Cantwell-Grassley bill would prohibit unfair PBM tactics that drive up costs for consumers

Pharmacist: “There’s obviously no way that a business could operate with these predatory and unpredictable fees.”

U.S. Senator Maria Cantwell (D-Wash.), Chair of the Senate Committee on Commerce, Science and Transportation, held a hearing on the importance of shedding light on the role Pharmacy Benefit Managers (PBMs) play in the skyrocketing price of prescription drugs. Sen. Cantwell and Sen. Chuck Grassley (R-Iowa) re-introduced the bipartisan Pharmacy Benefit Manager Transparency Act of 2023 in January to prohibit unfair or deceptive tactics that drive up costs for consumers. Sen. Grassley testified before the Committee and the Committee heard directly from a pharmacist, oncology doctor and experts who explained how PBMs pervade nearly every aspect of the drug distribution system – from setting prices, clawing back pharmacy reimbursements and making care decisions.

“Today we’re here to talk about what’s driving up the price of prescription drugs—a life or death matter for Americans who have skyrocketing prices that affect them,” said Sen. Cantwell at yesterday’s hearing. “Rising drug prices have stretched Americans’ budgets over the past decade…Nearly 3 in 10 Americans report that when the cost of their medication goes up, they cut their pills in half, skip doses, or stop taking their medication. This is not the kind of healthcare choices we want people to make. The evidence suggests that PBMs are part of the high drug cost increase.”

“The Cantwell-Grassley PBM Transparency bill directs the FTC to end well-known and documented PBM practices that drive up consumer prices, namely: spread pricing and clawbacks. Both actions game the system and hurt consumers,” said Sen. Grassley in his testimony. “Our bill has guardrails – it doesn’t give the FTC any new power or regulatory authority. The bill also puts sunshine on PBMs. Passing the PBM Transparency bill is an important step to lowering drugs costs.” 

PBMs have the power to dictate how much people pay for their prescriptions, how they can access their prescriptions, and can even dictate what type of treatments people can receive. Just three PBMs control nearly 80% of the prescription drug market.

The Cantwell-Grassley legislation would increase drug pricing transparency and hold PBMs accountable for unfair and deceptive practices that drive up prescription drug costs at the expense of consumers.

A Seattle-based pharmacist described how PBMs used deceptive practices to overinflate the price of a generic medication. Dr. Ryan Oftebro, owner of Kelley-Ross Pharmacy Group, testified that PBMs increased the patient co-pay for a common generic cholesterol medication from $15 to $141 for the same 90-day supply, costing his patients an extra $500 out-of-pocket per year. The “overpayment” was then clawed back by the PBM, and not given back to the patient. Ultimately, $538,000 in retroactive fees forced the closure of one of his locations that had served a neighborhood for decades.

“There's obviously no way that a business could operate with these predatory and unpredictable fees. So, we made the difficult decision to close this location in 2022,” said Dr. Oftebro.

“These are the practices that are driving Americans crazy, and they want some transparency,” said Sen. Cantwell during the Q&A.

Last year, the Pharmacy Benefit Manager Transparency Act passed the Commerce Committee with a bipartisan 19-9 vote in June 2022 after a hearing to bring attention to manipulative drug pricing practices of PBMs.

Sen. Cantwell and Sen. Grassley introduced similar legislation in 2021 to empower the FTC to conduct a study into whether PBMs provide actual value to the drug distribution chain, and whether PBMs are engaging in anticompetitive behavior leading to increased costs for consumers.

Senator Cantwell’s transcripts and videos are available here.

Senator Grassley’s testimony is available here.

Witness testimonies are available here.

Pharmacy Benefit Manager Transparency Act of 2023 (S. 127) Legislative Text and Summary.

Original source can be found here