In the same week President-elect Donald Trump said he wanted to “knock out the middleman,” the Republican-led U.S. House of Representatives failed to include reforms to pharmacy benefit managers, or PBMs in a key funding bill.
The House, which is controlled by Republicans, stripped language from legislation attached to a bill designed to fund the government that would increase regulation of PBMs, which are considered middlemen between drug companies and consumers when it comes to purchasing medicines, administer drug benefits for employers and government health insurance including Medicaid coverage for poor Americans and Medicare benefits for seniors.
In these roles, PBMs also decide what pharmacists and pharmacies are paid to dispense prescription medications. And pharmacies are closing across the country in recent years which their owners blame in part on a reimbursement squeeze from the PBMs that pay them.
PBMs have come under fire in recent years as the public, taxpayers and Congress question whether they are passing along as much savings as they should to health plan enrollees. The noise about coming regulation of PBMs and the companies that own them got even louder when Trump earlier this week said “we’re going to knock out the middleman” in reference to these companies.
“The horrible middleman that makes more money, frankly, than the drug companies, and they don’t do anything except they’re a middleman,” Trump said earlier this week. “I don’t know who these middlemen are, but they are rich.”
Included in a so-called “continuing resolution” before it was stripped late this week was a “provision that would require PBMs to reimburse pharmacies at (National Average Drug Acquisition Cost) plus the state’s fee for service dispensing fee for all Medicaid managed care programs in all 50 states,” the National Community Pharmacists Association, which represents more than 18,900 pharmacies, said. “It would eliminate spread pricing and pay PBMs a flat administrative fee in all Medicaid managed care programs. The provision will save taxpayers approximately $1 billion over the next 10 years.”
What’s more, the pharmacy lobby said the legislation would have required the Centers for Medicare & Medicaid Services “to establish reasonable and relevant contract terms, including pharmacy reimbursements, in Medicare Part D and create a mechanism for pharmacies to dispute contract violations and penalize PBMs.”
But Democrats blamed Republicans and a cozy relationship they say they have with PBMs as well as health insurers as the reason the PBM reforms were taken out of the legislation. Three of the largest PBMs are owned by UnitedHealth Group, CVS Health and Cigna, which also operate health insurance companies.
“A CR that includes health provisions but excludes bipartisan PBM reform is an embarrassing capitulation to the health insurance lobby,” U.S. Rep. Jake Auchincloss, a Massachusetts Democrat, said in a post on X Thursday afternoon. “GOP leadership just backed down from the fight to lower Rx drug costs.”
