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Subcommittee weighs PBM oversight changes, including spread-pricing disclosure and audits
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Summary
The House Commerce and Consumer Affairs subcommittee reviewed an amended PBM oversight bill that would expand PBM licensure, require written agreements and reporting, add a spread-pricing disclosure to group plans, and raise per-violation fines; industry witnesses said major concerns were addressed but cautioned about audit frequency and lingering provisions.
The House Commerce and Consumer Affairs subcommittee on Thursday reviewed a set of amendments aimed at increasing transparency of pharmacy benefit managers and clarifying enforcement tools for regulators.
Michelle Heaton of the New Hampshire Insurance Department told the panel the amendment removes a proposed fiduciary-duty requirement but tightens contract and reporting rules: insurer-owned PBM subsidiaries would be subject to PBM licensure, written agreements would be required to preserve audit access, some reporting would move from semiannual to annual, and a definition and disclosure requirement for spread pricing would be added for group plans.
"Part of what we're trying to get at is...how much is being spent on prescription drugs, how much is being recouped through rebates," Heaton said, describing the department's goal of producing more useful transparency on net drug costs.
Curtis Barry of the Pharmaceutical Care Management Association, representing PBMs, said the amendment addressed many of his group's central concerns. "PBMs are not fiduciaries," Barry told the committee, arguing that a fiduciary label would mischaracterize the contractual relationship between PBMs and carriers.
Industry witnesses pressed the committee on two outstanding points. Cam Lapine, representing Cigna and Express Scripts, asked the panel to reconsider language that treats each day of noncompliance as a separate violation and said mandatory semiannual on-site audits could be burdensome for carriers and PBMs that already maintain routine reporting and contractual audit rights. Peter Bragdon of Harvard Pilgrim urged flexibility on audit frequency for larger, sophisticated purchasers who already maintain intensive oversight.
Committee members responded that the amendment is a compromise intended to balance oversight and operational burden. One member said the spread-pricing disclosure was an important clarification: "If that's how the arrangement is set up, it just needs to be disclosed to the group plans," Heaton said.
The subcommittee approved an effective-date amendment for several managed-care changes and recorded favorable committee action on the amendment package; the bill will proceed with the agreed alterations and with continued engagement among the department, carriers, and industry stakeholders.
The insurance department said the data elements in the amendment are expected to be sufficient for the department's transparency goals and that further discussions can refine details if needed.
