Sen. John Kennedy (R-La.) and Colleagues Introduce Bipartisan Legislation to Cut Costs of Prescription Drugs
Jul 25 2019
WASHINGTON, D.C. –U.S. Sens. John Kennedy (R-La.), Jon Tester (D-Mont.), Bill Cassidy, M.D. (R-La.), Shelley Moore Capito (R-W.Va.), Sherrod Brown (D-Ohio), James Lankford (R-Okla.), Steve Daines (R-Mont.), Joe Manchin (D-W.Va), Kevin Cramer (R-N.D.), Cindy Hyde-Smith (R-Miss.) and Roger Wicker (R-Miss.) introduced the bipartisan Phair Relief Act on Wednesday to lower drug costs for seniors and improve financial certainty for community pharmacies.
Under the Medicare Part D program, pharmacy benefit managers (PBMs) act as middlemen between pharmacies and insurers, negotiating price concessions from pharmacies. PBMs should pass on these savings to patients to lower the cost of drugs, but this is seldom the case. PBMs that abuse these practices harm both local community pharmacies and seniors.
One of these abuses is the routine of PBMs requiring clawback fees from pharmacies. These fees are known as direct or indirect remuneration (DIR) fees. When pharmacies are asked for unexpected, retroactive fees months after dispensing a drug to a patient, it makes it challenging for pharmacies to financially plan ahead. DIR fees increase seniors’ out-of-pocket costs at the point of sale for their medications and contribute to an unsustainable environment that forces many community pharmacies to shutter their doors.
This legislation will put a five-year freeze on these DIR clawbacks, and it will establish enhanced oversight over these fees. The legislation also establishes standardized quality metrics that PBMs would have to use to assess any fees after the five-year freeze ends.
When the Centers for Medicare and Medicaid (CMS) proposed a similar policy in a proposed rule last fall, they estimated that requiring PBMs to account for these retroactive DIR fees at the point of sale would save seniors between $7.1 and $9.2 billion over 10 years on their out-of-pocket drug costs.
Click here for the full text of the legislation.
“The high cost of prescription drugs is one of the biggest problems that Americans face today. This legislation will help change that,” said Sen. Kennedy. “Middlemen negotiators like PBMs should not be receiving the benefits of lower drug costs. The customers at the pharmacy counter should be the primary beneficiaries of price cuts. This legislation promotes transparency and accountability in the pharmaceutical drug industry by prioritizing patient care instead of middlemen profits.”
“Montanans’ drug costs are too high,” said Sen. Tester. “This bipartisan bill will help bring them down by giving community pharmacists needed relief from burdensome fees—that’ll be passed on to their customers as lower costs. And it goes a step further by shining a light on how pharmacies are reimbursed for claims – requiring transparency and standardized reporting so folks can get the full picture of how much their prescriptions cost and why.”
“Prescription drugs cost too much,” said Dr. Cassidy. “Getting rid of loopholes and incentives lowers drug costs for patients and for taxpayers.”
“For many West Virginians, prescription medicine can be the difference between wellness and illness or even life and death, and in rural states like ours, pharmacists are the most trusted and frequently seen health care providers. That’s why I’ve focused many of my efforts on the important role pharmacists can play in lowering drug costs,” said Senator Capito. “This bipartisan legislation will not only help lower prescription drug prices for seniors, but it will also make it easier for local pharmacists to serve their communities. It’s a commonsense next step in our broader efforts to lower prescription drug costs and improve the health and well-being of West Virginians and all Americans.”
“Pharmacy middle-men shouldn’t be pocketing secret kickbacks instead of passing discounts onto customers. By requiring more transparency, we can hold the industry accountable to Ohio taxpayers and patients,” said Brown.
“The high cost of prescription drugs has been straining Montana’s hardworking families and seniors for far too long,” said Sen. Daines. “This bipartisan bill will shine a light on the complex drug pricing system and lower prescription drug costs for Montanans by ensuring savings are going to consumers instead of lining the pockets of pharmacy middlemen. This critical legislation will also assist seniors on a fixed income who rely on low out-of-pocket costs and access to their community pharmacy to gain access to needed medications.”
“The Phair Relief Act gives us the chance to resolve in law many of the issues we’ve debated during Senate Finance Committee hearings regarding PBMs and their interactions with pharmacies and patients,” said Sen. Lankford. “Drug price variance and a lack of relief from ever-increasing prices continues to frustrate patients from my state, but local pharmacies have been limited by PBM fees, rules, and cost issues. I am proud to join my colleagues in offering a proposal today that puts forward a broad set of common-sense reforms that will help solve some of those issues and set us on a path to address rising drug prices in our nation. I look forward to the bill’s full consideration.”
“If we don’t finalize DIR reform, another year could pass before seniors see drug prices lowered at the pharmacy counter,” said Sen. Manchin. “That’s why I’m joining my colleagues in introducing the Phair Relief Act – a bipartisan bill that will provide real cost savings to Medicare beneficiaries and reduce seniors’ out of pocket costs for prescription drugs. The Phair Relief Act will save seniors around the country $7.1 and $9.2 billion. Passing this legislation is crucial to help our seniors make ends meet and provide relief in our increasingly expensive healthcare system.”
The following organizations have offered their support for this legislation: the National Community Pharmacy Association (NCPA), National Association of Chain Drug Stores (NACDS), National Association of Specialty Pharmacy (NASP) and American Pharmacists Association (APhA).