Bipartisan Senate Group Cracks Down on Pharmacy Middlemen to Lower Drug Prices

By Gabrielle M. Etzel, Healthcare Reporter  June 14, 2023 02:00 PM

A bipartisan group of members of the Senate Finance Committee on Wednesday introduced legislation to regulate the revenue stream of pharmacy benefits managers, or PBMs, in an effort to address rapidly rising prescription drug prices.

Committee Chairman Ron Wyden (D-OR) said in a press release that the legislation, the Patients Before Middlemen Act, “will put a stop to one of the most egregious practices driving up the price of prescription drugs in Medicare: pharmacy benefit managers getting paid based on the price of a drug.”

PBMs are third-party administrative organizations intended to negotiate drug prices between consumers and insurance companies. Traditionally, PBMs earn revenue in part based on the cost of prescription drugs, disincentivizing PBMs from negotiating for lower prices on behalf of insurance providers, Medicare Part D , and consumers at large.

The proposed legislation would require PBMs to instead charge a “flat dollar amount” service fee for the negotiation process and prohibits PBMs from charging in connection to the cost of a drug.

“As we work to find solutions that reduce prescription drug costs for patients at the pharmacy counter, this commonsense proposal will help mitigate misaligned incentives that currently steer some Medicare Part D plans, pharmacy benefit managers, and seniors toward higher-priced medications,” said Committee ranking member Mike Crapo (R-ID).

Crapo added that the bipartisan legislation would be “a critical first step in … driving down out-of-pocket spending and promoting cost-cutting competition.”

PBMs have come under significant scrutiny from the federal government in recent months.

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