New Senate Health Package Bans “Spread Pricing” Tactics

A highly anticipated package of health care legislation from Sens. Lamar Alexander (R-TN) and Patty Murray (D-WA) that was expected to focus on surprise medical bills also includes aggressive drug pricing reforms that target the business models of pharmacy benefit managers (PBMs).

The package would ban the practice of “spread pricing,” which allows PBMs to retain the difference between the amount a pharmacy charges for a drug and the wholesale price paid to the manufacturer. While it is unclear how often PBMs use spread pricing, a recent report found that the companies, who act as the middlemen of the drug industry, made more than $200 million using spread pricing in Ohio’s Medicaid program.

Additionally, the legislation would require PBMs to report the net and list prices for individual drugs, and to pass 100% of the rebates they negotiate on to the consumer. Violations of these provisions would result in fines of $10,000 per day.

The package also targets generic drug manufacturers who attempt to block competitors and gives the FDA more flexibility to deny petitions that brand name pharmaceutical companies use to delay generic competition.

“These are common sense steps we can take, and every single one of them has the objective of reducing the health care costs that you pay for out of your own pocket,” Sen. Alexander said in a press release. “We hope to move it through the health committee in June, put it on the Senate floor in July and make it law.”

Source: STAT, May 23, 2019.