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Gianforte Introduces Bipartisan Bill to Hold Middlemen Accountable, Reduce Drug Prices

December 17, 2019
Press Release

Congressman Greg Gianforte (R-Mont.) recently introduced the bipartisan PBM Transparency and Prescription Drug Costs Act, H.R. 5304, with Congressman Kurt Schrader (D-Ore.). The bill will increase transparency, hold pharmacy benefit managers (PBMs) accountable, and help lower prescription drug prices.

This bipartisan bill will mandate quarterly reports on the costs, fees, and rebate information associated with PBM contracts. This reform ensures employers know the true costs of the services they are paying for and passes on savings to consumers.

States, local governments, organizations, and businesses use PBMs to negotiate lower drug prices for the individuals on their health insurance plans. Three organizations control 85 percent of this market. While PBMs play a crucial role in the drug supply chain, the lack of transparency into their practices has long contributed to the rising cost of prescription drugs.

“Too many PBMs operate as middlemen who negotiate deals out of the public eye and too often at the expense of consumers,” Congressman Gianforte said. “This bipartisan bill shines a light on PBM’s secretive process. This commonsense legislation increases transparency, puts consumers first, and is a step in reducing prescription drug prices.”

“As the cost of pharmaceuticals continues to escalate exponentially, the opaque process, rebates, discounts and claw-back fees have become part of the problem and do not give consumers the best deals possible,” said Rep. Schrader. “My bill with Mr. Gianforte will provide certainty to employers and consumers by ensuring greater transparency in the calculations of drug costs. This bipartisan legislation will reign in pricing schemes that hide the true cost of medications and prevent the skyrocketing costs of prescription drugs.”

The PBM Transparency and Prescription Drug Costs Act requires that employers receive a report at least every six months from the health issuer or entity providing PBM services including an array of prescription pricing and utilization data for the enrollees of their plan.

Under the bill, PBMs will no longer be able to utilize spread pricing as the default contracting model —a practice in which the PBM charges the plan sponsor more for a drug than the PBM paid the pharmacy for dispensing the drug. When contracting with a group health plan, a PBM must pass all rebates and discounts received from a pharmaceutical manufacturer, distributor, or other third party through to the health plan.

The bill also addresses a practice of shifting costs into non-transparent fees. Reporting will be structured to safeguard the release of information that could lead to higher drug prices.

In a July 2019 report, the Congressional Budget Office estimates the bill will lower private health insurance premiums and increase competition in the marketplace.

Leaders and stakeholders in Montana, as well as public interest advocates, welcomed Gianforte’s bill to lower prescription drug prices:

Montana State Auditor Matt Rosendale said, “I appreciate Congressman Gianforte’s efforts to reduce the cost of prescription drugs for the people of Montana. As we continue our fight to lower health care costs, we need prescription drug reform to address one of the biggest cost-drivers in the industry.”

Josh Morris, who owns four independent pharmacies in Montana, said, “PBMs have many practices that raise costs for consumers and put independent pharmacies, like mine, in rural communities at risk. We need to ensure that these PBMs are held accountable and Congressman Gianforte’s bill does just that. I look forward to continuing to work with the Congressman to lower costs and increase transparency for our independent pharmacies.”

Vince Colucci, professor and chair of the Department of Pharmacy Practice in the Skaggs School of Pharmacy at the University of Montana, said, “I endorse the legislation introduced by Congressman Gianforte requiring health plan oversight of pharmacy benefit managers. This legislation, if enacted properly, will assist in economizing drug therapy and optimizing patient outcomes.”

Annette Guarisco Fildes, president and CEO of the ERISA Industry Committee (ERIC), an association that aids employers with employee benefit policies, said, “As an association that exclusively represents large employers who sponsor health benefits for their employees and families, ERIC is committed to advancing legislation that improves health care quality and lowers costs, especially the costs of prescription drugs. Transparency in all aspects of the health care system, including the drug supply chain, is critical to those ends. ERIC believes that the PBM Transparency in Prescription Drug Costs Act takes a measured, reasonable approach to addresses transparency in the drug supply chain, and we strongly support the bill.”

David Balto, a public interest advocate and former policy director with the Federal Trade Commission, said, “Consumers, unions and employers applaud these long overdue reforms. For too long PBMs have been manipulating rebate schemes to pad their profits and consumers have paid the price in higher prices and less choice. This is a sound careful approach to making the market work.”