Braun unveils bill to force drug middlemen to pass savings to consumers

By | March 5, 2019

Sen. Mike Braun, R-Ind., introduced legislation Tuesday to force insurers that negotiate drug prices to pass savings directly to patients, a measure meant to advance President Trump’s plan for lowering prices.

The bill, the Drug Price Transparency Act, would codify a suggested change by Trump’s health chief aimed at lowering prices when patients pick up their drugs at the pharmacy.

The proposal would ban pharmacy benefit managers, the middlemen who negotiate payments for medicines on behalf of insurance plans, from receiving rebates from drugmakers. Critics have blamed the practice for high drug prices and accused pharmacy benefit managers of failing to pass savings on to patients while keeping a cut for themselves and for health insurers.

Under the plan, patients would pay prices for drugs at the pharmacy that are more similar to what the pharmacy benefit managers would have negotiated after the rebates. The middlemen could alternatively agree on fixed fees for drugs instead of a rebate deal.

“This bill doesn’t outlaw PBMs,” Braun said in a meeting with reporters. “It doesn’t even outlaw rebates. But what it does do is shed light on the process.”

Pharmacy benefit managers have warned that premiums will increase if rebates are allowed to end. A small number of companies — Express Scripts, OptumRx, and CVS Caremark — control the majority of the marketplace for middlemen.

The Trump administration in February proposed setting up such a rule in Medicare and Medicaid, which are both government healthcare programs but has asked Congress to pass a measure aimed at private health insurance companies. Braun’s bill is an attempt to meet that request.

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The rebate deals have historically been protected from a law known as the Anti-Kickback Statute, which says it is illegal to pay an incentive for drugs or services that federal healthcare programs cover. That protection, known as a “safe harbor,” would go away under the plan Braun laid out, and it would therefore become illegal for pharmacy benefit managers to arrange the rebates.

Braun framed his legislation as an attempt to lower healthcare prices overall through more competition and providing more information to patients.

“This is part of the cascade to get the industry to start to fix itself,” he said, noting that Senate Democrats were otherwise backing legislation that would directly let the government set the prices for drugs.

The legislation, which he introduced alongside two others on Tuesday, is among several others that senators have introduced as scrutiny grows on high drug prices. The Senate has held multiple hearings on the matter, with more scheduled for this week, and the Trump administration has urged Congress to act while also moving ahead on its own ideas.

A second bill Braun introduced Tuesday, the Accelerated Drug Approval for Prescription Therapies, would give the Food and Drug Administration no more than six months to decide whether to approve drugs that other developed countries have already signed off on. Braun said the bill would help to reduce the backlog of drug shortages in the U.S. and increase competition by bringing more drugs onto the market, a move aimed at lowering prices.

Drug companies have often said that the approval process is overly burdensome and expensive, but critics warn of putting patients at risk by approving drugs without enough review to make sure that they’re safe and that they work.

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A third bill, the Efficiency and Transparency in Petitions Act, would require brand-name drugmakers to explain why they file petitions to stop generic drugs from coming to market.

“These are all a starting point to shedding light and transparency,” Braun said, calling the system “opaque.” The healthcare system, he said, had “given us a system that is as broken as one can be.”