Menendez, Lankford introduce legislation to tackle PBMs, reduce cost of prescription drugs

NEW JERSEY – U.S. Senator Bob Menendez (D-N.J.), a senior member on the U.S. Senate Finance Committee which has jurisdiction over national health care policy, and Sen. James Lankford (R-Okla.) introduced the Ensuring Access to Lower-Cost Medicines for Seniors Act – vitally important bipartisan legislation to tackle one of the biggest drivers of the high cost of prescription drugs, particularly for senior adults on Medicare.

This builds on Sen. Menendez’s other legislative efforts to lower the cost of prescription drugs for patients at the pharmacy counter.

The Ensuring Access to Lower-Cost Medicines for Seniors Act would ensure that patients can finally benefit from lower-cost products instead of being forced to pay for higher-priced drugs solely because of pricing gimmicks used by pharmacy benefit managers (PBMs), the drug pricing middlemen. This legislation would clearly establish pricing “tiers” to separate lower-cost generic drugs and biosimilar products from name-brand drugs so that patients pay less out of pocket for truly lower-priced drugs, therefore incentivizing prices to drop for patients.

“I’m proud to be working with Sen. Lankford on this bipartisan solution, which takes on PBM discriminatory formulary practices that unfairly drive up the costs of prescription drugs for seniors on Medicare Part D,” Menendez said. “I am committed to lower costs for my constituents and Americans all across the country at the pharmacy counter, and this legislation is another step towards reforming PBMs so they cannot continue gaming the system on the backs of patients.”

“Most Oklahomans and people around the country do not know that because of complex and unfair pricing practices, sometimes a generic drug—which they think should come with a lower price tag at the pharmacy counter—actually costs as much or more than the brand name drug product, if it is covered by insurance at all. That’s not right,” Lankford said. “My bill requires cheaper generic or biosimilar drugs to be offered at a lower price than name-brand drugs. It’s a simple solution that should not have been so controversial. We need to get this passed immediately to address unfair pricing gimmicks that only hurts patients at the pharmacy counter.”

The Ensuring Access to Lower-Cost Medicines for Seniors Act requires:

• Medicare Part D to cover a generic or biosimilar if it costs less than its name-brand counterpart.
• Generic drugs or biosimilars to be placed on a generic/biosimilar formulary pricing tier and name-brand drugs to be placed on a brand tier, with the generic tier having a lower insurance cost-sharing requirement for patients than the name-brand tier.
• A new tier for specialty generics or biosimilars that would also have a lower insurance cost-sharing requirement for patients.

Sen. Menendez has long advocated for creating a more affordable health care system for every New Jerseyan and Americans across the country. Last year, he helped pass the Inflation Reduction Act, which capped the price of insulin at $35 a month for seniors on Medicare, and he authored a provision that also capped Medicare beneficiaries’ out-of-pocket costs at $2,000 a year.

Earlier this month, Sen. Menendez, alongside Sens. Marsha Blackburn (R-Okla.), Ron Wyden (D-Ore.), Mike Crapo (R-Idaho), Jon Tester (D-Mont.), and Roger Marshall (R-Kan.), led the introduction of the Patients Before Middlemen (PBM) Act to delink the compensation of PBMs from drug price and utilization in order to better align incentives that will help lower prescription drug costs for Medicare Part D beneficiaries. At a recent Senate Finance Committee hearing, the Senator pressed the witnesses about the impacts vertical integration of PBMs, pricing transparency, and insurer consolidation have on health care consumers.

In March, Sen. Menendez questioned witnesses during a Senate Finance Committee about the impact PBMs have on the prescription drug supply chain and how their warped incentive structure drives up prices for patients and consumers. The Senator emphasized how PBMs prefer prescription drugs with a higher list price versus those with a lower list price because they can obtain larger rebates. PBMs do this even though the patient would pay significantly less if they selected the drug with the lower list price.

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. Sen. Menendez will work to include the PBM Act and the Ensuring Access to Lower-Cost Medicines for Seniors Act in any drug pricing package that the Senate considers.