Emerging bipartisan path to lowering prescription drug costs reveals common ground for agreements on spending

One of the most pressing and persistent concerns facing Americans of every political stripe is the unchecked growth in out-of-pocket costs of prescription drugs. Fortunately, a bipartisan consensus is quickly gaining momentum in Congress to restore competition and increase transparency in the prescription drug market, potentially saving seniors and the federal government billions of dollars. 

The solution centers on a strategy of “delinking” pharmacy benefit managers’, or PBMs’, compensation in Medicare away from price manipulations and margins earned on the price of a drug. Instead, PBMs will be paid only transparent, market-based flat fees for services valued by their clients. By ending the practice of tying PBM income to a percentage of drug price, the delinking strategy will eliminate the perverse incentive for PBMs to steer patients toward higher cost drugs.

PBMs are among the most powerful hidden middlemen in our prescription drug market. Just three PBMs control 80 percent of all prescriptions processed in the U.S. They own or are owned by insurers and have vertically consolidated their businesses to own everything and everyone between themselves and the patients including doctors, pharmacies, group purchasing organizations and more. 

PBMs currently get compensated by charging fees calculated as a percentage of the cost of medicine. This incentivizes PBMs to push the price of medicines higher by blackmailing for formulary access, or they choose higher priced medicines to put on their formulary. For example, over the past five years, out-of-pocket costs for Medicare seniors have risen at nearly three times the rate for commercially insured consumers. This is unacceptable. 

Growing awareness and understanding of this truth in Congress is expanding, and now a bipartisan consensus exists in support of delinking as a key tool for realigning prescription drug market incentives and eliminating PBM conflicts of interest.

In May, Senate Finance Chairman Ron Wyden (D-Ore.) and Ranking Member Mike Crapo (R-Idaho) issued their Bipartisan Framework for Reducing Prescription Drug Costs. The framework’s first step was: “Delinking PBM Compensation from Drug Costs to Align Incentives for Lower Costs.” They followed through on this by introducing the Modernizing and Ensuring PBM Accountability Act. The bill, which would delink PBM fees from drug prices under Medicare Part D, was approved this July in a stunning bipartisan Senate Finance Committee vote of 23 to 1.

Now, it’s time for the House of Representatives to act. H.R. 2880, the Protecting Patients from PBM Abuses Act, completes the delinking process by effectively prohibiting PBMs from retaining any kind of income related to or contingent on the cost of any Medicare Part D-covered drug. In doing so, the bill will help to correct these misaligned incentives and bring relief to patients at the pharmacy counter. The Congressional Budget Office estimates that delinking in Part D would save more than $200 million in federal spending. It also boasts bipartisan support, with Reps. Nicole Malliotakis (R-N.Y.), Jake Auchincloss, (D-Mass.), Jeff Van Drew (R-N.J.), and Mariannette Miller-Meeks (R-Iowa) joining us, Reps. Carter and Blunt Rochester, as bipartisan co-sponsors.

The Protecting Patients Against PBM Abuses Act realigns PBMs’ incentives with their clients by limiting PBMs income to one source only: flat dollar fees paid by PBM clients for services they value. This commonsense provision eliminates another PBM conflict of interest that will continue to drive drug prices higher as long as PBMs are able extract income from both the supply and demand sides of every prescription drug claim. 

A bipartisan poll found that more than 80 percent of likely voters support complete delinking of PBM profits from drug prices and limiting payment for PBM-provided services to simple flat fees. This is what Americans want, and they’ll have the backs of representatives who deliver it for them. As the first session of Congress comes to a close, we have an historic opportunity to get the job done, finally, for the American people.

Lisa Blunt Rochester represents Delaware at large and is a member of the House Energy and Commerce Committee. Buddy Carter represents Georgia’s 1st District and is a pharmacist by trade. He is a member of the House Energy and Commerce Committee.