Senate panel advances drug pricing bills, including PBM reforms

A key Senate panel advanced a package of bipartisan bills aimed at improving generic drug competition and reforming the business practices of pharmacy benefit managers (PBMs).

The Senate Health, Education, Labor and Pensions Committee quickly advanced several generic drug bills. The PBM reform bill advanced by a vote of 18 to 3, with Sens. Mitt Romney (R-Utah), Rand Paul (R-Ky.) and Tommy Tuberville (R-Ala.) voting against it.

The bill would prohibit a PBM practice known as “spread pricing,” or charging health plans more for a drug than the PBM reimburses to the pharmacy, a tactic that’s drawn harsh criticism from lawmakers. 

It would also implement new requirements designed to increase the transparency of PBM contracts and pricing practices and mandate that PBMs pass 100 percent of the rebates collected from drug makers to health plans.

Romney and Paul objected to the spread pricing ban and argued some small employers find spread pricing a cheaper option. Romney attempted to introduce an amendment that would have required PBMs to offer an alternative to spread pricing rather than ban it, so the plan sponsor would be able to select which model works best for them.

The amendment was not voted on.

The committee tried to advance the bills last week, but the hearing ended up getting postponed a week following numerous Republican complaints and confusion about the process.

On Thursday, the committee’s ranking member Sen. Bill Cassidy (R-La.) said he thought the bills were stronger. 

“Although last week revealed how the sausage was made and was pretty messy, the final sausage is going to taste pretty good,” Cassidy said.

Chairman Bernie Sanders (I-Vt.) agreed the committee was in a better place than last week, and he said there will be more legislation on drug pricing to come. 

“This is not the last prescription drug markup we will be having,” Sanders said. 

Senate Democratic Leader Chuck Schumer (N.Y.) is aiming to bring a health package to the floor in the next couple of months. While the timing and the specifics of what it could include are in flux because of the debt limit negotiations, the bills from the HELP Committee — especially the PBM reforms — are likely to be a major part of it.

Both chambers seem to have common ground with legislation aimed at reforming the PBM industry. 

Experts say PBMs are far from the sole reason for high drug prices, but they are part of a larger system that makes medicine unaffordable and deserves just as much scrutiny as manufacturers.