PBM bill, telehealth extension may ride together in 'lame duck'

Congress has tried for much of the last two years to pass legislation to rein in pharmacy benefit managers, only to have negotiations fall just short.

With lawmakers back for a post-election lame duck session, analysts see one last chance — but also a likelihood the effort may wait until Republicans take control of Capitol Hill next year.

Related: Congress eyes 'site-neutral' pay bills for lame-duck session

A number of bipartisan bills targeting PBMs have been proposed and advanced through key committees throughout the 118th Congress. Almost a year ago, the House even overwhelmingly passed the Lower Costs, More Transparency Act of 2023, which includes a provision targeting PBMs in Medicaid.

But efforts to move some combination of PBM bills into law faltered when House and Senate leaders decided not to include them in a healthcare package passed along with government funding in the spring.

Still, those measures and the concepts behind them remain popular with legislators who continued to offer fresh bipartisan proposals to curb PBMs and spoke in support of Federal Trade Commission efforts targeting the drug industry middlemen.

The high level of unity left some observers optimistic that Congress may actually succeed in approving at least some PBM restrictions in the appropriations and health-related bills that Congress must pass in the waning weeks of this year.

"I see a possibility, a good possibility if not a probability, that something happens this year, just because there is bipartisan support to do PBM reform," said Lloyd Fiorini, general counsel at Capital Rx, a startup PBM that casts itself as a transparent alternative to the giants of the industry. CVS Health subsidiary CVS Caremark, Cigna unit Express Scripts, and UnitedHealth Group division OptumRx collectively control about 80% of the PBM market.

Lindsay Bealor Greenleaf, the head of federal and state policy for the consulting company ADVI Health, thought observers should keep their eyes on some of the measures that increase transparency or untether the revenue PBMs collect from the drug rebates they secure for clients — known as "delinking."

"Those are the two key policy themes that have the highest likelihood of something happening in lame duck," Greenleaf said.

There is a thicket of considerations to worry about, though, that could affect what passes, if anything.

First is whether Republicans will want to do more than the minimum of keeping the government open and extending expiring healthcare programs. Given they won majorities in the House and Senate next year, they may prefer not to negotiate with the Democrats who currently control the Senate. That dynamic applies to any legislation Congress may debate during the year-end session.

The safer bet is on the GOP stalling until it can notch the wins on its watch in the 119th Congress, but there are still reasons bills could advance.

One is that retiring members such as House Energy and Commerce Committee Chair Cathy McMorris Rodgers (R-Wash.) and several GOP doctors are champions of some of the measures, and would like to have them as their legacy.

Another is more practical. Among the policies that Congress wants to extend is the authority it granted Medicare to cover telehealth and care at home, which costs money.

The House Energy and Commerce and Ways and Means committees advanced a bill to extend telehealth payments for two years and a hospital-at-home program for five years, which is partly financed by a PBM delinking provision for Medicare. That legislation also includes transparency provisions that would mandate PBMs reveal extensive pricing and other data to health insurance companies, employers and federal regulators.

It would be possible, however, to simply extend all such expiring programs for a short time, rendering costs and ride-along measures relatively unimportant.

There is also industry opposition. The Pharmaceutical Care Management Association, which represents PBMs, sees what lawmakers describe as reforms as steps that will make its members less able to negotiate good deals, only benefitting drugmakers.

PCMA took aim at lawmakers returning for the lame duck session in a news release Tuesday. "This disastrous policy would 'delink' pay from performance in the prescription drug supply chain, removing market-based forces that act as an impactful counterbalance to Big Pharma’s otherwise limitless pricing power," PCMA said.

Observers see little chance for bills targeting PBMs in private insurance, such as the Senate Health, Education, Labor and Pension Committee's Pharmacy Benefit Manager Reform Act of 2023, but still said there could be broader efforts on PBMs this year and next from regulators, especially the Federal Trade Commission.

In addition to issuing a scathing report in July, the FTC initiated a lawsuit against CVS Caremark, Express Scripts and OptumRx in September.

While Republican President-elect Donald Trump will take control of the agency soon, he has shown no sign that he favors PBMs. And Vice President-elect JD Vance, currently a GOP senator from Ohio, and Trump's pick for attorney general, former Rep. Matt Gaetz (R-Fla.), have both praised FTC Chair Lina Khan, whom President Joe Biden nominated to the post in 2021.

"If he really wants to hit the middleman, which I don't think he really cares for at all based upon his first term, he just has to support the FTC lawsuit against the big three," Fiorini said.

Greenleaf agreed that Trump's FTC might be more hospitable to corporations than Biden's, but said targeting PBMs still could be attractive to his administration.

"There could be some nuance with how the FTC approaches all these things," Greenleaf said. "A more business-friendly, more merger-friendly FTC could still heavily scrutinize PBMs."

Indeed, Greenleaf suggested that if Trump wants to answer concerns from his base and a growing number of conservative lawmakers about the consolidation of power in the healthcare system, a combination of new laws and FTC enforcement would by the strongest route for him to take.

"A lot of these reforms and changing how PBMs can profit, they may very well be helpful in the short term, but if you still have three companies controlling the whole market, they can too easily find workarounds," Greeleaf said. "If they have that kind of consolidation and market power, there's just always going to be another way for them to distort the system."

Congress needs to pass federal funding by Dec. 20 to prevent a government shutdown. It is also concerned about extending the telehealth authorities, delaying Medicaid disproportionate share hospital payment cuts, and renewing programs such as community health centers and medical education.