Dear Chairs Crapo, Cassidy, Cruz, Guthrie, Smith, and Walberg, and Ranking Members Wyden, Sanders, Cantwell, Pallone, Neal, and Scott:
As the 119th Congress convenes, we are reintroducing the undersigned patient advocacy organizations who have come together under the common goal of Pharmacy Benefit Manager (PBM) reform. We support the reforms outlined below, many of which have been included in various legislation and proposals in Congress. We urge Congress to act soon on PBM reform to ensure patients can access and afford their medications.
The undersigned patient groups, representing millions of patients across the United States living with chronic and acute conditions, hear consistently from people with these conditions about the many challenges they face accessing life-changing or life-saving medications. Reforms are needed in many areas to help patients access the medications they need in a more timely and more affordable manner — including reforms to the practices of pharmacy benefit managers (PBMs).
PBM policies have a direct impact on whether patients can access and afford their medications. PBMs dictate decisions about access to, and affordability of, medications — controlling which drugs are available and at what price; what hoops patients have to jump through; and which pharmacies patients can use.
We therefore urge you to pass meaningful PBM reform at the beginning of this year that ensures transparency and accountability for PBMs and their practices and prioritizes the needs of patients.
For our organizations, this means:
- Ensuring transparency and accountability to allow for systemic reform, and so that all stakeholders, including patients, are working with the same level of information to inform healthcare decision-making;
- Banning spread pricing;
- De-linking PBM compensation from the cost of prescription drugs; and
- Addressing insurance-mandated step therapy practices that present barriers for patients accessing medically-necessary medications.
PBMs create significant barriers to care for people with chronic and acute conditions navigating insurance. This is largely due to the role of PBMs in coverage decisions and the evolving strategies that PBMs put in place. As Congress looks toward passing a comprehensive PBM reform package by the end of the year, we urge you to include the following proposals.
Increasing Transparency
There is increased pressure on patients to make informed choices about their care and prescription drug medications. However, there is very little transparency to guide patients as they navigate our health system. Transparency measures for PBMs and insurers would mean patients receive better information about coverage policies for specialty drugs. By having clear information on the requirements for obtaining specialty medications, patients can access their treatments more efficiently without undue burden. Transparency around formulary design would also allow patients and their health care providers to have confidence that clinical evidence is driving coverage decisions. Additionally, this transparency will give advocates and researchers the information and data they need to facilitate system-level reforms as-needed.
We urge Congress to advance proposals that expand and improve transparency measures for PBMs and insurers to ensure patients receive better information about coverage policies.
Ensuring Accountability
As demonstrated in the recent FTC interim report, vertical integration and increased consolidation over the last few decades have exacerbated the uneven power dynamic between PBMs and consumers. The pharmacy benefit management market has become extremely concentrated, and the largest PBMs are vertically integrated with the largest health insurers, as well as specialty and retail pharmacies. As a result, in 2023, the top three PBMs processed nearly 80 percent of the approximately 6.6 billion prescriptions dispensed by U.S. pharmacies, and account for nearly 70 percent of all specialty drug revenue. This consolidation allows PBMs to exercise significant control over which drugs are available for patients, and at what price. In addition, this consolidation — and the related lack of fair and transparent reimbursement practices for non-affiliated pharmacies — reduces patient choice, allowing PBMs to control which pharmacies patients can use to access their prescribed medications.
Given the harm vertical integration and consolidation has had on patient access to essential medications, we urge Congress to pass proposals that will more effectively hold PBMs accountable for their anticompetitive actions and hold PBMs accountable for providing appropriate services and access to their enrollees. These reforms will benefit patients and the healthcare system as a whole.
De-Linking PBM Compensation
Right now, PBMs are incentivized to prefer medications that offer the best rebates, instead of the ones that are the least expensive, or perform the best clinically. This practice has the dual result of driving up list prices while limiting access to less expensive treatment options, including lower-cost biosimilars or generic medications.
Our organizations support policy proposals that would "de-link" PBM compensation based on the list price of a drug as a condition of entering a contract with plans, across all plan types. Service fees should not be connected to the price of a drug, discounts, rebates, or other fees. Instead, PBM compensation should be limited to a flat dollar amount service fee. We believe that a flat service fee would be a fairer process for purchasing and distributing medications.
The de-linking provision will bring much-needed reform to these areas, to help people access and afford the medications they need to treat and manage their conditions. Our organizations believe this measure will make a real difference for patients’ out-of-pocket costs and access to necessary therapies, and support efforts to increase transparency.
Banning Spread Pricing
For similar reasons, our organizations support banning spread pricing across all plan types. Spread pricing, in which an insurer is charged more for a prescription drug than the pharmacy is reimbursed, leads to inflated drug costs that impact patients. The PBM has an incentive to maximize the size of the spread, which means that patients, drug purchasers and distributors pay more than is necessary for medications and treatments.
Addressing Utilization Management Practices via Step Therapy Reform
PBMs play a powerful role in determining what access patients have to their medications. Their unique role allows them to determine what medications are covered by payors, what tier those medications are placed on, and what pharmacies people can use to get their medications. One form of utilization management that is particularly concerning for the patient and provider community is insurance-mandated step therapy because it can delay access to needed medications for months and lead to severe or irreversible health outcomes.
Insurance-mandated step therapy utilization management requires that patients demonstrate that an insurer-preferred treatment does not work before the plan will cover the treatment initially selected by the patient and their provider. Some step therapy practices can require between three to five medications to fail a person with a chronic disease before access to the prescribed medication is approved.
The Safe Step Act (S. 662/H.R. 2630) was added as an amendment to S. 1339, the PBM Reform Act, by a vote of 20-1. The bill is a crucial safeguard for patients and would ensure that employer-sponsored health plans offer a timely and medically reasonable step therapy exceptions process. The Safe Step Act complements legislation that has passed in 38 states. This policy will directly impact patient access to essential medications, and we strongly urge Congress to include the Safe Step Act in the PBM reform package.
Millions of people who live with chronic and acute health conditions need Congress to act expediently and pass comprehensive and common-sense PBM reforms. These reforms have bipartisan, bicameral support and the potential to improve access and affordability of medications patients need. Thank you for considering our recommendations, and we encourage you to use our groups as a resource.