Policy Examples

• The Centers for Medicare and Medicaid Services (CMS) issued new guidance against cost spreading, the practice when a PBM charges a health plan more than it pays a pharmacy for a prescription while pocketing the difference for Medicaid plans. However, CMS has not commented on commercial plans. source & source
• In 2019, The Drug Price Transparency Act, proposed by the Department of Health and Human Services prohibits PBMs from receiving rebates from drug companies and requires all price concessions be reflected as discounts at the point of sale. source
• In 2019, the Senate Finance Committee passed Prescription Drug Pricing Reduction Act (PDPRA) that features increased oversight for pharmacy benefits managers (PBMs), such as prohibiting cost spreading, justifying charges to providers, and disclosing discounts. source
• In 2019, The Lower Health Care Costs Act proposed three components that address PBM contracting inefficiencies for self-funded employers: PBMs would be authorized to report drug pricing, prohibited from cost spreading, and mandated to pass through savings to employers. source

• In 2019, the House unanimously passed two bills (HR 2115 and HR 1781) that would increase transparency on prescription drug rebates. Both bills aim to boost access to data to address concerns that PBMs may be causing drug prices to rise by favoring drugs with high list prices and large rebates. source & source
• The American Society of Health-System Pharmacists (ASHP) formally submitted a review “The Prescription Drug Pricing Reduction Act (PDPRA) of 2019.” Some areas they support include improving manufacturing costs including price transparency, inclusion of coupons in determination of sale prices, Medicare Part D redesign, and more. Some areas they believe need to be strengthened include public disclosure of drug discounts and audit results. source

Outcome Evidence

• A 2019 study published by Pew found that the share of rebates PBMs passed through to insurers and payers increased from 78 percent in 2012 to 91 percent in 2016. source
• A 2019 Government Accountability Office report found that 99.6 percent of prescription drug rebates negotiated by PBMs with drug manufacturers in Medicare Part D are passed through to drug plan sponsors and used to lower costs for Medicare beneficiaries. source
• A 2019 Society of Human Resources Management (SHRM) survey found three in four large employers do not believe drug manufacturer rebates are an effective tool for helping to drive down pharmaceutical costs. Employers prefer to adopt PBM capabilities to make rebates available to consumers at the point of sale, rather than having the PBMs collect the rebates and pass the savings back to employers and health plans. source