Discussing the Current Landscape of PBM Reform Legislation

Joseph Shields, managing director of TransparencyRx, said during an interview ahead of the annual meeting of the Pharmacy Benefit Management Institute that he was optimistic that PBM reform legislation would reach President Joseph R. Biden’s desk before the end of the end. He noted that recent actions in the House and Senate indicate a growing alignment on the need for comprehensive reforms that address issues such as market concentration, spread pricing models, and transparency.

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Managed Healthcare Executive: During the PBMI presentation you’ll be talking about PBM policy. What points will you touch on?

Joseph Shields: It's a sort of landscape analysis of what's both happening on Capitol Hill and then the overall market vis a vis transparency and the attempts to sort of reform the misalignments that exist in the market based on spread pricing models and the market concentration control that the big 3 and mega insurers have.

Managed Healthcare Executive: Will Congress address PBM legislation this fall?

Shields: We've actually been doing rounds of conversation, and I would say, based on maybe where I was a couple weeks ago, I think I'm actually getting more optimistic, not less, that you'll see action on PBM reform. The hope is, and the intent for us, is that it should be meaningful action. I don't think there should be lip service, sort of paid to transparency. That for us is a fundamental value and fundamental core of who we are and what we do. I think there's been some transparency washing or some other sort of greenwashing that's occurred in the market, where the big 3 or others give it lip service, and it's not necessarily reflective in their business models, intentionally so. I think there's been some ossification as a result, which they're really good at, candidly, of people understanding what transparent models are and sort of the impact of them and their ability to compete and allow for choice and openness in the marketplace.

Managed Healthcare Executive: What bills are expected to move forward?

Shields: There's a couple of different bills. So, the House has actually passed a package that's generally known as the sort of lower cost package that's inclusive of some commercial reforms and a lot of reforms impacting both Medicaid and Medicare. That's already come out of the House. There's 2 sets of bills out of the Senate that are sort of the overarching packages, 1 called [the Modernizing and Ensuring PBM Accountability (MEPA) act] that came out of Senate finance that would impact Medicare plans and has a ban on spread pricing and a number of other elements on it that sort of gained attention. And then there's the package coming out of the Senate [Health, Education, Labor and Pensions (HELP)] committee which is passed. Both of these are passed to committee level that would fundamentally address commercial markets.

Amidst that, there have been some individual bills that have gained attention. There's been some delinking legislation, specifically that's gained traction over the summertime. The Drug Act specifically was both passed by the Oversight Committee, and then over the summer, the House Ways and Means Committee passed that bill 49-0.

So, sort of conceptually, the House, in terms of concerns around commercial reform and other issues, is getting closer to where the Senate is from our vantage point, which we think is a good thing. We're in favor of, and have advocated for, as comprehensive reform as you can get that helps level set the market. I think there's been, candidly, a sort of thumb on the scale in favor of larger competitors for some time, and they've been leveraging that with spread pricing models that are antiquated and not really reflective of reality. To me, spread pricing is like communism, right? It's just not based on a set of principles that is market driven, transparent, doesn't rely on things that aren't opaque notions and feels like isn't decided by 3 or 4 people in the room making decisions for millions and millions of Americans over their health care.

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