House Passes PBM Transparency Bill Before Moving to Broader Measure in November

November 01, 2019

The House unanimously passed a pharmacy benefit manager (PBM) transparency bill, showing that while larger bills on drug prices have hit roadblocks, there can be broad bipartisanship on narrower bills to increase health care transparency.

The Public Disclosure of Drug Discounts and Real-Time Beneficiary Drug Cost Act (H.R. 2115) would require PBMs to report aggregate rebate data, discounts, and other price concessions they received from drug manufacturers.  HHS would then be required to share this data with the public by drug class level.

Why focus on PBMs?  Pharmacy benefit managers have often found themselves labeled as bad actors in the debate over increasing drug prices despite the value and benefits they can provide to employers, and with Congress determined to pass something on drug prices ahead of the 2020 election, measures to increase health care transparency are relatively easy to pass.

What does the bill do?  The goal is to increase the amount of data collected and analyzed on PBM practices to understand whether PBMs and their business model are contributing to higher drug prices.

Takeaway:  As with much of the health care industry, drug pricing is opaque, making it difficult to know the prices and discounts received from one PBM to another.  Raising the curtain on this data may in fact increase competition and result in lower drug prices.  It may also allow PBMs to defend themselves successfully against the “bad actor” label, as they can demonstrate that when working in a more transparent market, they are the best avenue to reduce drug prices.

Outlook:  The House is expected to vote on H.R. 3—a much broader drug pricing bill that is likely to draw substantial opposition—in November.  However, it is unclear whether any action will occur in the Senate, where a different approach is pending but has yet to receive a consensus.