Pharma, patient groups and PBMs clash as Connecticut committee considers PBM reforms

Senate Bill 1366 drew sharply contrasting testimony as pharmaceutical companies, patient advocacy groups and pharmacy benefit managers gave competing accounts of how PBM business practices affect drug prices and patient access.

Laura Hoch, associate vice president for advocacy at the National Multiple Sclerosis Society, urged the committee to curb PBM incentives that favor higher list prices. Hoch cited Federal Trade Commission reports that, she said, show PBMs may profit from arrangements that favor certain brands and can raise patient costs at the pharmacy counter: “PBMs may prefer a higher cost brand drug because it will increase their revenue,” she said.

Pharmaceutical industry representatives told the committee the bill’s core reform — removing compensation tied to drug list prices and replacing it with flat fees — is a useful corrective. “To the extent that PBMs provide valuable services … they should be entitled to compensation based on that value. But PBM compensation should not be tied to the price of medicine,” said a witness from PhRMA, citing concerns that rebate structures can distort formulary choices.

PBMs and their trade association, however, opposed several bill provisions. Sam Hollomire of the Pharmaceutical Care Management Association told the committee that banning performance‑based compensation and spread pricing would likely result in reduced manufacturer rebates and higher premiums. He cited a New Mexico fiscal estimate as an example and warned the state employee plan could see large premium increases if rebates fall away.

PBM opponents also challenged proposed fiduciary duties. PCMA’s witness said PBMs do not control plan assets and that making them fiduciaries could increase legal liability and costs for plans, translating into higher premiums. PBM testimony included a claim that Connecticut PBMs pass back about 99.7% of negotiated rebates to plans, citing a Connecticut Insurance Department figure.

Public interest and patient advocacy witnesses countered that vertical integration and opaque rebate flows have real costs for patients and independent pharmacies. Dawn Holcomb of the Connecticut Oncology Association told the committee the bill is “a drop in the bucket” but an important start to restoring patients’ choice of pharmacy and ensuring clinicians can rely on medically appropriate formulary decisions.

Some legislators pressed for more data and contracts to evaluate the projected fiscal effects. Representative Pavlak Damato asked PBM witnesses for sample contracts and more transparency about compensation calculations. PBM representatives said they would provide examples for further review.

The committee heard a range of fiscal projections and policy tradeoffs: supporters argued that delinking compensation from list price would reduce incentives to prefer higher‑cost products; PBMs warned that removing rebates or spread pricing could reduce negotiated discounts and increase employer and state plan costs. Several witnesses said enhanced rebate reporting and transparency would help policy makers assess net effects.

Committee members indicated they will continue to weigh the tradeoffs, request additional data from PBMs and other parties, and consider narrowing or amending statutory language to address fiscal and implementation concerns.