Pharmacy Benefit Manager (PBM) reform is a hot topic in Congress and in statehouses around the country. Several factors have led to the increased scrutiny. Numerous reports and investigations, including by the Federal Trade Commission and the US Department of Justice, conclude that PBM pricing strategies are inflating costs for consumers and employers. And, because the three largest PBMs control 80% of the market, the reports show PBMs have undue influence over the ability of many Americans to access and afford their medicines. The FTC is rumored to be considering a lawsuit.
At the Congressional level, at least 30 bills have been introduced in the 118th Congress that take aim at PBMs or their medication pricing strategies, none of which have passed as of the time of writing. Most of the bills include transparency requirements that would reveal just how much PBMs are making.
While federal legislation is stalled, several states including Wisconsin have taken action to further regulate PBMs. 2021 Wisconsin Act 9 was signed into law in March of 2021 which requires PBMs to obtain licensure from the state, giving state insurance regulators some authority over PBMs. The bill also limited PBM pharmacy auditing practices and imposed modest reporting requirements.
That legislation was followed by another bill considered during the 2023-24 session that includes numerous additional provisions aimed primarily at addressing the complaints of independent pharmacies. Certain provisions could be detrimental to employer plans, such as a provision prohibiting PBMs working with employers to offer lower copays for using mail order. Under the legislation, PBMs would not be able to lower premiums, deductibles, copays or benefits to encourage the use of a specific retail, mail order or other pharmacy provider.
The bill also includes a provision sought by pharmaceutical manufacturers that would require PBMs to apply amounts paid by third parties for brand name prescription drugs to any calculation of enrollees’ deductibles and out of pocket maximums. Employers are concerned this would undermine health plan cost sharing requirements and put an end to “copay accumulator” or “copay maximizer” pharmacy benefit designs utilized by some Wisconsin employers and PBMs to manage their drug spend.
The “any willing pharmacy” language in the bill would bar PBMs from eliminating pharmacies from their networks, assuming they are willing to accept the same payment as other network pharmacies. And a provision AFMH would strongly support: the bill would clarify that PBMs hold fiduciary obligations to act in the best interests of the clients and consumers they serve. Similar legislation is expected to be introduced once the legislature reconvenes in January of 2025. Watch this space for an update on what provisions were rolled over from the previous session.