March 2, 2017

Collins Introduces Legislation to Increase Drug Pricing Transparency

WASHINGTON—Today Congressman Doug Collins (R-Ga.) introduced H.R. 1316, The Prescription Drug Price Transparency Act, to protect taxpayers and the community pharmacists who serve them by requiring greater transparency from pharmacy benefit managers (PBMs).

PBMs are the middlemen that employers and federal programs use to set formularies, or lists of drugs covered by insurers, for consumers on their health plans. PBMs also use Maximum Allowable Cost (MAC) lists to set reimbursement rates for prescription drugs sold in pharmacies. PBMs have historically refused to explain, either to pharmacies or to the federal programs they represent, their process for setting pharmacy reimbursement prices.

PBMs also claim to deliver cost savings by passing along rebates to federal programs like Medicare Part D, TRICARE, and the Federal Employees Health Benefits Program (FEHBP). However, PBMs’ lack of transparency makes it impossible to determine whether these savings are being passed to federal programs or are increasing the PBMs’ bottom line.

“PBMs engage in predatory practices designed to boost their own profit margins at the expense of insurers, contracting pharmacies, patients, and—in their relationships with federal programs—taxpayers. The lack of transparency in their operations has allowed them to control the market unjustly, with the result that these companies withhold savings that they have promised to pass on,” explains Collins.

In their relationships with community pharmacies, PBMs often change the prices on their MAC lists, often to rates that reimburse pharmacies significantly below pharmacies’ acquisition costs for prescription drugs, which forces community pharmacies to sell prescriptions at a loss. Because of PBMs’ failure to regularly update MAC pricing lists, the true cost of prescription drugs is hidden from employers, consumers, pharmacists, and the federal government. As these pharmacies lose money and are driven out of business, patients lose access to the medical services offered by their local pharmacists.

“I’m introducing a bipartisan bill to ensure that PBMs update their MAC lists for Medicare Part D, TRICARE, and FEHBP every seven days to protect competitive pricing and to preserve pharmacy access and choice for patients. The Prescription Drug Price Transparency Act provides essential oversight to prevent waste, fraud, and the abuse of taxpayer funds and better protects patient privacy,” Collins said.

Support for this legislation extends across the aisle, and Congressman Dave Loebsack (D-Iowa) is the bill’s lead Democratic co-sponsor. Other original co-sponsors for H.R. 1316 include Reps. Brian Babin (R-Texas), Rod Blum (R-Iowa), Buddy Carter (R-Ga.), John Duncan, Jr. (R-Tenn.), Cathy McMorris Rodgers (R-Wash.), and John Sarbanes (D-Md.).

“Whether it is in large cities, or small towns, pharmacists across the country serve as the first line of health care services for many patients. I appreciate all of their hard work to serve our communities and to provide quality, affordable and personal care,” said Loebsack.

“However, I also recognize how challenging it can be for some small pharmacists to compete with bigger companies. One pressing challenge facing many community pharmacists is the ambiguity and uncertainty surrounding the reimbursement of generic drugs. To help address this problem, I am proud to join my colleague Rep. Collins to reintroduce the Prescription Drug Price Transparency Act, which also helps ensure federal health plan reimbursements to pharmacies to keep pace with generic drug prices.”

“I have always said that sunlight is the best disinfectant, and that is what this critical legislation will do with prescription drug pricing. For too long, Pharmacy Benefit Managers have been able to hide behind a curtain in the drug pricing chain as families across the country watch the prices of their lifesaving medications soar. As a pharmacist for more than 30 years, I saw firsthand the distress of families attempting to balance their health care needs with their bottom line when the cost of their prescription medications was on the rise and unpredictable. That is why the Prescription Drug Price Transparency Act is so important. The legislation will provide some light to how PBMs determine the pricing reimbursement of prescription drugs, which will provide greater transparency on how drug prices are set so patients can finally get the truth about drug pricing increases,” said Carter, a pharmacist himself.

“I am pleased to join Rep. Collins in introducing this legislation that is critical to protecting our seniors and pharmacists from being ripped off by these PBMs, whose practices are unfair and wasteful. It’s time for transparency, so we can hold PBMs accountable for their roles in our drug price crisis,“ Duncan said.

The National Community Pharmacists Association, the Community Oncology Alliance, and the National Association of Specialty Pharmacy have endorsed this legislation.