PBMs in the Spotlight: Proposed Regulations and Investigations

The pharmaceutical industry has long been criticized for the high cost of prescription drugs, and now the focus has shifted to pharmacy benefit managers (PBMs). PBMs are intermediaries between drug manufacturers, pharmacies, and health insurance companies. They negotiate drug prices on behalf of health insurance plans and employers, but critics claim that they are not transparent about how they set prices and that they often end up driving up costs for consumers.

Congress is proposing new regulations that aim to increase transparency and control drug costs. Three bills to watch are:

• Promoting Access to Treatments and Increasing Extremely Needed Transparency (PATIENT) Act of 2023
• Pharmacy Benefit Manager Reform Act of 2023
• Patients Before Middlemen (PBM) Act of 2023

The proposed bills aim to require PBMs to disclose more information about how they set prices and how they negotiate with drug manufacturers. These bills would also prevent PBMs from imposing "gag clauses" on pharmacies, which prevent them from telling customers when a cheaper alternative is available. If these bills come to a Congressional vote, bipartisan support exists, making their passage likely.

In addition to these proposed regulations, the House Oversight and Accountability Committee and the Federal Trade Commission have both launched investigations into PBM practices. The level of scrutiny that PBMs are potentially facing will be new to them. As a result, careful attention should be given to creating formal policies guiding price structures and sales protocols, along with training of sales teams.