Drug company middlemen likely to be a focus in 118th Congress

WASHINGTON — Factions of the health care system and members of Congress are turning their fire on an oft-maligned part of the drug pricing system — the middlemen who negotiate discounts with drug companies on behalf of health plans.

The business practices of pharmacy benefit managers, or PBMs, have attracted the ire of community pharmacies, health care providers, drug companies and both Republicans and Democrats, who argue the middlemen lead to increased costs for patients.

“We want to address the whole kit and caboodle,” said Rep. Earl L. “Buddy” Carter, R-Ga., referring to the full suite of PBM business practices. He said he and other lawmakers, including Democrats, will soon launch a bipartisan “Patient Access Caucus” to focus on issues impacting access to health care.

“That is going to be the first issue that we address: PBMs.”

PBMs work with health plans — and, in some cases, are owned by them — to decide what drugs will be on a covered list of drugs called a “formulary” and how much a patient will have to pay for them.

PBMs argue their work saves money and that the rebates they collect from drug companies in exchange for coverage by a health plan are used to lower premiums.

“I see some of that focus [in Congress] is providing an opportunity for us to better educate policymakers on Capitol Hill and the administration about the value that our companies deliver to the market in terms of lower costs, affordability, better patient access and better health care outcomes,” said JC Scott, president and CEO of the Pharmaceutical Care Management Association, a trade group representing PBMs.

But a 2019 Senate Finance Committee staff report argues drug companies raise list prices so they can offer PBMs larger rebates and get more favorable placement on formularies to improve their market share.

PBMs keep a portion of these rebates and also receive fees for their work, but how much is generally unknown because of the secrecy of contracts.

The new Republican majority in the House, reeling from a historic loss last year dealt to its allies in the pharmaceutical industry in a newly passed law addressing drug costs, wants to do something to make its own mark in the drug pricing debate.

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