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By Jeffrey Woldt
Retail pharmacy operators had their hopes of finally a-
chieving federal PBM reform dashed last month, when rapidly changing political dynamics led to the collapse of a bipartisan Continuing Resolution (CR) that would, to some extent, have reined in middlemen in the prescription drug market. While the demise of the bill brings to mind other occasions when PBM reform seemed near at hand, the latest attempt provides reason to be cautiously optimistic.
The primary purpose of the CR was to authorize funding to keep the government running until mid-March. But, as has become standard practice in Washington, members of both parties attached unrelated provisions to the measure. Negotiations between Speaker of the House Mike Johnson, a Republican from Louisiana, and Democratic leaders resulted in a 1,547-page bill that included provisions for everything from assistance for victims of natural disasters and farmers to energy, digital privacy and health care.
Expressing concern about the vast scope of the CR, the high level of spending and the short window they were given to analyze the bill, many House Republicans opposed the measure, which still probably would have passed with Democratic support. The nail in the coffin came when Trump allies Elon Musk and Vivek Ramaswamy, and then the president-elect himself, came out against the bill. A stripped-down version of the CR — minus most of the extraneous provisions, including PBM reform — was finally enacted, averting a partial government shutdown.
Disappointing as the result turned out to be, the process reflected the success that the National Association of Chain Drug Stores and other pharmacy advocates have had in raising awareness about the urgent need for PBM reform among policy makers. Extensive bipartisan support for the original CR is an encouraging sign as efforts begin to persuade members of the 119th Congress to step up and regulate PBM practices that are both detrimental to health care consumers and the community pharmacies they rely on.
In a recent article in InsideSources’ DC Journal, Steve Anderson, president and CEO at NACDS, and Jay Timmons, his counterpart at the National Association of Manufacturers, delineated what’s at stake: “In practice, PBMs profit by inflating costs, pocketing savings meant for patients, creating incentives to raise prices even more, and reimbursing pharmacies below cost.”
They also discuss the adverse impact that rising health care expenditures have on employers — almost two out of three NAM members cited the issue as a major concern in a recent survey. Reimbursement pressure from PBMs is a grave problem for pharmacy operators, which are filling some prescriptions at below cost, raising questions about their continued viability.
According to a recent study in Health Affairs, roughly a third of the pharmacies in the country were shuttered between 2010 and 2021. As that number continues to increase and pharmacy deserts proliferate, voters are sure to pressure members of Congress to act. That pressure, together with ongoing lobbying efforts, will improve the prospects for meaningful PBM reform.
President Trump appears to be on board. On at least two occasions prior to taking office, he blasted PBMs. During a press conference earlier this month at Mar-a-Lago, he said: “We are paying far too much for prescription drugs. We have laws that make it impossible to reduce costs, and we have a thing called a middleman that makes more money than the drug companies. They don’t do anything except they’re middlemen. We are going to knock out the middleman.”
Trump is mercurial and could change his mind, and he will no doubt expect the new Congress to begin its work by focusing on his top priorities — confirming cabinet appointees and immigration, energy and tax policy. But, on the whole, conditions for federal PBM reform appear to be favorable.
At the same time, reform legislation at the state level continues to gain momentum. Last year, 24 states enacted 33 PBM laws — after more than 130 state measures passed during the preceding three years.
“A growing number of states are prioritizing communities in the face of the ‘pharmaceutical benefit manipulation’ that inflates Americans’ prescription drug costs, deprives people of their choice of pharmacies and forces pharmacies of all sizes to close their doors,” Anderson notes. “PBM reform requires a comprehensive approach at the state and federal levels and across all branches of government.”
As the new year gets under way, the pharmacy sector has a legitimate shot at making meaningful progress toward realizing that ambitious goal.
