Menendez delivers remarks on the need to reform the PBM industry

WASHINGTON, D.C. – U.S. Senator Bob Menendez (D-N.J.), a senior member of the U.S. Senate Committee on Finance, Wednesday delivered remarks during the markup of the Modernizing and Ensuring PBM Accountability (MEPA) Act.

This bipartisan legislation includes the Senator’s Patients Before Middlemen (PBM) Act which will eliminate the perverse incentives that Pharmacy Benefit Managers (PBMs) exploit to drive up the cost of prescription drugs.

“For too long, PBMs have held a vise grip over the prescription drug supply chain — price gouging hardworking families and seniors alike. Through the current incentive structure, whereby they turn a profit as a percentage of the list price of a prescription, PBMs wield their influence to have health insurers cover more and more expensive drugs — even when cheaper options are available,” Menendez said. “My Patients Before Middlemen Act, which I’ve introduced alongside Senators Blackburn, Wyden, Crapo, Marshall, and Tester, would replace the complicated scheme of opaque rebates and administrative charges with a flat fee — one that is negotiated before entering into a contract. By delinking PBM compensation from drug prices, we help lower prescription drug costs for Medicare Part D beneficiaries and better align incentives in the market. Our bipartisan Patients Before Middlemen (“PBM”) Act would curb the biggest abuses in the PBM industry today.”

The Modernizing and Ensuring PBM Accountability (MEPA) Act would modernize how pharmacy benefit managers interact with federal prescription drug programs to help lower costs for patients and taxpayers.

Specifically, the MEPA Act:

• Includes the PBM Act, which seeks to delink the compensation of PBMs from drug price and utilization in order to better align incentives that will help lower prescription drugs costs for Medicare Part D beneficiaries.
• Requires PBMs to report annually drug prices and other information to Part D plan sponsors and to the Department of Health and Human Services (HHS). PBMs would be required to include information related to several categories, such as information related to covered Part D drugs, drug dispensing, drug costs and pricing, generic and biosimilar formulary placement, PBM affiliates, and more.
• Requires HHS to institute standard Part D measures for assessing network pharmacy performance.
• Establishes a process by which Part D plan sponsors provide their network pharmacies with comprehensive information about pricing prescription drug claims to help increase predictability in pharmacy reimbursement.
• Bans PBM spread pricing in the Medicaid program.
• Requires participation by retail community pharmacies in the National Average Drug Acquisition Cost (NADAC) survey.
• Requires the HHS Office of Inspector General (OIG) to investigate the impact of vertical integration between Part D plans, PBMs, and pharmacies including effects on beneficiary out-of-pocket costs and spending under Medicare Part D.

During the Senate Finance Committee markup, Sen. Menendez successfully included the following amendments into the MEPA Act:

• To require PBMs and health plans to report the aggregate amount of all administrative fees the PBM receives from pharmaceutical manufacturers.
• To create an OIG report on biosimilar and generic drug access under Medicare Part D.