7/16/24 

CBSA has consistently advocated for PBM reform at the state and federal level. Following the release of an interim report from the Federal Trade Commission (FTC) blasting the business practices of “prescription drug middlemen” and news reports that the FTC is preparing to sue the three largest pharmacy benefit managers (PBMs), CBSA is continuing to urge Congress to take action addressing middlemen in the drug supply chain. 

We encourage CBSA members to join CBSA in signing onto a letter to Congresswoman Diana DeGette urging her to support H.R.2880, the “Protecting Patients Against PBM Abuses Act,” which we expect to be marked up in the House Oversight and Investigations Subcommittee on July 23. To see the draft letter and sign on, please email Amy Goodman. CBSA will need logos to add to the letter by the end of day on Thursday, July 18. 

FTC Report on PBMs 

The Federal Trade Commission (FTC) released an interim report titled “Pharmacy Benefit Managers: The Powerful Middlemen Inflating Drug Costs and Squeezing Main Street Pharmacies” on July 9, calling out PBMs for their harmful impact on drug prices and access. The Wall Street Journal’s coverage highlighted how PBMs, “which are supposed to control spending, have overcharged for cancer drugs and taken other steps raising costs.” The FTC report includes these key findings: 

• “The market for pharmacy benefit management services has become highly concentrated, and the largest PBMs are now also vertically integrated with the nation’s largest health insurers and specialty and retail pharmacies.” 

• “As a result of this high degree of consolidation and vertical integration, the leading PBMs can now exercise significant power over Americans’ access to drugs and the prices they pay.” 

• “Vertically integrated PBMs may have the ability and incentive to prefer their own affiliated businesses, which in turn can disadvantage unaffiliated pharmacies and increase prescription drug costs.” 

• “Evidence suggests that increased concentration may give the leading PBMs the leverage to enter into complex and opaque contractual relationships that may disadvantage smaller, unaffiliated pharmacies and the patients they serve.” 

This interim report is the first major product of a study of PBMs initiated by the FTC in 2022. FTC Chair Lina M. Khan indicated that this report will be followed shortly by a final report. 

FTC to Sue PBMs 

On July 10, just one day after the FTC released its “scathing” interim report “blasting” PBMs for their business practices, the Wall Street Journal reported that the FTC is preparing to sue the three largest PBMs—CVS Caremark, Express Scripts and OptumRx—each of which is integrated with a national health insurer, “over their tactics for negotiating prices for drugs including insulin, after a two-year investigation into whether the companies steer patients away from less-expensive medicines.” Lawsuits will be filed against each of the PBMs for directing patients toward more expensive drugs. 

H.R.2880: The “Protecting Patients Against PBM Abuses Act”

H.R.2880 establishes requirements for Medicare PBMs with respect to remuneration, payments, and fees. Specifically, the bill restricts Medicare and Medicare Advantage PBMs from “(1) receiving income for their services other than flat dollar amount service fees; (2) basing any service fees on the prices of covered drugs or any associated discounts, rebates, or other remuneration; (3) charging plan sponsors for ingredient costs or dispensing fees in amounts that are different than what is reimbursed to the pharmacy; or (4) reimbursing network pharmacies for less than that what is reimbursed to PBM-affiliated pharmacies. Such PBMs must also report on the difference between certain costs for drugs on the plan’s formulary and those that are not on the formulary but are therapeutically equivalent. PBMs must also report certain information regarding rebates and fees they receive from drug manufacturers; the Centers for Medicare & Medicaid Services must publish this and other information that is currently reported by PBMs online.” 

H.R.2880 is one of several PBM reform bills that have been introduced to hold PBMs accountable, including S.1542, the “Delinking Revenue from Unfair Gouging Act” (DRUG Act), and S.2973, the “Modernizing and Ensuring PBM Accountability Act” (MEPA Act). 

CBSA’s Advocacy for PBM Reform 

CBSA supports PBM reform efforts and has spoken to state policymakers and members of Colorado’s Congressional delegation for years about the need to address PBM practices. Most recently, on July 12, 2023, CBSA sent letters to Senator Michael Bennet and Senator John Hickenlooper encouraging them to cosponsor the Patients Before Middlemen (PBM) Act (S.1967), which would de-link PBM revenues from drug prices for Medicare Part D beneficiaries, eliminate one of the most egregious flaws in the U.S. prescription drug pricing system—the ability of PBMs to favor higher-priced drugs. When CBSA’s President & CEO Elyse Blazevich represented the Colorado life sciences community in Washington, D.C. at the 2023 We Work for Health Healthcare Summit, she discussed a number of bills that have been introduced as part of Congress’ push to achieve PBM reform. CBSA’s Vice President and Counsel for Policy + Advocacy, Amy Goodman, has also discussed the need for PBM reform with Colorado’s Congressional delegation numerous times, including during the 2024 BIO Fly-In on Capitol Hill. CBSA will continue to advocate for PBM reform legislation that will help fix a broken system and make medications more affordable for patients. 

Media Attention 

CBSA is pleased to see that PBMs’ role in drug pricing is now getting a significant amount of overdue national media attention, including these recent articles: 

WSJ, 7/10: FTC to Sue Drug Managers Over Insulin Prices 

Fierce Healthcare, 7/10: WSJ: FTC to sue PBMs over drug pricing tactics 

STAT News, 7/10: FTC plans to sue PBMs over the high cost of insulin and other medicines 

Forbes, 7/10: FTC Will Sue Pharmacy Middlemen Over Inflated Insulin Prices, Report Says 

Politico, 7/10: Feds poised to sue pharmacy gatekeepers over high drug costs 

WSJ, 7/10: How Drug Middlemen Keep Beating the System 

WSJ, 7/9: Big Pharmacy-Benefit Managers Increase Drug Costs, FTC Says 

NYT, 7/9: F.T.C. Slams Middlemen for High Drug Prices, Reversing Hands-Off Approach 

Modern Healthcare, 7/9: PBMs Pay Higher Prices to Their Own Pharmacies, FTC Says 

STAT News, 7/9: FTC report finds PBMs profit at the expense of patients and independent pharmacies 

The Hill, 7/9: FTC report slams pharmacy ‘middlemen’ for seemingly driving up prices, limiting access 

Fierce Healthcare, 7/9: FTC: PBMs may ‘urgently’ require ‘potential regulation’ 

NYT, 6/21: The Opaque Industry Secretly Inflating Prices for Prescription Drugs 

NYT, 6/21: What To Do If You’re Overpaying For Your Prescriptions  

NYT, 6/21: Have You Had Trouble Getting Your Medication? We Want To Hear From You