On February 16, the Senate Commerce, Science, & Transportation Committee held a hearing entitled, "Bringing Transparency and Accountability to Pharmacy Benefit Managers." The hearing centered on the bipartisan Pharmacy Benefit Manager Transparency Act (S. 127) reintroduced by Committee Chair Maria Cantwell (D-WA) and Sen. Chuck Grassley (R-IA). The bill would prohibit pharmacy benefit managers (PBMs) from charging health plans more for a drug than they reimburse to pharmacies (also known as "spread pricing") or imposing retroactive clawbacks on pharmacies and require PBMs to report certain information about payments they receive from health plans and fees charged to pharmacies to the Federal Trade Commission (FTC) on an annual basis.

During the hearing, both Democrats and Republicans cited a need for additional transparency to better understand how money flows through PBMs and the role PBMs play in patients' out-of-pocket drug costs. However, some Republicans, including Ranking Member Ted Cruz (R-TX), raised concerns about the bill's provisions related to the FTC and the potential for the FTC to assume new authorities at a time when there are no Republican commissioners.

The panel heard from two panels of witnesses. First, Sen. Grassley who twice assured Sen. Cruz that the bill would not give the FTC any new authority. They heard next from a panel of providers, including a pharmacist and an oncologist, and two economists. While most of the panelists spoke in favor of increasing PBM transparency, Casey Mulligan, a professor in economics at the University of Chicago, warned about the potential downfalls of increased PBM regulation.

More information is available here.

Additional information is also available in the attached Tax Alert.

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Senate hearing on pharmacy benefit managers