Congress is moving to rein in Pharmacy Benefit Managers (PBMs) as lawmakers from both parties target these powerful healthcare middlemen for allegedly driving up medication costs at the expense of American patients.
At a Glance
- Bipartisan groups of lawmakers are pushing legislation to regulate Pharmacy Benefit Managers (PBMs) in efforts to lower prescription drug prices
- PBMs are accused of inflating drug costs through complex pricing schemes, reducing market competition, and harming independent pharmacies
- Senators Chuck Grassley and Maria Cantwell have reintroduced two bills aimed at increasing PBM transparency and accountability
- States that eliminated certain PBM practices have saved millions in Medicaid costs
- Critics note PBMs receive substantial campaign donations from both pharmaceutical companies and PBMs, complicating reform efforts
The Hidden Middlemen of Prescription Drugs
Pharmacy benefit managers, often operating behind the scenes of the healthcare industry, have come under intense scrutiny from legislators on Capitol Hill. These companies, which negotiate drug prices between insurers and pharmaceutical manufacturers, are facing accusations of artificially inflating medication costs while reducing market competition through consolidation and opaque business practices.
The three largest PBMs—CVS Caremark, Express Scripts, and OptumRx—control approximately 80% of the prescription drug market in the United States.
“PBMs are the pharmaceutical supply chains hidden middlemen that are driving up costs for prescription medications, delaying access to necessary treatments, adding hoops for patients to jump through, and robbing hope from patients,” Chairman Buddy Carter (R-Ga.) said.
The major concerns surrounding PBMs include their use of spread pricing (charging insurers more than they pay pharmacies and pocketing the difference), complex rebate structures that incentivize higher list prices, and vertical integration that allows them to favor their own affiliated pharmacies. These practices have particularly affected independent pharmacies and patients in rural communities who rely on them for medication access.
Newsmax or MSNBC, I'll go everywhere to talk about lowering Rx drug prices by reforming the drug-pricing middlemen known as pharmacy benefit managers. The bill is drafted, the bill is bipartisan, and the bill has the votes in the House & Senate. Speaker Johnson: bring up the… pic.twitter.com/HtNpe0fxyZ
— Rep. Jake Auchincloss 🟧 (@RepAuchincloss) January 7, 2025
Congress never really agrees on anything – but they do agree on this. So Big Pharma’s in trouble…
Bipartisan Momentum for Reform
In a rare display of bipartisan cooperation, lawmakers from both major parties have united in their criticism of PBM practices. The House Energy and Commerce Committee has held hearings examining PBM business models, while Senators Chuck Grassley (R-Iowa) and Maria Cantwell (D-Wash.) have reintroduced two bills aimed at increasing transparency and reducing costs. Their legislative package includes the Prescription Pricing for the People Act and the PBM Transparency Act, which would require the Federal Trade Commission to study consolidation effects and ban deceptive pricing schemes.
“Iowans are fed up with the skyrocketing cost of prescription drugs and eager for Congress to act to put a stop to pharmacy benefit managers’ shady practices. These bipartisan legislative solutions will bring much-needed transparency to prescription drug pricing and ensure the federal government can effectively target the abusive practices that unfairly drive up drug costs,” Grassley said.
Ranking member Diana DeGette (D-Colo.) echoed this sentiment during recent hearings.
“Republicans and Democrats agree we must rein in PBM abuses. We know how PBMs play games to pad their bottom lines at the expense of consumers,” DeGette said.
2025 is a wild year so far. And it’s only February.
