Babin supports bill to require transparency from pharmacy benefit managers

Rep. Brian Babin speaks in favor of HR 1316 on the U.S. House floor.   Contributed photo/U.S. House of Representatives

Rep. Brian Babin (R-TX) is co-sponsor of a bill that would, he says, require more transparency in how pharmacy benefit managers (PBMs) negotiate price rebates with pharmaceutical companies.

A few weeks ago, he also joined the bill's original sponsor, Rep. Doug Collins (R-GA), on the House floor to speak in favor of the legislation. It was during those speeches that Collins turned heads in what Dr. Adam Fein of the Drug Channels Institute labeled "jaw-dropping" remarks attacking PBMs. 

In his remarks, Collins alleged that PBMs engage in "monopolistic, terrorist kind of ways" in which they deal with community pharmacies.

"Terrorists? Really?!? I wonder how ISIS feels about this comparison," Dr. Fein wrote in response to the speech, which was delivered this month.

Babin did not respond to Texas Business Daily's request for comment, including a question about how he felt about Collins' use of the word "terrorist" to describe American PBM companies.

During his remarks on the House floor that day, however, Babin spoke in favor of HR 1316 – the Prescription Drug Transparency Act – saying the legislation would address what he says is a situation in which "payment levels that make it up to the community pharmacists after the PBMs have skimmed off the top are well below the acquisition costs and fail to be delivered in a timely manner."

PBMs are companies that administer drug benefits for employers, unions and government programs, such as Medicare Part D. 

Devon Herrick, a Texas-based health care expert with the National Center for Policy Analysis, is closely following  the attacks on PBMs by some in Congress. He argues that PBMs help keep drug prices lower, in part by negotiating rebates with pharmaceutical companies.

"Drug rebates apply to brand drugs (not generic)," Herrick wrote in an email to Texas Business Daily. "If PBMs jacked up the price of drugs and did not perform a service to plan sponsors (insurers/employers/state Medicaid agencies), the sponsors would not hire them."

He added, "It makes a good story nonetheless when drugmakers argue their prices are not as high as people think because they give rebates of about 30 percent to PBMs.  The research I’ve seen estimates about 90 percent of the rebates flow back to plan sponsors; whereas PBMs keep about 10 percent as drug plan administration fees."

Citing as an example the history of Medicare Part D and the initial Congressional Budget Office cost projections, Herrick wrote, "The private Medicare Part D plans have done an admirable job keep costs down (maybe too good; maybe that’s why the pharmacy lobby and the drug lobby are attacking the PBMs that run them)."

Herrick has analyzed Medicaid carve outs, where the state administered drug benefits separately from health benefits.

"Medicaid often paid dispensing fees far higher than Medicare Part D plans," he said. "Alabama is a good example, whereas the private Medicare Part D plans pay dispensing fees of about $2 per scrip, the state is paying pharmacies nearly $11 per script for Medicaid prescriptions. Community pharmacies were definitely fighting against letting PBMs manage Medicaid drug benefits in states where the Medicaid dispensing fee is higher than the market rates."

The Pharmaceutical Care Management Association (PCMA), which serves as the trade association for the PBM industry, argues that HR 1316 would "increase the cost of prescription drugs in federal health programs, including TRICARE and the Federal Employee Health Benefits Plan."

According to PCMA, the bill "would gut the use of Maximum Allowable Cost lists, which are a key cost-control reimbursement strategy used to ensure consumers – and the federal government – don’t overpay for generic drugs."

Further, according to the trade group, the legislation would "increase costs and risk patient safety by undermining the use of mail-service pharmacies for those with chronic conditions like high blood pressure and rheumatoid arthritis."

Collins, however, says his legislation would "protect taxpayers and the community pharmacists" by requiring greater transparency from PBMs.  

The bill was introduced March 2 and now sits before the U.S. House committees on Energy and Commerce; Ways and Means; Armed Services; and Oversight and Government Reform.

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Organizations in this Story

Drug Channels Pharmaceutical Care Management Association U.S. Representative Brian Babin (TX-36) U.S. Representative Doug Collins (GA-9)

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