Both the House of Representatives and Senate have taken action to lower prescription drug prices this summer. Committees in the House and Senate are targeting the business practices of pharmacy benefit managers (PBMs), which act as a middleman between insurance companies and drug manufacturers, while House Democrats push to expand the amount of drugs for which Medicare can negotiate prices.
When the Inflation Reduction Act was passed last year, it stipulated that Medicare could negotiate the cost of some prescription drugs; the list of the first 10 drugs that Medicare can negotiate prices for is expected to be published on September 1, 2023, although the reduced prices will not take effect until 2026.1
As House Democrats push to expand the number of drug prices that Medicare can negotiate and bipartisan progress is made in both houses of Congress to limit the influence of PBMs, clinicians should be aware of how these pieces of proposed legislation could affect the cost of their patients’ medication.
MEPA: Legislation Targeting PBM Practices
The Senate Finance Committee reported the Modernizing and Ensuring PBM Accountability Act (MEPA) out of committee in a 26-1 vote on July 26, 2023.2
“These targeted reforms are an important first step that will empower consumers, plans, providers, and pharmacies to make informed, cost-effective, and clinically appropriate decisions, ultimately driving down prescription drug costs for patients,” said Sen Mike Crapo (R, Idaho). “I thank Senator Wyden and all members of the Committee for their partnership and contributions to this legislation, and look forward to incorporating additional policies to generate the broad bipartisan support that will lead to enactment.”
If MEPA were to become law, it would shrink the influence of PBMs by disincentivizing PBMs from favoring higher-priced drugs. Under the new law, if a medication is covered by Medicare Part D, PBMs can only receive a bona fide service fee instead of a payment based on the drug manufacturer’s price, as is the case under current law. In addition, the practice of spread pricing, in which PBMs profit from charging insurers significantly more than the amount paid to the pharmacy, is banned under MEPA.3
While the Senate was able to agree nearly unanimously on these reforms, Sen Crapo and Ron Wyden (D, Ore) stated that they are committed to incorporating more proposals to make MEPA more comprehensive. Specifically, the senators requested feedback from the Congressional Budget Office on proposals that would help reduce patients’ out-of-pocket costs, increase pharmacy access to medication, and ensure that older adults benefit from access to biosimilars.2
Health Care Price Transparency Act of 2023 Includes PBM Reform
The House’s Ways and Means Committee approved the Health Care Price Transparency Act of 2023 (H.R. 4822) on July 27, 2023. This bill requires PBMs to report data on copayments, rebates, discounts, net payments, and costs of covered drugs to plan sponsors. The Act also requires every drug to have its net price reported and for the Government Accountability Office to report on vertical integrations between insurers, PBMs, and pharmacies.4
The Protecting Patients from Middlemen Act, introduced by Rep Nicole Malliotakis (R, NY) and Brad Wenstrup (R, Ohio), passed out of the full committee on July 26, 2023, and is included in the Health Care Price Transparency Act of 2023.
“This commonsense legislation will provide important protection for seniors in Medicare by ensuring they will not have to pay more for a prescription than it costs their insurance company. I’m pleased to see that the Ways and Means Committee agreed to put patients first and protect seniors from the opaque pricing tactics of PBMs,” Rep Wenstrup said.
Expanding Medicare’s Price Negotiation Capabilities
The ranking members of the Energy and Commerce Committee (Frank Pallone,Jr. [D, NJ]), Ways and Means Committee (Richard Neal [D, Mass]), and Education and the Workforce Committee (Robert C. “Bobby” Scott [D, Va]) introduced the Lowering Drug Costs for American Families Act on July 26, 2023.5
“The Inflation Reduction Act finally granted Medicare the power to negotiate lower prescription drug prices for seniors, however, the fight is not over,” Rep Pallone said. “The Lowering Drug Costs for American Families Act will build on this progress by providing those same lower negotiated prices to all Americans who are covered by private health plans. It also protects consumers against unfair price hikes and increases the number of drugs Medicare can negotiate on each year, meaning lower prices on more drugs sooner. This bill is part of House Democrats’ ongoing efforts to lower health care and prescription drug costs for hardworking American families.”
The Lowering Drug Costs for American Families Act would also raise the number of prescription drugs annually chosen for price negotiation from 20 to 50.5
1. Text – H.R.5376 – 117th Congress (2021-2022): Build Back Better Act. www.congress.gov. Published September 27, 2021. https://www.congress.gov/bill/117th-congress/house-bill/5376/text
2. Senate Finance Committee Leaders Praise Committee Passage of Legislation to Help Lower Prescription Drug Costs. Washington, DC: United States Senate Committee on Finance; July 26, 2023. https://www.finance.senate.gov/chairmans-news/senate-finance-committee-leaders-praise-committee-passage-of-legislation-to-help-lower-prescription-drug-costs
3. United States Senate Committee on Finance. Description of the Chairman’s Mark The Modernizing and Ensuring PBM Accountability Act. Updated July 26, 2023. Accessed July 30, 2023. https://www.finance.senate.gov/imo/media/doc/Description%20of%20the%20Chairman’s%20Mark%20MEPA_Final.pdf
4. United States House Committee on Ways & Means. H.R. 4822, The Health Care Price Transparency Act of 2023. Updated July 27, 2023. Accessed July 30, 2023. https://waysandmeans.house.gov/wp-content/uploads/2023/07/HR-4822-Section-Summary.pdf
5. House Democratic Health Committee Leaders Introduce Lowering Drug Costs For American Families Act. Washington, DC: House Committee on Energy and Commerce; July 26, 2023. https://democrats-energycommerce.house.gov/newsroom/press-releases/house-democratic-health-committee-leaders-introduce-lowering-drug-costs-for