The Bipartisan “DRUG Act” Would Disincentivize Prescription Drug Manufacturers & Pharmacy Benefit Managers (PBMs) From Raising Drug Prices for Patients
WASHINGTON, D.C. — U.S. Representative Abigail Spanberger today helped introduce a bipartisan bill to help tackle the prescription drug affordability crisis and lower drug costs for Virginians.
Pharmacy benefit managers (PBMs) are the middlemen between pharmaceutical manufacturers, health insurers, and pharmacies that negotiate and keep rebates from manufacturers in exchange for preferable formulary placement — the lists of medications covered by a given health plan. Given that PBMs’ profits are tied to rebates, PBMs have an incentive to select a higher priced drug, which can cause drug manufacturers to artificially inflate a drug’s list price to offer PBMs higher rebates. Therefore, patients often end up paying more for their prescription drugs, even when a lower-cost option might exist but is not covered by their insurance plan. Experts have long argued that delinking PBMs’ profits from drug prices would eliminate the incentive for PBMs to recommend higher-priced drugs, as well as lower costs for patients.
The bipartisan, bicameral Delinking Revenue from Unfair Gouging (DRUG) Act would prohibit PBMs from making higher profits on expensive drugs than they do from lower-cost drugs. Specifically, the legislation would prohibit PBMs from linking rebates paid by manufacturers to the list price of the drug and instead implement a flat service fee paid to PBMs. Additionally, the bill would ban spread pricing — the practice of PBMs billing health plan sponsors more than the reimbursements paid to pharmacies. The bipartisan legislation would also ban PBMs from steering patients to PBM-owned pharmacies and reimbursing out-of-network pharmacies at a different rate than in-network pharmacies.
“While Virginians and Americans across the country are spending more and more of their money on lifesaving medication, PBMs are playing a behind-the-scenes role in driving up prescription drug costs,” said Spanberger. “These third-party middlemen should not receive a cash reward for steering patients toward overpriced medications. This bipartisan bill would help lower drug costs by reforming thepharmaceutical industry’s murky rebate system and removing the incentive for PBMs to favor expensive drugs over drugs Americans can actually afford.”
Along with Spanberger, the bipartisan DRUG Act is led in the U.S. House by U.S. Representatives Mariannette Miller-Meeks (R-IA-02), Nanette Diaz Barragán (D-CA-44), Lori Chavez-DeRemer (R-OR-05), Kathy Manning (D-NC-06), Nicole Malliotakis (R-NY-11), Brad Schneider (D-IL-10), Tom Kean, Jr. (R-NJ-07). The legislation is led in the U.S. Senate by U.S. Senators Tim Kaine (D-VA), Roger Marshall (R-KS), Jon Tester (D-MT), and Mike Braun (R-IN).
Click here to read the full bill text.
Spanberger has long worked to hold PBMs accountable and lower drug costs for Virginia patients. In 2019, the U.S. House passed her bipartisan Public Disclosure of Drug Discounts Act on a vote of 403-0 to help tackle the prescription drug affordability crisis and bring greater transparency to prescription drug negotiations. She also introduced the bipartisan Improving Transparency to Lower Drug Costs Act in June 2021 to hold PBMs accountable by requiring PBMs to report their aggregate rebates, discounts, and other price concessions for prescription drugs to a public website.
Earlier this year, Spanberger helped introduce the bipartisan PBM Sunshine and Accountability Act to establish new, public reporting requirements for PBMs, hold these intermediaries accountable, help tackle the prescription drug affordability crisis, and lower drug costs.
And in April 2023, Spanberger reintroduced the bipartisan Preserving Rules Ordered for the Entities Covered Through (PROTECT) 340B Act to prohibit insurers and PBMs from discriminating against providers or contract pharmacies that dispense discounted 340B drugs. Spanberger originally introduced the bipartisan bill in July 2021.