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Pharmacy benefit managers are underregulated middlemen that raise the cost of health care for employers and patients—and they must be reformed now, the NAM told the House Energy and Commerce Subcommittee on Health ahead of a hearing on PBM reform Wednesday. 
 
What’s going on: Competitive health care benefits help manufacturers attract and retain workforce talent, but their rising price tag—a direct result of PBM practices—is making it increasingly difficult for employers to provide them, the NAM told the subcommittee.  

• “PBMs contribute to the skyrocketing cost of health care by tying patient cost-sharing to list prices, pocketing manufacturer rebates and obscuring their concerning business models,” the NAM said.  

Something must be done: The hearing—the first on PBM reform in the new Congress—saw bipartisan agreement on the need to change the health care entities’ business practices, and soon.  

• “PBMs are driving up costs for prescription medications, delaying access to necessary treatments, adding hoops for patients to jump through and robbing hope from patients,” Subcommittee Chair Buddy Carter (R-GA), a longtime NAM ally on the need for PBM reform, said at the hearing. “They have only created perverse incentives throughout the drug supply chain.”   
• Added Ranking Member Diana DeGette (D-CO): “Republicans and Democrats agree we must rein in PBM abuses.”  

What reform should look like: To bring down health care costs for employers and workers alike, the NAM said Congress should take several specific steps: 

• Increase transparency into PBMs’ business models and the factors that contribute to a drug’s cost and formulary placement, as well as PBMs’ compensation.  
• Ensure full rebate passthrough so 100% of negotiated pharmaceutical savings are passed from PBMs to health plan sponsors and workers.  
• Delink PBM compensation from the list price of medications to reverse PBMs’ incentives to drive up prescription list prices. 

What it would do: By taking these actions, Congress “will make it easier for manufacturers to get the data needed to make informed decisions on prescription drug benefits for their workers.” 

• “They will also help break the cycle of PBMs increasing health care costs to boost their profits at the expense of patients. Most importantly, these reforms will help lower health care costs for manufacturing families across the country.”