade, these tactics have fueled their profits while inflating seniors’ out-of-pocket prescription drug costs, threatening the viability of pharmacies of all sizes and types and undermining the Medicare program,” the organizations wrote in their statement.

In a separate statement, National Association of Chain Drug Stores President and CEO Steve Anderson said ending “fee abuses” is essential to improving patient pharmacy access, lowering drug prices and to preventing “the baffling expectation that pharmacies fill prescriptions at a loss while PBMs manipulate the Part D program to boost their profits at the expense of seniors.”

The National Association of Chain Drug Stores represents regional pharmacies with as few as four stores as well as national pharmacies.

In addition to Capito, other sponsors of the bill included Sens. Jon Tester, D-Mont., Sherrod Brown, D-Ohio, and James Lankford, R-Okla.