Recently, Sen. Wyden has introduced a bill, tilted “Creating Transparency to Have Drug Rebates Unlocked (C-THRU) Act.” The purpose of the bill is to require PBMs to share more information about the rebates they receive and how much of the rebates they actually pass to the plans.

The terms of the contracts between PBMs and manufacturers are variable and secret. If PBM has access to a greater amount of covered individuals, the more bargaining power it will have in negotiating steeper rebates, which is why some large PBMs may walk away with rebates twice as big as those of their smaller competitors.

As expected, PCMA – PBMs’ trade group – argues that the effect of the bill would be the opposite: it actually lead to increased drug prices. PCMA argues that drug companies would use PBMs’ information and collude with competitors.

Link to the full bill

As described by Business Insider, this legislation:

  • Requires greater transparency of rebates and discounts negotiated by the PBM as well as the proportion of these rebates and discounts passed on to the health plan.

  • Requires greater transparency of a common PBM practice known as “spread pricing” – which is the difference in payments made to pharmacies by PBMs compared to payments received by PBMs made by health plans.

  • Requires this information (aggregated by PBM) to be posted on CMS’s website, allowing consumers and employers to decide whether PBMs’ are delivering on their promise of bringing down the cost of prescription drugs.

  • Establishes, after two years of public reporting, a minimum percentage of rebates and discounts that must be passed on from a PBM to a health plan, which will lower premiums or other cost-sharing amounts paid by patients.

  • Requires cost-sharing for Part D enrollees to be based off the negotiated price of the drug as agreed to by the drug manufacturer and PBM (or an approximate negotiated price if the actual negotiated price is unknown at the time the drug is dispensed) so that Part D enrollees to fully benefit from discounts and rebates provided by drug manufactures. Cost-sharing for prescription drugs in Part D is often based off a higher price than the price negotiated by the PBM and the drug manufacturer. Specifically, cost-sharing (e.g. 20% co-insurance) is based off the price the pharmacy acquires the drug, meaning Part D enrollees pay cost-sharing based off a higher price than the price the Part D plan pays to purchase the drug.

    • Example: a drug maker sets a drugs price at $100. Under current law, Part D beneficiaries pay co-insurance based on the $100 price, not the lower price, say, $80, that a PBM negotiates with a drug maker. Seniors in Medicare ought to benefit from these negotiations.