The ERISA Industry Committee (ERIC) – S1339 Pharmacy Benefit Manager Reform Act

ERIC member companies have a simple goal when it comes to health policy – improve quality and reduce costs. To that end, we are advocating for Congress to enact several policies by the end of the year, including bills advanced by the House and through Senate committees of jurisdiction that, collectively: codify hospital and health plan transparency requirements; create pharmacy benefit manager (PBM) transparency and accountability reforms; move the needle on site-neutral payment policy and honest billing policies; and fixes concerns with gaps that remain through implementation of the Consolidated Appropriations Act of 2021 (CAA) compliance requirements.

Importantly, Congress is closer than ever to passing legislation that would hit on each of these policies, in particular those related to PBM transparency and accountability reforms set forth in the Pharmacy Benefit Manager Reform Act (S. 1339). This bill reflects policies to reorient PBM practices to lower drug costs and drive value for workers and their families, and includes strong provisions such as banning spread pricing and requiring 100% pass-through rebates, discounts, fees, and other payments from drug manufacturers to employer plans. We are also supportive of policies that would de-link PBM profits from drug list prices to drive better access to cheaper drugs, such as biosimilars and specialty generics, and clarify the application of the ERISA fiduciary duty standard to third parties when performing services on behalf of health benefit plan sponsors.

Such legislative changes are needed now to address spiraling drug costs for employees, retirees, and their families. Reforming PBMs will not solve the entire issue of rising health care costs that are borne by employer plans and beneficiaries alike, but it is nonetheless a critical step. More price transparency across all stakeholders is also needed, as well as policies to curb anticompetitive prices and mitigate growing market consolidation.