U.S. Senator Bob Menendez (D-NJ) discussed his Patients Before Middleman (PBM) Act in front of a Union City pharmacy this morning, emphasizing the impact on seniors on Medicare D.
By John Heinis/Hudson County View
PBMs are third-party intermediaries that manage prescription drug benefits and pharmacy networks on behalf of health plans, including Medicare Part D plans.
PBMs perform multiple functions including determining which medications will be covered by health insurance plans and how much patients will pay.
“In their role as middlemen, PBMs have a vise grip on our drug supply chain, creating warped incentives that jack up costs for patients at the pharmacy counter,” Menendez said in a statement.
“I’ve introduced legislation, the Patients Before Middlemen Act, that would curb some of the biggest abuses that PBMs engage in. My bill would simplify and reform the current system, delinking PBM compensation from drug prices in order to drive down costs for seniors on Medicare.”
Sens. Menendez and Marsha Blackburn (R-Tenn.), alongside Senate Finance Chairman Ron Wyden (D-Ore.), Senate Finance Ranking Member Mike Crapo (R-Idaho), Senator Jon Tester (D-Mont.), and Senator Roger Marshall (R-Kan.) introduced this bill in June.
The bill is the central piece of a PBM reform legislative package the U.S. Senate Finance Committee will be marking up tomorrow.
“So much of being a senior citizen is focusing so much time and worry over finances. Dealing with chronic health issues and the medications that accompany them is a continual source of concern,” stated Doreen Monks, a Medicare Part D Beneficiary.
The PBM industry was created to assist employers with managing overall prescription drug costs and benefits; however, the current system incentivizes PBMs to steer health plans and seniors towards more expensive prescription drugs.
Currently, PBMs’ income is often linked to the price of a drug. By tying administrative fees, rebate-based compensation, and other payments to a percentage of the list price, current arrangements incentivize increases in sticker prices, harming patients at the pharmacy counter.
Specifically, the bill would prohibit PBM compensation based on the price of a drug as a condition of entering into a contract with a Medicare Part D plan.
Service fees will not be connected to the price of a drug, discounts, rebates, or other fees.
Create an enforcement mechanism requiring PBMs to pay to the Secretary any amount in excess of the designated service fees.
