Congressional lawmakers launch push for increased federal scrutiny of PBMs

WASHINGTON As the war of words between Walgreens and CVS Caremark heats up this week, federal scrutiny of the overall pharmacy benefit management industry also continues to intensify.

The latest salvo came from Reps. Bruce Braley, D-Iowa, and Peter Welch, D-Vermont. The two Democrats sent a letter to three powerful House committee and subcommittee chairmen, calling for increased congressional oversight of the PBM industry and a hearing on current industry practices.

The letter went to Henry Waxman, D-Calif., who chairs the House Energy & Commerce Committee; Frank Pallone Jr., D-N.J., chairman of the Energy & Commerce Subcommittee on Health; and Bart Stupak, D-Mich., chairman of the panel’s Subcommittee on Oversight and Investigations. Braley and Welch urged the three to impose new and stricter transparency rules on the PBM industry.

“Since their creation by managed care organizations in the early 1980s, there has been no consistent regulatory structure or oversight for PBMs,” the two lawmakers pointed out in their letter. During that time, they added, “PBMs have been subject to 27 federal, state and local lawsuits and enforcement actions because of behavior alleged to be harmful to patients and payers. To assure that the interests of plans, patients and pharmacists are served in reducing costs and assuring the most appropriate drug therapy is used, Congress should consider regulating PBMs to require that they have a fiduciary responsibility to plan sponsors and to allow ... greater transparency of financial relationships,” Braley and Welch concluded.

Not surprisingly, independent pharmacy advocates strongly endorsed calls for boosting congressional oversight of the PBM market. The National Community Pharmacists Association, long a foe of PBM business practices, issued a statement today praising the two Democrats.

“Reps. Bruce Braley and Peter Welch should be commended for advocating Congressional oversight hearings of PBMs,” noted NCPA president Joseph Harmison. “A hearing will help shine a spotlight on several troubling questions that need answers if patients, pharmacies and plan sponsors are going to be treated fairly. Is it fair for PBMs to contract with independent community pharmacies for access to patients, while steering some of those patients to mail-order and retail pharmacies they own at higher cost to plan sponsors?” Harmison demanded in his response.

NCPA’s leader also decried “take-it-or-leave-it contracts” between managed care and independent pharmacies, along with PBMs’ ability “to secretly receive rebates from drug manufacturers for favoring certain prescription drugs over others, and then pocket commissions.”

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