Pharmacy benefit managers would have to disclose the prices they negotiate for prescription drugs for Medicaid under a proposal the Centers for Medicare and Medicaid Services announced Tuesday.
Under an upcoming proposed rule, PBMs that contract with Medicaid would have to reveal the prices they pay for medicines, a provision that seeks to curb spread pricing, a practice in which PBMs charge insurance companies, employers or government programs more for medicines than it actually pays. If finalized, this would be the first time that PBMs are required to disclose actual drug prices under federal law. The regulation also would make specialty drugs administered in hospitals eligible for rebates.
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“With today’s proposed rule, we are advancing unprecedented efforts to increase transparency in prescription drug costs, being good stewards of the Medicaid program and protecting its financial integrity. This proposed rule will save both states and the federal government money,” Health and Human Service Secretary Xavier Becerra said in a new release.
“We look forward to engaging with CMS in the coming months to address the root causes of the problems they identify—specifically, the high prices set by drug companies," the Pharmaceutical Care Management Association, which represents PBMs, said in a statement
The draft regulation would require annual reports on prescription drug prices that would enable CMS and states to ensure Medicaid is paying the appropriate amount for medications and receiving its share of drugmaker rebates, according to CMS.
Cigna subsidiary Express Scripts, CVS Health subsidiary CVS Caremark and UnitedHealth Group subsidiary OptumRx held a combined market share of 80% in 2022, according to the latest data from the Drug Channels Institute.
Pharmacy benefit managers have become targets for federal and state policymakers as prescription drug prices rise and the industry attracts criticism for not sharing the savings PBMs generate from deals with pharmaceutical companies. In addition to this CMS action and an ongoing Federal Trade Commission investigation, several bills are moving through Congress that would create limits on PBMs.
The House Energy and Commerce Committee is slated to vote Wednesday on the Transparent PRICE Act of 2023, which unanimously advanced out of a subcommittee last week. Among the bill's provisions are a requirement that PBMs disclose prescription drug spending to employers.
The Senate Health, Education, Labor, and Pensions Committee cleared the Pharmacy Benefit Manager Reform Act of 2023 earlier this month, which would ban price spread and mandate that rebates be passed through to clients.
Last week, the FTC widened its year-old probe into pharmacy benefit manager business practices to include group purchasing organizations affiliated with PBMs. State authorities also have targeted PBMs. For example, Ohio and other states sued Express Scripts, Humana Pharmacy Solutions and Prime Therapeutics in March, alleging the companies overcharged Medicaid for prescription drugs.
Some PBMs have responded to this pressure by voluntarily adopting new internal policies. Express Scripts and OptumRx, for instance, launched transparent payment plans last month that would pass-through drugmaker rebates and charge payers the same as pharmacies.
Lauren Berryman contributed to this story.