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Menendez joins with Sugarman’s owners, NJ citizen action and Medicare beneficiary to highlight efforts to reform PBMs

Pharmacy Benefit Managers (PBMs) currently stand in the way of lower prescription drug prices due to price-based compensation that rewards price gouging

WASHINGTON, D.C. – U.S. Senator Bob Menendez (D-N.J.) joined with Sugarman’s Drug Store Owners, New Jersey Citizen Action Network Health Care Program Director, Laura Waddell, and Medicare beneficiary, Doreen Monks, Tuesday to highlight the impact his Patients Before Middlemen (PBM) Act will have on the lives of patients, particularly seniors on Medicare D.

The Senator highlighted how his bill will help address the perverse incentives PBMs rely on, which drive up the cost of prescription drugs.

Sens. Menendez and Marsha Blackburn (R-Tenn.), alongside Senate Finance Chairman Ron Wyden (D-Ore.), Senate Finance Ranking Member Mike Crapo (R-Idaho), Senator Jon Tester (D-Mont.), and Senator Roger Marshall (R-Kan.) introduced this bill in June. The bill is the central piece of a PBM reform legislative package the U.S. Senate Finance Committee will be marking up tomorrow.

“In their role as middlemen, PBMs have a vise grip on our drug supply chain, creating warped incentives that jack up costs for patients at the pharmacy counter,” Menendez said. “I’ve introduced legislation, the Patients Before Middlemen Act, that would curb some of the biggest abuses that PBMs engage in. My bill would simplify and reform the current system, delinking PBM compensation from drug prices in order to drive down costs for seniors on Medicare.”

“Here at Sugarman’s Pharmacy we are pleased and honored to join Senator Menendez and Mayor and State Senator Stack to help bring awareness to this extremely important issue that many people have struggled with. We hope that through their diligent efforts there is positive change on the horizon for providing affordable medicine for all individuals most affected and most in need,” said Gabriela Bernat and Vanessa Rodriguez, co-owners of Sugarman’s Drug Store.

“More than 5 million Medicare Beneficiaries struggle to afford their prescription medications and in New Jersey, 1 in 4 adults report not filling a prescription, cutting a dose in half, or skipping a dose to make their medication last longer. Legislation like Senator Menendez’ Patients Before Middlemen Act, aims to address some of the prescription drug affordability burdens in the lives of our seniors by establishing new Part D requirements for Pharmacy Benefit Managers. This is a step in the right direction, especially as we approach the 58th anniversary of Medicare/Medicaid, and we look forward to continuing to work together on improving affordability in health care for everyone,” said Laura Waddell, Health Care Program Director.

“So much of being a senior citizen is focusing so much time and worry over finances.  Dealing with chronic health issues and the medications that accompany them is a continual source of concern,” said Doreen Monks, Medicare Part D Beneficiary.

PBMs are third-party intermediaries that manage prescription drug benefits and pharmacy networks on behalf of health plans, including Medicare Part D plans. PBMs perform multiple functions including determining which medications will be covered by health insurance plans and how much patients will pay.

The PBM industry was created to assist employers with managing overall prescription drug costs and benefits; however, the current system incentivizes PBMs to steer health plans and seniors towards more expensive prescription drugs. Currently, PBMs’ income is often linked to the price of a drug. By tying administrative fees, rebate-based compensation, and other payments to a percentage of the list price, current arrangements incentivize increases in sticker prices, harming patients at the pharmacy counter.

The Senate Finance Committee’s 2021 report on insulin arrangements between PBMs and manufacturers uncovered evidence suggesting that insulin manufacturers raised list prices in tandem with competitors to maintain formulary placements with PBMs. Evidence also showed that some manufacturers debated decreasing their insulin list prices, but appeared to conclude that doing so would put them at a competitive disadvantage because lowering price would also lower amounts paid to PBMs.

 The PBM Act would:

  • Prohibit PBM compensation based on the price of a drug as a condition of entering into a contract with a Medicare Part D plan. Service fees will not be connected to the price of a drug, discounts, rebates, or other fees.
  • Create an enforcement mechanism requiring PBMs to pay to the Secretary any amount in excess of the designated service fees.
  • This April, Sens. Wyden and Crapo released a legislative framework to address PBMs and issues with the prescription drug supply chain. This framework aims to modernize and enhance federal prescription drug programs, with the goal of reducing drug costs for patients and taxpayers. Sens. Menendez and Blackburn have worked diligently to ensure their PBM Act is the marquee piece of any Senate Finance Committee effort to address the high costs of medications and the supply chain issues for prescription drugs.

Jay Edwards

Born and raised in Northwest NJ, Jay has a degree in Communications and has had a life-long interest in local radio and various styles of music. Jay has held numerous jobs over the years such as stunt car driver, bartender, voice-over artist, traffic reporter (award winning), NY Yankee maintenance crewmember and peanut farm worker. His hobbies include mountain climbing, snowmobiling, cooking, performing stand-up comedy and he is an avid squirrel watcher. Jay has been a guest on America’s Morning Headquarters,program on The Weather Channel, and was interviewed by Sam Champion.

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