WASHINGTON, D.C. – U.S. Senators Marsha Blackburn (R-Tenn.) and Bob Menendez (D-N.J.), alongside Senate Finance Chairman Ron Wyden (D-Ore.), Ranking Member Mike Crapo (R-Idaho), Senator Jon Tester (D-Mont.), and Senator Roger Marshall (R-Kan.), introduced the Patients Before Middlemen (PBM) Act to delink the compensation of pharmacy benefit managers (PBMs) from drug price and utilization.

The legislation will better align incentives to help lower prescription drug costs, benefiting over 1 million Tennesseans enrolled in Medicare Part D drug plans.

“For too long, middlemen have taken advantage of misaligned incentives in the pharmaceutical supply chain at the expense of taxpayers and seniors. We need to put patients before the profits of pharmacy benefit managers,” said Senator Blackburn. “The Patients Before Middlemen Act is a major step toward increasing transparency and reducing prescription drug costs for seniors at the pharmacy counter.”

“Currently, pharmacy benefit managers have rigged the system to maximize profits, while doing little to drive down the cost of prescription drugs for patients at the pharmacy counter,” said Senator Menendez. “This bipartisan legislation would help lower prescription drug prices for Medicare Part D beneficiaries by delinking PBM compensation from list prices and utilization levels – eliminating a perverse incentive structure that has done nothing but disadvantage patients. Together with my colleagues, I look forward to working to ensure we create a more equitable system that prioritizes patients and puts more money back into people’s pockets.” 

BACKGROUND:

PBMs are third-party intermediaries that manage prescription drug benefits and pharmacy networks on behalf of health plans, including Medicare Part D plans. PBMs perform multiple functions including determining which medications will be covered by health insurance plans and how much patients will pay.

The PBM industry was created to assist employers with managing overall prescription drug costs and benefits; however, the current system incentivizes PBMs to steer health plans and seniors towards more expensive prescription drugs. Currently, PBMs’ income is often linked to the price of a drug. By tying administrative fees, rebate-based compensation, and other payments to a percentage of the list price, current arrangements incentivize increases in sticker prices, harming patients at the pharmacy counter.

The PBM Act would:

• Prohibit PBM compensation based on the price of a drug as a condition of entering into a contract with a Medicare Part D plan. Service fees will not be connected to the price of a drug, discounts, rebates, or other fees.
• Create an enforcement mechanism requiring PBMs to pay to the HHS Secretary any amount in excess of the designated service fees.

For a copy of the legislative text click here.