Washington, D.C. – Today, Representatives Diana Harshbarger (R-Tenn.) and Jake Auchincloss (D-Mass.) introduced the Patients Before Monopolies (PBM) Act. This bipartisan, bicameral legislation will prohibit joint ownership of pharmacy benefit managers (PBMs) and pharmacies, a gross conflict of interest that enables these companies to enrich themselves at the expense of patients and independent pharmacies.
The Senate version of the bill was introduced by Senators Elizabeth Warren (D-Mass.) and Josh Hawley (R-Mo.)
Over the past decade, pharmacy benefit managers (PBMs) — the middlemen between pharmacies and health insurance companies — have morphed into large healthcare conglomerates that exercise control over every link in the prescription drug coverage and delivery chain. Today, the largest healthcare conglomerates each own a PBM — which pays for pharmacy services — as well as the pharmacy chains that provide those services. This inherent conflict of interest results in higher drug costs for patients and fewer independent pharmacies, but bigger profits for the corporate healthcare giants.
The Patients Before Monopolies (PBM) Act would address this by:
- Prohibiting a parent company of a PBM or a health insurer from owning a pharmacy business;
- Requiring that a parent company in violation of the PBM Act divest its pharmacy business within three years;
- Enabling the FTC, Department of Health and Human Services, Antitrust Division of the Department of Justice, and state attorneys general to issue orders requiring violators of the PBM Act to divest its pharmacy business and disgorge any revenue received during the period of such violation;
- Directing the FTC to distribute any disgorged revenue to harmed communities, including consumers overcharged at vertically integrated pharmacies;
- Mandating reporting of all divestitures to the FTC, and allowing the FTC to review all divestitures and subsequent acquisitions to protect competition, financial viability, and the public interest.
“As a life-long pharmacist, I know first-hand how unchecked PBM consolidation and vertical integration have allowed these shadowy middlemen to self-deal and manipulate the system in ways that are driving up drug costs, limiting patient choices, and putting the financial screws to independent community pharmacies,” said Representative Harshbarger. “I’m a proud conservative Republican, but we have antitrust laws for a reason. That’s why I’m joining my colleagues in introducing the bipartisan Patients Before Monopolies Act, which will protect consumers and taxpayers, and ensure fair competition by breaking up these anticompetitive, conflict-of-interest arrangements. Federal regulators should never have let this excessive concentration of our healthcare industry happen in the first place, and so it’s up to Congress to get the job done.”
“The PBM industry is rife with self-dealing that raises costs for patients and bankrupts independent pharmacists. No PBM should be allowed to own pharmacies because it poses an unacceptable conflict of interest when it then sets reimbursement rates for its own versus external pharmacies. Independent pharmacies deserve fair play,” said Representative Auchincloss.
ThePatients Before Monopolies (PBM) Act is endorsed by the American Economic Liberties Project (AELP), National Community Pharmacists Association (NCPA), American Pharmacy Cooperative, Inc. (APCI), Pharmacists United for Truth and Transparency (PUTT), Patients Rising, and AffirmedRx.
“Giant PBMs and insurers owning their own pharmacies has driven independent pharmacies out of business and reduced patient access to quality care. The Patients Before Monopolies Act addresses the root cause of this problem — consolidated market power — by eliminating the inherent conflicts of interest within the big three PBM business model,” said Morgan Harper, Director of Policy and Advocacy at the American Economic Liberties Project. “We are thrilled to see Rep. Harshbarger and Rep. Auchincloss lead this bipartisan effort to lower drug costs, protect independent retail pharmacies, and improve patient access to care.”
“A particularly egregious result of the vertical integration of PBM-insurers with retail and mail-order pharmacies is that the PBM – which competes with independent pharmacies and others – decides what their rival pharmacy will be reimbursed and which patients will be allowed to use them. There are also countless examples of PBMs paying their pharmacies much higher reimbursement than non-affiliated pharmacies and using patient data to steer patients to their own pharmacies,” said Anne Cassity, Senior Vice President of Government Affairs for the National Community Pharmacists Association. “We're grateful to Reps. Harshbarger and Auchincloss for introducing the PBM Act, which will go a long way in eliminating the conflicts of interest that currently exist in this space.”
“The inherent conflicts of interest between PBMs owning their own retail, mail-order, and specialty pharmacies have resulted in higher drug costs, reduced patient choice and access to care, and unsustainable reimbursements to non-PBM affiliated pharmacies. With retail pharmacies closing at an alarming rate and patients fighting life-threatening diseases being steered to PBM-owned pharmacies and often overcharged thousands of dollars for medications, the Patients Before Monopolies Act couldn’t come soon enough,” said Greg Reybold, Vice President of Healthcare Policy and General Counsel at the American Pharmacy Cooperative, Inc. “This commonsense legislation strikes at the heart of anti-competitive PBM behavior and roots out conflicts of interest by prohibiting ownership of both a PBM and a pharmacy. American Pharmacy Cooperative, Inc., is grateful to Reps. Harshbarger and Auchincloss for their work and leadership on this issue and looks forward to fighting for this critically important piece of legislation.”
“While there are a variety of conflicts of interest that can compromise the intended role of PBMs to act as counterweights to inflated drug prices, one of the chief areas of system misalignment arises from PBM ownership of pharmacies. As these large vertically integrated companies serve as both price-setter and price-taker for pharmacy transactions, PBM incentives to reduce drug markups and to manage pharmacy reimbursement and network decisions in an unconflicted manner are significantly undermined,” said Antonio Ciaccia, President of 3 Axis Advisors. “In our work advising government programs and commercial plan sponsors, we stress that minimizing or eliminating these areas of misalignment are foundationally critical in order to achieve greater balance for medicine accessibility and affordability.”
"For too long vertically integrated PBMs have put profits over patients, driving up costs, limiting access to essential medications, and forcing countless independent pharmacies to close their doors. The Patients Before Monopolies Act is a step toward breaking these monopolies, restoring fairness and competition and, most importantly, ensuring patients get the care they need at a price they can afford,” said Greg Baker, Pharmacist, CEO of AffirmedRx, a transparent PBM. “At the heart of our mission is the belief that transparency and integrity should be the foundation of health care. I congratulate Representatives Harshbarger and Auchincloss for putting patients first, and urge Congress to pass this bipartisan bill.”
"This bill is the next step in urgently-needed legislation to eliminate the profiteering and other conflicts of interest that exist when private health insurers and their pharmacy benefit managers are allowed to design and sell health benefit plans while also owning pharmacies, clinics, and other point-of-care entities,” said Monique Whitney, Executive Director of Pharmacists United for Truth and Transparency. “Vertical integration among the largest healthcare insurers has only served to saddle Americans with the priciest possible premiums for impossibly high-deductible plans that provide fewer options and ultimately result in poorer health outcomes. We applaud Representatives Harshbarger and Auchincloss for recognizing the need to dismantle the current system, which has failed consumers and taxpayers at just about every level.”
“Across the country, patients feel increasingly disenfranchised by the healthcare system. The culprit: a complex web of powerful health conglomerates including health insurers, Pharmacy Benefit Managers (PBMs), and their affiliated pharmacies,” said MacKay Jimeson, Executive Director of Patients Rising.“Patients Rising applauds Representatives Diana Harshbarger and Jake Auchincloss for putting forward bi-partisan legislation to put patients before monopolies. It is critical we crack down on health conglomerate conflicts of interest and encourage businesses to operate in the interest of patients' long-term health and wellbeing.”
This is a companion discussion topic for the original entry at https://harshbarger.house.gov/media/press-releases/rep-harshbarger-introduces-legislation-eliminate-pbm-monopoly-pharmaceutical