BUTLER COUNTY, IOWA – U.S. Sens. Chuck Grassley (R-Iowa) and Maria Cantwell (D-Wash.) are announcing AARP, a leading nonprofit advocacy group on issues impacting seniors, endorsed their Pharmacy Benefit Manager (PBM) Transparency Act.
“To restore sanity to drug prices, we need to shine light on dim corners of the pharmaceutical industry. I’m grateful to AARP for its support of this bill to help address abusive practices and bring more transparency and accountability to PBMs. With every bit of progress, we’re a step closer to lowering the outrageous costs people are forced to pay for the prescriptions they need,” Grassley said.
“I’m pleased that the nation’s largest advocacy organization for seniors has endorsed the bipartisan legislation I authored with Senator Grassley,” said Cantwell, Chair of the Senate Committee on Commerce, Science and Transportation. “The Pharmacy Benefit Manager Transparency Act will hold PBMs accountable for their deceptive and unfair business practices that drive up prescription drug costs and will reduce the deficit by $740 million over the next 10 years. As the AARP rightly said, our bill targets practices like ‘spread pricing’ and ‘clawbacks’ in the prescription drug supply chain ‘that can contribute to high prices for consumers and taxpayers.’ I look forward to working with Leader Schumer and my bipartisan colleagues on advancing this legislation toward a vote on the Senate floor.”
“We are grateful for Senator Grassley’s continued work to make prescription drugs affordable for Americans who are often forced to choose between food and life-saving medicine. The Senator’s bipartisan PBM Transparency Act would increase transparency and accountability in the prescription drug supply chain, which would lead to lower costs for consumers and taxpayers,” said Brad Anderson, AARP Iowa State Director.
Grassley and Cantwell have been persistent in their efforts to advance the PBM Transparency Act. Grassley testified before the Senate Committee on Commerce, Science and Transportation earlier this year to advocate for the bill’s passage. The committee approved the legislation the following month. It now has 14 Senate cosponsors. If enacted, the PBM Transparency Act would ban deceptive pricing schemes that drive up patient costs, prohibit arbitrary claw backs of payments made to pharmacies and require PBMs to report their profits from spread pricing and pharmacy fees to the Federal Trade Commission (FTC).
During Grassley’s 99 county meetings across Iowa, attendees – most recently in Waterloo and Saint Charles – have shared with him the urgent need to lower prescription drug prices. Grassley has brought his conversations with Iowans back to Washington and taken action. Over the last few years, he has garnered broad bipartisan support for holding PBMs accountable and passed targeted legislation either into law or through committee. Grassley previously prompted the FTC to launch an investigation into PBMs. While ranking member of the Senate Finance Committee, he called five PBM executives to testify.
AARP joins a substantial list of supporting stakeholders, including the Biotechnology Innovation Organization, the Autoimmune Association, the National Community Pharmacists Association and the Community Oncology Alliance.
Read AARP’s endorsement letter HERE.
Access text of the PBM Transparency Act HERE.
About PBMs:
PBMs were formed in the 1960s to process claims and negotiate lower drug prices. Now, PBMs administer prescription drug plans for hundreds of millions of Americans.
Three PBMs control nearly 80 percent of today’s prescription drug market. They serve as middlemen, managing every aspect of the prescription drug benefits process for health insurance companies, self-insured employers, unions and government programs. They operate out of the view of regulators and consumers – setting prescription costs, deciding which drugs insurance plans cover and how to dispense them. Their work in the shadows ultimately undercuts local, independent pharmacies and enables them to pocket unknown sums that could otherwise be passed along as savings to consumers. This lack of transparency makes it impossible to fully understand if and how PBMs might be manipulating the prescription drug market.
Some PBMs have been known to engage in “spread pricing,” where a PBM charges a health insurance plan more to process a prescription than it reimburses the pharmacy, keeping the difference – the “spread.” For example, when a pharmacist fills a prescription, a PBM handles the process, informing the pharmacy it will be reimbursed $90. The PBM then charges the health insurance plan $100 for processing that same prescription. PBMs pocket the $10 spread.
In some cases, the pharmacy is reimbursed below the prescription’s cost. This drives independent pharmacies out of business, creating pharmacy deserts and increasing prices for health plans that can result in higher premiums. PBMs have also practiced unfair claw backs, retroactively rescinding reimbursement payments made to pharmacies based on arbitrary guidelines and evaluations.
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