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PBM Reform: A Persistent Congressional Priority Amid Uncertain Timing

When Congress returns after the November election, it will have a slew of spending bills to address—either passing them or kicking the can down the road until the new year. One of the topics that could resurface in the lame duck is reforms to requirements on Pharmacy Benefit Managers (PBMs), as there has been bipartisan support this year for measures to change the way PBMs do business. 

What is a PBM? 

PBMs are third-party administrators that manage prescription drug plans for health insurers, Medicare, Medicaid, and large employers.1 They negotiate discounts and rebates with drug manufacturers, create formularies (lists of covered drugs), and manage pharmacy networks.   PBMs were designed to create cost savings, manage formularies, streamline the process of getting medications to patients and providers, and to help with patient medication adherence. 

Current Issues 

Many of these benefits have been achieved – but in recent years, many in Congress have identified concerning PBM behaviors and now feel the system and market have become misaligned.  The House and the Senate have spoken of the lack of transparency within PBMs.  Leaders in both chambers have also pointed out that current reimbursement incentives steer PBMs toward higher cost drugs, as they receive higher reimbursements for these drugs2.  In fact, studies have shown that PBMs are costing patients more in out-of-pocket prescription drug spending.3 Advocates have also said that PBMs are one of the largest factors in the closure of local ” mom-and-pop” pharmacies.

PBM Reform 

Consequently, both the House and Senate have considered PBM reform bills in this Congress.  The full House passed legislation with broad bipartisan support late last year, while the Senate has moved legislation at the committee level. Legislation focused on changing compensation for drug pricing and service fees5, creating more transparency regarding PBM pricing and reimbursement practices, allowing beneficiaries to have flexibility in which pharmacy they want to use, and changing the way drug savings and discounts are accounted for and distributed6.  These bills would create significant cost savings for the Medicare program – upwards of $1 billion – so PBM reform will be eyed as a “pay for” if Congress wants to offset the costs of other legislation.  

When Congress returns after the elections, whether some type of PBM reform will be passed this year remains an open question. Should Congress not move PBM reform this year, we expect that in 2025 PBMs will continue to be in the bipartisan crosshairs of policy leaders on both sides of the Capitol until some form action is taken. 

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