OMG both parties working together to do something smart!
Lawmakers Plot to Force Health Insurers to Sell Off Pharmacies
Bipartisan bills would make healthcare companies with pharmacy-benefit managers divest their pharmacies
By Liz Essley Whyte and Joseph Walker, WSJ
Updated Dec. 11, 2024 5:25 pm ET
A bipartisan group of lawmakers introduced legislation to break up pharmacy-benefit managers, the drug middlemen that have now faced yearslong scrutiny from Congress and the Federal Trade Commission.
A Senate bill, sponsored by Sens. Elizabeth Warren (D., Mass.) and Josh Hawley (R., Mo.), would force the companies that own health insurers or pharmacy-benefit managers to divest their pharmacy businesses within three years.
A companion bill, which sponsors say draws on a history of government prohibitions on joint ownership within industries, was also introduced in the House on Wednesday.
If passed, the legislation would be the most far-reaching intervention yet into the operations of pharmacy-benefit managers, known as PBMs, and their parent companies, cutting off a major source of revenue for the companies and frustration for patients.
“PBMs have manipulated the market to enrich themselves—hiking up drug costs, cheating employers, and driving small pharmacies out of business,” Warren said. “My new bipartisan bill will untangle these conflicts of interest by reining in these middlemen.”
Hawley said the legislation “will stop the insurance companies and PBMs from gobbling up even more of American healthcare and charging American families more and more for less.”
It is unlikely the bills could get enacted into law in this Congress, because it is wrapping up its session. Backers are trying to lay the groundwork for passage next year.
Dissatisfaction with the role of healthcare gatekeepers has emerged as a flashpoint in the wake of the killing of UnitedHealth Group executive Brian Thompson.
The unusual support of both Republicans and Democrats for the bills follows hearings and probes of health-industry business practices that lawmakers and other critics say have increased drug costs.
“Congress should focus on the real way to lower prescription drug costs by finally holding big drug companies accountable for high drug list prices,” said a spokesman for the Pharmaceutical Care Management Association, a trade group representing PBMs.
“Any policies that would limit our ability to negotiate with drugmakers and pharmacies would ultimately increase the cost of medicine in the United States, and in many cases, serve as a handout to the pharmaceutical industry,” said a CVS Health spokesman.
PBMs are powerful players in the prescription-drug business, influencing which medicines insurance plans will pay for and how much.
The three biggest PBMs—CVS Health’s Caremark, Cigna’s Express Scripts and UnitedHealthGroup’s OptumRx—belong to companies owning some of the country’s largest health insurers. They distribute some medicines through their own mail-order pharmacies. CVS also owns more than 9,000 retail pharmacy locations.
By using their purchasing power to wring discounts and rebates from drugmakers, the firms say they help health plans keep a lid on costs and thereby lower the premiums paid by Americans.
But some doctors, patients and drugmakers say the firms have wound up increasing costs, while extracting fees and other payments that boost their revenue. Among the targets of their criticism is the PBMs’ ability to steer drug dispensing through their own pharmacies at the expense of independent retail stores, and sometimes at a higher price.
Drugs dispensed via mail-order pharmacies can wind up costing many times what other pharmacies charge, The Wall Street Journal has reported. A House investigation this summer found that PBMs sometimes make patients pay more to use their local pharmacy than the PBM’s affiliated mail-order pharmacy. A Federal Trade Commission investigation similarly found that PBMs steer patients away from less-expensive drugs and overcharge for cancer treatments.
Other pieces of legislation targeting the pharmacy-benefit companies have required transparency in their business dealings or banned certain pricing practices. Certain provisions came close to passing at the end of last year, but failed to make it into an end-of-year legislative package.
The House version of the bill, known as the Patients Before Monopolies Act, is sponsored by Rep. Jake Auchincloss (D., Mass.) and Rep. Diana Harshbarger (R., Tenn.). The two previously teamed up on a bill aimed at PBMs’ methods of steering patients to affiliated pharmacies.
The bills would require companies that own insurers or PBMs to divest pharmacy businesses of all kinds, including mail-order and retail.
The senators said precedent for the government prohibiting joint ownership within industries includes what is called the Volcker rule, a part of the 2010 Dodd-Frank financial law that stopped banks from doing proprietary trading.
Write to Liz Essley Whyte at liz.whyte@wsj.com and Joseph Walker at joseph.walker@wsj.com
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