Legislation Would Limit Options for Employers to Provide Quality
Prescription Drug Coverage for Employees

The U.S. Senate Health, Education, Labor, and Pensions (HELP) Committee is weighing several proposed policies related to the prescription drug market, including S. 1339, the Pharmacy Benefit Manager Reform Act. The Pharmaceutical Care Management Association (PCMA) appreciates the Senate HELP Committee postponing the committee markup of several measures, including S.1339, so as not to rush to legislate without first examining the unintended, negative consequences for employers and consumers.

We urge all members of the committee to understand the negative impact the legislation’s “one-size-fits-all” contracting mandates would have on the ability of employers to choose the contract terms with pharmacy benefit companies that fit their benefit design requirements. Under the legislation, employers are deprived of a range of options when designing pharmacy benefits. Removing employers’ choice and flexibility could cost patients money and limit their overall benefits.

The U.S. Chamber of Commerce shares these concerns. In a letter to the HELP committee, the Chamber warns that eliminating risk-mitigation pricing would make it more difficult for employers to offer pharmacy benefit coverage to their employees:

“Risk-mitigation pricing (also referred to as spread-pricing) provides employers a definitive price for prescription drug benefit payments to pharmacies, and transfers the risks associated with daily fluctuations in drug prices onto the Pharmacy Benefit Manager (PBM). This ability to include spread pricing as part of a contractual agreement is highly valued by many employers and plan sponsors and incentivizes these PBMs to push pharmacies to reduce their acquisition costs. This is a contracting term that employers demand, bringing much needed pricing predictability. The Chamber opposes proposals that would eliminate and prohibit the ability of entities to include such a provision in private contracts.”

Taxpayer watchdog group the Council for Citizens Against Government Waste (CCAGW) also submitted a letter to the HELP committee, cautioning lawmakers against mandating proprietary information that could lead to higher drug costs. CCAGW writes:

“S. 1339 will undermine pharmacy benefit managers (PBMs) and their ability to effectively lower costs for patients…S. 1339 will interfere with the private contracts that are made with PBMs by imposing burdensome transparency and pricing requirements. The disclosure of proprietary and sensitive information beyond the existing transparency requirements is anti-competitive and will ultimately harm the consumer. Exposing privately negotiated agreements will increase rather than decrease costs. Price controls and overregulation never reduce costs for any product or commodity.” 

“S. 1339 also interferes with a PBM’s ability to lower prices by altering and restricting spread pricing, administration fees, and rebates. Further inserting government into private healthcare only discourages competition and options for patients. Supporting S. 1339 also opens the door further to government-run healthcare and socialized medicine. Senators who believe in free markets should not support this legislation.”

Rather than limiting choice for employers and restricting options for achieving savings, Congress should call on drug companies to continue to lower list prices and enact laws that strengthen competition in the market. In most industries, but especially in the prescription drug marketplace, increased competition is the most effective way to lower costs for the consumer. PCMA joins other stakeholders in calling on Congress to enact legislation that holds drug companies accountable for abuse of pricing power through government granted monopolies that currently block competition and keep drug prices high.

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Learn more about public policy solutions that would promote competition in the prescription drug market and effectively lower prices for patients HERE.

PCMA’s recent Policy Forum, held on April 25, 2023, featured policymakers – including key Administration officials and Congressional staffers – and PBM executives to discuss how the public and private sectors are tackling drug costs and improving both the affordability and quality of care for patients. View the PCMA Policy Forum HERE.

The Hill recently hosted and PCMA sponsored an event titled, “Prescription for Change: Improving Competition to Lower Drug Prices,” where lawmakers and a panel of drug pricing and economic experts discussed the importance of promoting competition as the most effective way to lower prescription drug costs. Watch the event HERE.

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PCMA is the national association representing America’s pharmacy benefit companies. Pharmacy benefit companies are working every day to secure savings, enable better health outcomes, and support access to quality prescription drug coverage for more than 275 million patients. Learn more at www.pcmanet.org