The Prescription Pricing for the People Act of 2019 Cantwell, Grassley introduce bipartisan legislation requiring FTC get to the bottom of prescription drug middlemen

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Sen. Chuck Grassley (R-Iowa)

WASHINGTON, D.C. – U.S. Senator Maria Cantwell (D-WA), a senior member of the Finance Committee, and Senator Chuck Grassley, the chairman of the committee, have introducedlegislation requiring the Federal Trade Commission (FTC) to study the role and recent merger activity of pharmacy benefit managers (PBMs), as well as possible anticompetitive behaviors. The Prescription Pricing for the People Act of 2019 helps to shine a light on the PBM industry by examining the effects of consolidation on pricing and other potentially abusive behavior. It also requires the FTC to provide policy recommendations to Congress to improve competition and protect consumers.

“People’s lives depend on getting affordable access to medicine. We need greater transparency and oversight to increase competition and make sure patients get a fair deal on the medications they need,” said Cantwell.

“Competition and transparency are key ingredients to improving affordability of prescription medications. While PBMs play a significant role in determining how much patients and the government pay for drugs, much of their business model is cloaked in secrecy, and the industry has experienced significant consolidation in recent years. The Prescription Pricing for the People Act helps provide a better understanding of the PBM industry through a comprehensive FTC review designed to inform policymakers, protect patients and safeguard competition. This bill is just one of many steps I’m taking as Finance Committee chairman to improve access to affordable medications,” Grassley said.

PBMs serve as middlemen in the prescription drug supply chain, but the industry has been under scrutiny for how it determines the prices of prescription drugs. Recent consolidations between PBMs and insurance providers have resulted in vertical integration whereby a small number of companies now manage the vast majority of prescription drug benefits. The Prescription Pricing for the People Act requires the FTC to study the industry, in light of recent consolidations, and report its findings to Congress. Specifically, the legislation commissions the FTC to evaluate whether PBMs:

  • charge certain payers, including Medicare and Medicaid, a higher price than reimbursement rates for competing pharmacies while reimbursing pharmacies in which the PBMs have an ownership interest at the rate charged to payers;
  • steer patients to pharmacies in which the PBM has an ownership stake; and
  • use formulary designs to depress the market share of low-cost, lower-rebate prescription drugs.

The legislation also directs the FTC to evaluate the current state of the industry, determine whether more information about the roles of intermediaries would benefit consumers and offer policy recommendations to improve transparency, prevent anticompetitive behavior and promote efficiencies for patients. The legislation will be referred to the Senate Judiciary Committee, which has jurisdiction over antitrust matters.

Cantwell has long supported efforts to drive down prescription drug prices. She introduced the Basic Health Plan provision included in the Affordable Care Act, which has allowed New York and Minnesota to negotiate health care prices for large populations in bulk, driving down costs for hundreds of thousands of Americans. And in January, she joined Senators Bernie Sanders (I-VT) and Amy Klobuchar (D-MN) to introduce bills to empower Medicare to negotiate lower drug prices for seniors and allow Americans to import safe, low-cost prescription drugs from Canada.

Along with Cantwell and Grassley, the legislation is also cosponsored by Senators Steve Daines (R-MT), Richard Blumenthal (D-CT), James Lankford (R-OK), and Joni Ernst (R-IA)

 

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