PBM Accountability Project, Pharmacists United for Truth & Transparency, and Nearly 50 Other Stakeholder Organizations Urge Congress to Pass PBM Reforms

"The predatory impact of PBM practices is extensively documented in the public record. And it is felt every day at pharmacy counters by millions of Americans who cannot afford their medicines. The time to deliver real results is now."

November 28, 2023

Representative Cathy McMorris Rodgers

Chair, Committee on Energy and Commerce

2188 Rayburn House Office Building

Washington, DC 20515

Representative Frank Pallone

Ranking Member, Committee on Energy and Commerce

2107 Rayburn House Office Building

Washington, DC 20515

Cc: House Energy and Commerce Committee Membership

Re: Must-Pass PBM Reform Legislation

During the 118th Congress, multiple bills have been introduced and acted upon by committees in both chambers that would improve our nation’s broken prescription drug system and result in cost savings to patients and prescription drug plans. All advance a common goal of reining in the profiteering, anticompetitive and anti-consumer practices of pharmacy benefit managers (PBMs), creating price transparency, making prescription medicines more affordable for patients, and bringing genuine savings to employers and taxpayers. On behalf of nearly 50 patient, provider, pharmacy, consumer, organized labor and antitrust advocates, we are now urging expedited action to enact meaningful PBM reform. In short, it’s time to deliver the right legislation so that Americans can better afford the medicines they need at the pharmacy counter.

Predatory PBM business practices have become well documented in Senate and House hearings. Three major corporations control more than 80% of U.S. prescription drug sales and they have used their domination of the marketplace to eliminate competition and create vertically-integrated empires that include mail order, specialty and retail pharmacies, and offshore group purchasing organizations that evade taxation and scrutiny by U.S. regulators. The original mission of PBMs – to use their volume purchasing to negotiate lower prices for their clients and consumers – has been replaced by a cynical system of arbitrage in which PBM profits soar continually higher, while working Americans see out-of pocket costs rising for the medicines they need and employers struggle to cover escalating costs of health benefits for their employees.

Americans cannot, and should not, wait longer to resolve these problems. Each day without comprehensive, effective legislative action is a day in which more savings are being siphoned from taxpayers, consumers and employers to be funneled into PBM profits. Through a complex web of opaque arbitrage schemes, PBM-derived drug revenues have transformed these middlemen companies into some of the most profitable corporations in the world, in many cases taking a larger share of prescription drug revenues than the research and manufacturing companies that create the products.

Growing costs of healthcare hurt Americans at home, and hurt American companies’ global competitiveness. Legislative inaction or enactment of weak legislation will only extend the financial insecurity of working Americans, while the competitive advantage of American businesses erodes in the global marketplace.

As both houses of Congress advance legislation to restore dynamic and transparent competition to the PBM-intermediated prescription drug marketplace, we believe enactment of two key provisions is critical to achieving the bipartisan goal of lowering prescription drug costs that Congress has pursued for many years:

Break the link between PBM income and drug prices in the private marketplace and in the Medicare program. PBMs negotiate rebates and discounts from prescription drug manufacturers and then offer preferred placement on formularies to those drugs that provide PBMs the greatest sources of income from retained rebates and discounts, extracted fees and other revenue extraction schemes. A complex set of perverse incentives in this highly uncompetitive drug marketplace motivates PBMs to steer consumers to higher-priced drugs, rather than to less expensive generics and biosimilars, as would occur in an authentically competitive market. It is especially unconscionable for Medicare beneficiaries – Americans who face mounting health challenges in the autumn of their lives after a lifetime of work – to face higher out-of-pocket costs and be denied access to medicines they need due to predatory pricing tactics of a few anti-competitive PBM oligopolists who dominate the prescription drug marketplace. Congressional legislation must prohibit PBMs from deriving income from any source other than transparent, market determined fees paid by PBM clients for services they value. It is long overdue for Congress to take this decisive step to prohibit cost-increasing and anti-competitive PBM arbitrage schemes and replace them with a genuine competitive market for bona fide PBM services.

Americans with chronic diseases should directly benefit from the savings PBMs negotiate with drug manufacturers. We have a chronic disease crisis in this country. Chronic illnesses are reducing life-years more than twice as much as overdoses, suicides, homicides and car accidents combined. When out-of-pocket prescription drug costs are too high, patient adherence to physician-prescribed medications is diminished and patients become sicker and generate greater costs for our health care system. Passing savings on to chronic disease patients makes sense for our population health and our economy. Yet today, when PBMs negotiate discounts from drug manufacturers, there are no incentives for them to pass these savings on to their plan sponsor clients or their patients. And the health of chronically ill patients and our economy suffer because of it.

Taking Action

The public wants Congress to act on these matters. A recent poll found that more than 80% of likely voters support breaking the link between PBM income and prescription drug prices. And Americans have consistently said that PBM-negotiated savings should be used to make drugs more affordable for consumers. At a time in which Americans are divided on so many political and policy issues, there is bipartisan agreement on the matter of PBM reform.

Congress has devoted considerable time to examining these issues. Members have pored over pharmacy data and heard many hours of expert testimony. The predatory impact of PBM practices is extensively documented in the public record. And it is felt every day at pharmacy counters by millions of Americans who cannot afford their medicines. The time to deliver real results is now. We encourage immediate action to enact effective PBM reform, and we thank you for your leadership.

Sincerely,

PBM Accountability Project

A. Philip Randolph Institute

Alliance for Transparent and Affordable Prescriptions (ATAP)

American Pharmacists Association (APhA)

American Pharmacy Cooperative, Inc.

America's Agenda

Autoimmune Association

Black, Gifted & Whole Foundation

Boone County Hospital

Carilion Clinic

Chronic Care Policy Alliance

Coalition of State Rheumatology Organizations

Coalition to Protect Patient Choice

Colorado WINS Local 1876

Crohn's & Colitis Foundation

Healthy Men Inc.

HIV + Hepatitis Policy Institute

Immune Deficiency Foundation

Infusion Access Foundation

International Foundation for Autoimmune & Autoinflammatory Arthritis (AiArthritis)

International Union of Bricklayers & Allied Craftworkers (BAC)

International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers

Ironworkers District Council of the Mid-Atlantic States

Iowa Pharmacy Association

Job Creators Network

Let My Doctors Decide

Lupus and Allied Diseases Association, Inc.

Mercyone

MidWest Rheumatology Association

Multiple Sclerosis Foundation

National Community Pharmacists Association

National Consumers League

National Grange

National Infusion Center Association (NICA)

Neuropathy Action Foundation

NH AFL CIO

North Carolina Rheumatology Organization

Partnership to Fight Chronic Disease

Pharmacists United for Truth and Transparency

South Carolina Pharmacy Association

Sunvalley Arthritis Center

Tennessee Rheumatology Society

Trade Alliance to Promote Prosperity

Transparency-Rx

United Food & Commercial Workers (UFCW)

UFCW 8-Golden State

United Mineworkers of America (UMWA)

Virginia Society of Rheumatology

Wisconsin Rheumatology Association