Staten Island Reporter

U.S. Rep. Nicole Malliotakis (R-N.Y.) said she is sponsoring a bill to regulate pharmacy benefit managers (PBMs) because "mom and pop" pharmacies in her district are being "crushed."

“When it comes to PBMs, there’s little to no transparency on their practices, and oftentimes they also own the insurance companies and pharmacies and are dictating what their competitors, smaller ‘mom and pop’ pharmacies, are able to make on prescription drugs while they pocket big profits,” Malliotakis told Staten Island Reporter. “Because of this, ‘mom and pop’ pharmacies in my district are being crushed, and the costs are being passed down to consumers."

"I’m proud to join my colleagues in introducing this critical piece of legislation which cracks down on the exploitative pricing techniques of PBMs and works to make pharmaceuticals more affordable," Malliotakis said. "I will continue pushing to ensure it’s considered in the House as soon as possible.”

H.R. 2880, the "Protecting Patients Against PBM Abuses Act," is a bipartisan bill sponsored by Malliotakis and U.S. Reps. Earl L. "Buddy" Carter (R-GA), Lisa Blunt Rochester (D-DE) and Jake Auchincloss (D-MA). 

Currently with 14 co-sponsors, the bill, introduced in April 2023, specifically states that It would limit “PBMs that are under contract with plans under the Medicare prescription drug benefit or Medicare Advantage from (1) receiving income for their services other than flat dollar amount service fees; (2) basing any service fees on the prices of covered drugs or any associated discounts, rebates, or other remuneration; (3) charging plan sponsors for ingredient costs or dispensing fees in amounts that are different than what is reimbursed to the pharmacy; or (4) reimbursing network pharmacies for less than that what is reimbursed to PBM-affiliated pharmacies,” according to the bill summary.

They would also be required to provide a report on the cost disparity between drugs listed on the plan’s formulary and those that are not on the formulary but have equivalent therapeutic effects. PMBs would also be asked to disclose rebates and fees received from drug manufacturers which the Centers for Medicare & Medicaid Services will publish online, along with other data currently reported. 

According to reports, only three major PBMs control 80% of U.S. prescriptions and boast significant ownership connections to insurers, engaging in vertical consolidation throughout healthcare entities. Compensated through a percentage of medication costs, these PBMs are incentivized to inflate drug prices, a practice exacerbated by tactics like formulary manipulation. Consequently, Medicare seniors face escalating out-of-pocket expenses compared to their commercially insured counterparts. The imperative for transparency and reform persists as a crucial step towards mitigating these issues.

Attorney General Letitia James (D-N.Y.) in February joined other state attorneys general in writing a letter to congressional leaders urging the passage of several pending bills aimed at increasing the transparency of pharmacy benefit managers’ role in increasing costs of medications and eliminating competition that independent pharmacies pose to PBM-affiliated pharmacies.

The letter asserts that a “small number of PBMs hold significant market power and are reaping abundant profits at the expense of the patients, employers, and government payors the PBMs are supposed to help.”

The attorneys general blame PBMs for dramatic increases in drug costs, as PBMs can require rebates from drug manufacturers in exchange for allowing the manufacturer’s medications to be on the PBM’s list of covered drugs.

In their letter to House Speaker Mike Johnson (R-La.), House Minority Leader Hakeem Jeffries (D-N.Y.), Senate Majority Leader Chuck Schumer (D-N.Y.) and Senate Minority Leader Mitch McConnell (R-Ky.), the coalition implored Congress to ensure fulsome regulation of PBMs nationwide by requiring transparency, enabling health plans to negotiate better with PBMs, leading to lower drug costs.