Pharmacy benefit managers Archives - EMPLOYEE BENEFITS BLOG

Pharmacy Benefit Manager Reform: What’s on the Horizon? (December 2023 Update)

by Leigh Feldman, Amy Kelbick, Rachel Stauffer, Erica Stocker and Katie Waldo | Dec 27, 2023 | Employee Benefits, Health and Welfare Plans

The price of prescription drugs has brought scrutiny to the entire drug supply chain. Congress and other policymakers continue to seek opportunities to lower costs for patients and the federal government. Pharmacy benefit managers (PBMs) are a key stakeholder in the drug supply chain, functioning as intermediaries between insurance providers and pharmaceutical manufacturers.

Congress and other stakeholders are raising questions about PBMs’ operations and their impact on drug prices and out-of-pocket costs for patients. In the 118th Congress, six key committees have advanced legislation that would increase PBM transparency and reporting obligations and modify other business practices. In the House, three committees combined to introduce H.R. 5378, the Lower Costs, More Transparency Act, which passed the House December 11, 2023. Read on as we review and compare policies in the Lower Costs, More Transparency Act and the PBM bills considered individually by the relevant House and Senate committees.

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New York Proposes Regulations Expanding State’s Ability to Regulate PBMs

by Gregory Mitchell, Grayson I. Dimick and Benjamin Glass | Oct 3, 2023 | Employee Benefits, Health and Welfare Plans

The New York State Department of Financial Services recently announced the publication of proposed regulations that would increase the state’s oversight of pharmacy benefit managers (PBMs). If enacted, the proposed regulations would create significant requirements for PBMs and would require prompt compliance by January 1, 2024. Comments on the proposed regulations are due October 16, 2023.

Tenth Circuit Reaffirms Preemption of State Pharmacy Network Regulations

by Andrew Liazos, Michael B. Kimberly and Sarah P. Hogarth | Aug 23, 2023 | Employee Benefits, Health and Welfare Plans

The US Court of Appeals for the Tenth Circuit recently held in Pharmaceutical Care Management Association v. Mulready (PCMA) that the Employee Retirement Income Security Act (ERISA) and Medicare Part D preempted several provisions of Oklahoma law regulating pharmacy benefit managers and pharmacy networks. Left unchallenged, these provisions threaten the ability of employers and Medicare Advantage organizations to design uniform nationwide health plans. The Tenth Circuit’s decision in favor of PCMA overturned a lower court decision that caused great concern about the ability of states to indirectly dictate the design of plans governed by ERISA and Medicare Part D.

Congress Advances Four Bipartisan Healthcare Bills

by Debra Curtis, Kristen O'Brien, Priya Rathakrishnan and Erica Stocker | Jul 24, 2023 | Employee Benefits, Health and Welfare Plans

The US House and Senate returned from recess, beginning a three-week sprint toward the August break. The bipartisan healthcare legislation on pharmacy benefit managers (PBMs) and healthcare transparency is moving through both the House and Senate.

The House Education and the Workforce Committee held a markup of a bipartisan healthcare package of four bills. The July 12 markup included four bills under the committee’s jurisdiction related to the Employee Retirement Income Security Act of 1974, to increase cost transparency for employers and patients, increase oversight of pharmacy benefit managers (PBMs), lower premiums, reduce healthcare spending and increase competition by removing incentives for provider consolidation.

H.R. 4509, the Transparency in Billing Act, would require accurate billing practices by hospitals, ensuring that group health plans pay for appropriately billed services. The bill advanced by a vote of 39–0.
H.R. 4507, the Transparency in Coverage Act, would codify the Transparency in Coverage final rule, which would provide consumers with price transparency for medical services and prescription drugs, and bring light to PBM practices. The bill advanced by a vote of 38–1.
H.R. 4527, the Health DATA Act, would ensure that health plan fiduciaries are not contractually restricted from receiving cost or quality of care information about their plan, including by adding PBMs to the list of groups that can be liable for violating gag clause provisions. The bill advanced by a vote of 38–1.
H.R. 4508, the Hidden Fee Disclosure Act, would strengthen requirements that PBMs and Third-Party Administrators disclose compensation to plan fiduciaries. The bill advanced by a vote of 39–1.

Almost every House and Senate committee with healthcare jurisdiction has now considered bipartisan PBM reform and healthcare transparency and consolidation reforms. This week, the Senate Finance Committee released a draft bill that would require increased disclosures by PBMs about their business practices. The Senate Finance Committee also announced a markup on July 26 to consider a package of PBM legislation.

The Inflation Reduction Act of 2022: Healthcare Provisions

by McDermott Will & Emery | Sep 9, 2022 | Benefit Controversies, Digital Health, Employee Benefits, Health and Welfare Plans

After almost a year of negotiations among congressional Democrats and the White House, the Inflation Reduction Act of 2022 (IRA) was signed into law by President Biden on August 16, 2022. It passed in the US Senate by a vote of 50–50, with the vice president breaking the tie, on August 7, 2022. The bill passed the US House of Representatives August 12, 2022, by a party-line vote of 220-207. This McDermott+Consulting article summarizes the key healthcare provisions of the IRA, including prescription drug reform, inflationary rebates, a cap on insulin costs, a Medicare Part D benefit redesign and a new pharmacy benefit manager rebate rule.

ERISA Preempts State Regulation of PBM–Pharmacy Pricing Agreements

by McDermott Will & Emery and Sarah P. Hogarth | Jul 31, 2018 | Benefit Controversies, Employee Benefits, Health and Welfare Plans

ERISA broadly preempts state laws that “relate to” ERISA-governed employee benefit plans to ensure a uniform federal regulatory scheme and to relieve ERISA plans from the burdens of satisfying a patchwork of state laws. Recently, however, several states have enacted legislation designed to regulate the prices that pharmacy benefit managers, as third-party administrators for ERISA-governed plans, agree to reimburse pharmacies for dispensing prescription drugs to ERISA plan members. These regulations run afoul of ERISA, as the US Court of Appeals for the Eighth Circuit has twice held.

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