What’s next for PBM reform? Both sides make their case

The battle over PBM reform may have just be starting...

Advocates on both sides of the pharmacy benefit managers (PBMs) issue saw glimpses of victory during the recent year-end spending fight. PBM allies view them as critical in lowering costs of drugs, and opponents view them as shady middlemen that are responsible for a lack of price transparency in drug pricing. Both sides are aiming to claim both populist and Trump-y mantles as they gear for a potential rematch in the next Congress.

The PBMs scored a major victory when a series of proposed reforms were axed from the final bill; some of their advocates, like Ann Marie Buerkle, a former GOP congresswoman who served as chair of the Consumer Product Safety Commission in the first Trump term, told the Washington Reporter in an interview that including PBM reform in a continuing resolution would have been a rejection of the message that voters sent in electing President Donald Trump.

“The American people didn't ask for PBM reform,” Buerkle said. “The American people asked to get the economy back in order, to secure our border, and to make our country safe again. They want to deal with crime, and I think it would be misguided on the part of the Republicans to take this up when there are other priorities.”

Supporters of PBM reforms expressed disappointment the legislation was left out of the final package, with the National Community Pharmacist Association’s (NCPA) CEO Doug Huey saying that “this is a clear miss by Congress, and we are extremely disappointed. PBM reform would rein in the big health insurance lobby, save taxpayers $5 billion, and throw a lifeline to the thousands of small, family-owned pharmacies that are on the brink of closure.” NCPA had previously released statistics showing that one community pharmacist closes across the country per day due in part to issues related to the PBMs, including spread pricing.

Trump reiterated his opposition to PBMs during the government funding debate: “We have a thing called the middleman,” he said. “I don’t know who these middlemen are, but they are rich as hell. And we’re going to knock out the middlemen, we’re going to get drug costs down.”

Some who favor PBMs believe that Trump missed the mark with his criticisms. “Eliminating the middlemen was how Lenin thought he was going to save the Russian economy,” Ike Brannon, a senior fellow at the Jack Kemp Foundation, told the Reporter. “Like a lot of things these days this is a purely populist reflex that doesn’t fit neatly into a conservative/liberal or Republican/Democrat perspective. And like a lot of populist measures the advocates for PBM reform use rhetorical sleights of hand to advocate for a change that isn’t going to save any money. ‘Middlemen’ in this case are the main constraint on high pharmaceutical prices.”

Nevertheless, multiple PBM opponents described it as “ballgame” after Trump’s remarks, and yet the PBM reform that initially was in the bill was taken out. Some who worked on the legislation told the Reporter that they have no idea why it was removed.

Buerkle said it was unusual for PBM reform to have ever been in a continuing resolution to begin with. “Things like the congressional pay raise, being able to opt out of the Affordable Care Act for members, and then this PBM reform, are kind of things that are clandestine and are things that really should be discussed very openly.”

Buerkle noted that the “force, sway, and persuasion” of pharma remains a powerful opponent to PBMs. “The reason they don't like PBMs is because, if you look at this whole spectrum of drugs and how they get to the patient, the only thing standing in between pharma and the patient and or the health care plan is the PBM. By virtue of what they do, they negotiate that drug price for the health care plans.”

Members of both parties seem eager to get PBM reform passed next year. Rep. Andy Harris (R., Md.), a longtime doctor and current chair of the Freedom Caucus, told the Reporter that “price transparency is the most important thing you can have in a free market system.”

“The health care delivery system is the furthest from a free market delivery system you could possibly imagine where, if you go into a drugstore right now or pharmacy, there could be 100 different prices on the exact same prescription depending upon who's the carrier, what deal was made with what PBM on any given year,” Harris, a former co-chair of the GOP Doctors Caucus, added. “That's not a formula for an efficient system…We should have total price transparency on everything delivered in health care, just like we have it when we go to a Walmart or we go to a grocery store.”

Harris noted that his caucus has not taken a formal position on the matter; some members of it have been more willing to defend PBMs. While noting that PBMs “are not real popular,” Rep. Eric Burlison (R., Mo.) recently said, “ at the end of the day, somebody has to challenge big pharma.”

The question at hand is how to do it, policymakers told the Reporter. They see several competing plans from the last Congress that could provide roadmaps forward. One, the bipartisan Lower Costs, More Transparency Act, was approved by both leaders of the Energy and Commerce Committee last Congress. Another, the bipartisan Patients Before Monopolies (PBM) Act, was rolled out by Rep. Diana Harshbarger (R., Tenn.), Rep. Jake Auchincloss (D., Ma.), Sen. Elizabeth Warren (D., Ma.), and Sen. Josh Hawley (R., Mo.).

Hospitals, a top GOP aide told the Reporter, oppose site-neutral payment policies, and have been successful in getting several provisions for it removed. These policies “would require Medicare to pay the same rate for services delivered regardless of the care site,” the American Hospital Association says. “Medicare payment rates currently recognize fundamental differences between patient care in hospital outpatient departments compared to other settings.”

The Energy and Commerce Committee bill has more buy-in from industry, committee sources told to the Reporter. More action is expected early in the next Congress. Advocates like NCPA expect to continue to push for reform

“We strongly encourage our many champions in Congress to make PBM reform an immediate priority,” Huey said. “They should do this as soon as possible in 2025. More small pharmacies will close, pharmacy deserts will grow, drug prices will continue to spiral upward, and more patients will lose access to the prescriptions their doctor prescribed and to their most accessible health care provider, the local pharmacist.”