Recently, Senate Finance Committee Chair Ron Wyden and Ranking Member Mike Crapo issued a bipartisan framework that outlines the work the Committee wishes to focus on to modernize and enhance federal prescription drug programs, with the ultimate goal of reducing drug costs for patients and payers.
The Senators acknowledge that over the years, federal policy has not kept pace with developments in the way entities deliver and pay for prescription drugs. Wyden and Crapo believe that the Senate Finance Committee “has a critical responsibility to examine supply chain practices to make prescription drug spending under these programs more efficient for patients and taxpayers.”
The framework follows a Senate Finance Committee hearing that reviewed the practices of pharmacy benefit managers (PBMs) and the impact on costs to patients and taxpayers and focuses on four challenges federal prescription drug programs are facing: misaligned incentives, insufficient transparency, hurdles to pharmacy access, behind-the-scenes practices that impede competition and increase costs. In addition to the challenges, the framework also lays out potential policy solutions.
During the hearing, Senator Crapo called for an “all-of-the-above approach to transparency that empowers consumers, plans, providers and pharmacies to make informed, cost-effective and clinically appropriate decisions—as well as to practice meaningful oversight.” He further noted that Congress needed “more line of sight into the black box of drug pricing relationships and transactions, especially as we look to pursue productive reforms in the future.”
Senator Wyden called PBMs out specifically, saying that, “in recent years, it’s increasingly apparent that PBMs are using their data, market power, and know-how to keep prices high and pad their profits instead of sharing the benefits of the prices they negotiate with consumers and the Medicare program.”
One potential solution to misaligned incentives is to no longer tie administrative fees, rebate-based compensation, and other payments to a percentage of the drug list price. Another solution is to disallow PBMs from being able to receive fees from both the health plans and the drug manufacturers.
The Senators also call for changes to the Medicare “Any Willing Pharmacy” requirements, so that options and access are improved for seniors around the country and ensure that discounts negotiated by the PBMs end up in the patient’s pocket, not the PBM’s pocket.
Senators Statements
“Some of the most life-saving medications remain out of reach for far too many working families and seniors,” said Senator Crapo. “We need a bipartisan, all-of-the-above approach to modernization and transparency that empowers consumers, plans, providers and pharmacies to make informed, cost-effective and clinically appropriate decisions. I thank Senator Wyden for working with me to identify ways to improve prescription drug access and affordability and look forward to discussing potential consensus-based solutions with our colleagues.”
“For years, drug pricing middlemen like pharmacy benefit managers have been engaging in practices that are driving up the cost of prescription drugs and clobbering American families at the pharmacy counter,” said Senator Wyden. “The Finance Committee is responsible for federal health programs that spend billions on prescription drugs each year, and we have a responsibility to seniors, working families and taxpayers to ensure these programs are strengthened and updated to keep up with the health care system of today. I look forward to working on a bipartisan basis to craft legislation this summer that will take on the worst practices by drug pricing middlemen and ensure that the prescription drug supply chain is pulling in the same direction: more competition and lower drug costs for patients and taxpayers.”
Next Steps
The Senators note that the Senate Finance Committee plans to “pursue commonsense legislative solutions that modernize and enhance our federal prescription drug programs,” with particular focus on the four areas of challenges above. The Senate Finance Committee hopes to receive input from bipartisan Committee members to craft workable solutions that benefits patients.