Time is enemy for lawmakers pushing PBM changes

Time is slipping away from lawmakers who hope to resurrect a slate of changes to the pharmacy benefit manager (PBM) industry.  

PBMs dodged a bullet when those changes — which included transparency requirements, a ban on “spread pricing” and a provision delinking PBM payments from a drug’s list price — were stripped from December’s short-term government funding bill.  

Lawmakers tried and failed twice last year to legislate changes to PBM business practices. They came the closest in December, and there’s bipartisan interest in bringing those same provisions back.  

But Democrats blame Republicans for killing the package last year and do not want bipartisan issues included in a partisan reconciliation bill, which will be a vehicle to cut spending to pay for an extension of President Trump’s 2017 tax cuts. 

“We were on the brink of passing historic reforms. But then at the behest of Elon Musk, Republicans balked,” said Rep. Diana DeGette (D-Colo.), the top Democrat on the House Energy and Commerce Subcommittee on Health.

House lawmakers held a hearing Wednesday on “reining in” PBM business practices, a sign that Republicans remain interested in the issue.  

But with much of the attention in Congress focused on reconciliation, it isn’t clear whether there will be enough political will among GOP leadership to do anything but a “clean” funding bill, without PBM changes or other health extenders. 

At the same time, Democrats are also highly suspicious of the Department of Government Efficiency’s (DOGE) efforts to reshape the federal government and are unlikely to support any funding legislation that doesn’t contain language restricting DOGE and Trump from undercutting any spending deal — even if the funding bill were to include bipartisan health measures.  

“Anytime you’re in a one-party rule, and you’re dealing with reconciliation, bipartisanship nearly always freezes for an extended period of time,” said Chris Meekins, an analyst at Raymond James and a former senior member of the Department of Health and Human Services during the first Trump administration.  

“When … the ground thaws after the reconciliation fight, I think we could revisit PBM reforms and others, but until then, I think it’s an incredibly heavy lift to get it through both chambers,” Meekins added. 

During Wednesday’s hearing, Democrats repeatedly brought up the potential Medicaid cuts that will be needed to find the savings included in the budget resolution Republicans approved Tuesday evening. 

Democrats say they would overwhelmingly approve a stand-alone bill with the same PBM changes and extension of other expiring health programs, if Republicans were willing to bring it up. 

The language is already written and could be inserted ready-made into a new bill or passed as a stand-alone under a suspension of the rules.  

“What is the plan of the majority to get that bipartisan plan, including PBM reform [and] all these important health care extenders that we agreed on last year, to the floor?” DeGette asked. 

Even if Republicans wanted to include last year’s PBM provisions in the reconciliation bill, the complicated Senate rules around reconciliation could mean some, or all, may not qualify.  

Health subcommittee Chair Buddy Carter (R-Ga.) said Republicans weren’t clear on the next steps, but “it will be cleared up soon.” 

The PBM changes represented significant guardrails on the business practices of the industry, which has become a focus of bipartisan efforts to curb drug costs. The industry has faced intense scrutiny on Capitol Hill, and essentially every committee in both chambers with jurisdiction over health care drafted PBM reform legislation last year.   

The three biggest PBMs are UnitedHealth Group’s Optum Rx, CVS Health’s Caremark and Cigna’s Express Scripts. Those companies represent about 80 percent of all U.S. prescriptions.   

JC Scott, president and CEO of the PBM lobbying group Pharmaceutical Care Management Association, said he anticipates Congress will try again. 

“The fact that they are focused this amount of time and energy on PBMs and not focused on fundamentals like drug company list prices is pretty astounding to me,” Scott said. “I suspect this is all connected to additional legislation here coming down the road.” 

But if Congress wants to act, the clock is ticking.  

Temporary health extenders included in the December bill funding community health centers, delaying Medicaid Disproportionate Share Hospital payment cuts to safety net hospitals and extending Medicare telehealth flexibilities are all due to expire by the end of March. 

Democrats do not want to renegotiate any of the provisions. But Meekins said despite an outcry from industry, the legislation wouldn’t have significantly “whacked” them. 

“I think that the legislative action being proposed, even in the December package, was not going to be a material impact to the big three PBM players,” Meekins said.