In The News | Congress Reins In Drug Middlemen in Effort to Lower Prescription Prices

The legislation will impose new restrictions on pharmacy benefit managers, giant companies like CVS Caremark, Optum Rx and Express Scripts that oversee prescription drug benefits.

The New York Times

Reporters: Reed Abelson and Rebecca Robbins

The spending package passed by Congress on Tuesday includes an effort to drive down drug prices, by imposing new restrictions on some of the most controversial practices of the giant companies that oversee prescription benefits.

The legislation represents a significant political defeat for the companies, known as pharmacy benefit managers, or P.B.M.s, which for years had largely escaped public attention, regulation and oversight. And it represents a win for drugmakers, which have long lobbied to deflect blame for high drug prices toward the P.B.M.s.

In signing the overall package on Tuesday afternoon, President Trump singled out his efforts to reduce drug prices.

While the new restrictions on P.B.M.s received widespread support, it is unclear how much they will benefit the government, employers and patients. There are complex reasons for high drug prices, and the legislation still preserves many core elements of the benefit managers’ opaque business model that contributes to high drug prices.

The three largest benefit managers — CVS Health’s Caremark, Cigna’s Express Scripts and UnitedHealth’s Optum Rx — collectively oversee some 80 percent of all prescriptions in the United States. Employers and government programs hire P.B.M.s to negotiate with drug companies, pay pharmacies and help decide which drugs patients can get at what price. Patients see the work of a benefit manager when they encounter denials for coverage of prescriptions or are forced to switch medications.

Over the years, benefit managers and their conglomerate parent companies, which also own major insurers, consolidated more power over different parts of the American health care system.

This legislation is the latest sign of the pressure building against the benefit managers’ longstanding practices. Many Americans are angry about the interference with their medicines, and some disillusioned employers have fired the big three P.B.M.s and moved their business to start-ups pitching a more transparent and friendly alternative.

When choosing which drugs are available to patients, benefit managers make more money by favoring high-priced medications, a dynamic that critics say drives up drug prices. The changes — which have been debated in Congress for the past few years — seek to eliminate those incentives.

“We’re finally going to see some relief on P.B.M.s and the egregious practices that they have,” said Representative Buddy Carter, Republican of Georgia, a pharmacist and a central architect of the P.B.M. legislation.

Benefit managers defended their business practices, saying they lower drug prices for their clients and patients.

Their trade group, the Pharmaceutical Care Management Association, fiercely opposed the legislation... Continue Reading