Senate HELP Committee Leadership PBM Reform Comments

Dear Chairman Sanders and Ranking Member Cassidy,

On behalf of HealthHIV and the National Coalition for LGBTQ Health, we genuinely appreciate the Committee’s dedication to making healthcare more accessible and affordable. Ensuring strong patient protections is vital to developing a healthcare system that serves everyone effectively and affordably. To that end, we urge the Senate Health, Education, Labor, and Pensions (HELP) Committee to take actionable and implementable steps now to help patients better access and afford the medications they need by addressing critical issues within the Pharmacy Benefit Manager (PBM) system.

PBMs play a crucial role in the pharmaceutical supply chain (for better and worse), handling transactions between health plans, pharmacies, and manufacturers. Recent court rulings have enabled states to regulate PBMs more effectively—prompting policymakers to explore various regulatory strategies. These strategies aim to address market concentration and conflicts of interest by defining the types of transactions to regulate and the specific regulations to enforce.

One major issue with PBMs is their ability to exploit their market position. The high concentration of PBMs allows them to extract surplus from health plans and pharmacies, potentially hiding critical information due to complex contract structures. Vertical integration further intensifies conflicts of interest, as PBMs may favor their affiliated businesses over the interests of health plans and patients. This scenario calls for substantive regulatory measures to ensure transparency and accountability in PBM operations.

Critically to the Coalition, both HIV-positive individuals and the LGBTQ community also face significant challenges due to Pharmacy Benefit Managers’ (PBMs) utilization management (UM) practices. These practices often involve step therapy and quantity limits, which can delay access to essential and lifesaving medications by requiring patients to try less effective treatments first. Such delays can be particularly detrimental for those needing continuous and effective treatment regimens.

Specialty medications, critical for managing HIV and other conditions prevalent in the LGBTQ community, are also typically higher-priced. This can present financial barriers, especially for patients who rely on Federally Qualified Health Centers (FQHCs) and other community health clinics, which may have limited resources to support the provision of these expensive treatments. Furthermore, these clinics often face challenges in navigating PBM policies, which can further complicate access to necessary medications.

Research shows that the high costs of these medications, combined with restrictive PBM practices, exacerbate issues of access and affordability, making PBM reform crucial for ensuring equitable and timely access to vital treatments for these vulnerable groups .

Without reform, these practices continue to create significant barriers for vulnerable populations, making it crucial to implement changes that ensure equitable and timely access to vital treatments for HIV-positive individuals and the LGBTQ community. Reforming PBM practices is essential to address these disparities and promote a more equitable healthcare system that meets the needs of all patients, particularly those in marginalized communities.

Regulating PBMs involves several key approaches. First, limiting conflicts of interest through ownership restrictions and transparency in rebate sharing can help align PBM actions with the best interests of health plans. Banning spread pricing, where PBMs charge health plans more than what they pay pharmacies, is another critical measure. This practice can lead to inflated costs and obscure financial dealings, making it difficult for health plans to monitor PBM behavior effectively, and therefore necessitating its banning.

Additionally, imposing substantive fiduciary responsibilities on PBMs can ensure that they consistently prioritize their clients’ interests over their profits. Fiduciary duties would legally bind PBMs to act in the best interest of the patients and health plans that they serve, reducing the potential for self-serving, profit-driven, actions. Furthermore, regulating the relationship between PBMs and pharmacies can prevent additional discriminatory practices, such as favoring PBM-affiliated pharmacies over independent ones, and ensuring fair competition and access to medications for patients.

Overall, effective regulation of PBMs is essential to address market failures and ensure that their operations benefit the entire healthcare system, beyond themselves. By focusing on transparency, accountability, and fair practices, policymakers can help create a more equitable and efficient pharmaceutical supply chain.

To address these issues and ensure patients have access to necessary treatments, Congress must pass PBM reform legislation that ensures that savings reach all patients. Savings or discounts negotiated by PBMs should be passed on to all patients, regardless of their specific condition or medication. These savings should also be transparently reflected in a patient’s out-of-pocket costs, particularly during deductible periods and when cost-sharing is calculated as a percentage of the medication’s price. Reform must also decouple PBM profits from the list prices of medications to eliminate the incentives that drive up overall healthcare costs and create barriers to patient care. Legislation supporting greater access to lower-cost biosimilars and generic medications can also significantly reduce out-of-pocket expenses for patients managing chronic conditions.

Throughout these efforts, we believe in the foundational principles of:

Broadening Access by Extending Savings: Savings and discounts negotiated by PBMs should benefit all patients equally—ensuring that financial relief is applied across all conditions and medications. These savings must be transparently reflected in patient’s out-of-pocket costs, particularly during deductible periods and when cost-sharing is calculated as a percentage of the medication’s price. This approach ensures that patients receive the full benefit of negotiated savings, reducing their overall healthcare costs and making medications more affordable.

Decoupling Profits from List Prices: Reform must disconnect PBM profits from the list prices of medications to remove incentives that drive up overall healthcare costs and create barriers to patient care. By decoupling profits from list prices, PBMs can focus on securing the best prices for patients rather than benefiting from higher drug prices. This strategy, as discussed by various state Prescription Drug Affordability Boards (PDAB), can effectively target and reduce profiteering within the drug supply chain, ensuring that cost savings are passed directly to consumers rather than PBM middlemen.

Increasing Availability of Cost-Effective Medications: Legislation should also facilitate greater access to lower-cost biosimilars and, when appropriate, generic medications. This approach can substantially reduce out-of-pocket expenses for patients managing chronic conditions, ensuring that they receive effective treatments without undue financial burden, viewed through the lens of shared clinical decision-making. By increasing the availability and use of affordable medication alternatives, patients can maintain their health without financial hardship, leading to better health outcomes and more sustainable healthcare spending.

There is now strong bipartisan support for PBM reform, with backing from a wide range of stakeholders, including the Federal Trade Commission (FTC), state lawmakers, attorneys general, patient groups, and pharmacists. The urgency for the Committee to advance this legislation is heightened by the upcoming general election, providing a limited (but critical) window to enact reforms that could dramatically improve patient access to affordable medications.

We urge the Senate HELP Committee to act swiftly to mark up and pass PBM reform legislation. Delays in action could risk missing this critical opportunity to implement necessary reforms, continuing to impede patient access to essential care.

We appreciate your leadership and dedication to patient-centered policies that improve access to prescription drugs and enhance health outcomes and look forward to working with you to advance these critical reforms.

Thank you for your work and consideration!

Sincerely,

HealthHIV

National Coalition for LGBTQ Health

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