Congress leaves for August as clock ticks down on health policy bills  

Congress has left Washington for its August recess but faces a long to-do list this fall that includes passing legislation to lower healthcare costs through increased transparency and competition. House and Senate committees in recent weeks have approved a flurry of similar, largely bipartisan policies, and while it now falls to leaders in both chambers to meld the various bills into packages ready for floor votes, reconciling differences amid a crush of other business and a short legislative calendar will be challenging.  

Proposals that could land in a Senate healthcare package that Senate Majority Leader Charles Schumer (D-NY) originally planned to bring to the floor before August will likely feature elements of legislation (the Pharmacy Benefit Manager Reform Act, S 1339) overwhelmingly approved in May by the Health, Education, Labor, and Pension (HELP) Committee. 

Key provisions in S 1339 would: (i) require extensive new PBM disclosures in the form of annual reports to plan sponsors about the amount of prescription drug copayment assistance funded by drug manufacturers, a list of covered drugs billed under the health plan, the total net drug spend by the health plan, and rebates and fees received from drug manufacturers and other third parties, (ii) mandate that all rebates, fees or alternative discounts be passed through to the health plan, and (iii) ban spread pricing, where PBMs charge plans more for a drug than what they pay the pharmacy to dispense it.

The bill would also require the Secretary of Labor to conduct a study on the fiduciary duties of PBMs and clarify that PBMs are subject to service provider disclosure rules requiring benefit advisors to disclose all direct and indirect compensation.

The HELP bill does not address out-of-pocket caps on the cost of insulin, though Schumer and other senators hope to include a provision in a broader package. This idea is opposed, however, by plan sponsors and insurers over concerns that a cap would simply shift costs without addressing the list price of insulin.

The Senate Finance Committee has also approved bipartisan legislation (the Modernizing and Ensuring PBM Accountability Act) that aims to bring down drug costs for Medicare beneficiaries by, among other things, eliminating the link between PBM compensation and list drug prices, creating new PBM transparency standards and reporting requirements, and requiring a study of how vertical integration in the pharmacy space is affecting Medicare drug costs and spending. It would also ban spread pricing in Medicaid. While the bill’s scope is limited to public programs, it could indirectly shift costs onto employer plans.

House legislation is also in play as Senate leaders shape their package, with key committees recently reporting out an array of similar bills.

The House Ways and Means Committee last week approved a sweeping but partisan package (HR 4822) that would require more oversight and transparency for PBMs, including annual reports to plan sponsors similar to those proposed in the Senate HELP bill. The measure would also codify and expand hospital and health plan price transparency rules and require off-campus hospital outpatient departments to use unique national provider identification numbers that would show the location of where a service was provided, giving employers and other payers more insight into whether they are appropriately charged for visits based on location. It would also expand certain “site-neutral” payment policies in Medicare. Employer groups are urging Congress to apply the policy more broadly to the commercial market.

While the bill’s reforms generally have bipartisan support, Ways and Means Democrats objected to the lack of insurer transparency requirements for Medicare Advantage plans. Democrats also took issue with a separate committee-approved bill (HR 3284) requiring a government study of consolidation in the healthcare industry (including PBMs) because it does not require private equity investors to submit data. 

The House Education and the Workforce Committee homed in on similar themes in four bills it recently passed by big bipartisan margins, including extensive new reports from PBMs to plan sponsors detailing drug spending and rebate information (HR 4507). The panel also passed a bill (HR 4527) to ensure that plan sponsors cannot be contractually restricted from obtaining cost or quality of care information from service providers related to their own healthcare plans.  

Bipartisan legislation (HR 3561) unanimously approved in May by the House Energy and Commerce Committee is the most wide-ranging and tackles virtually all these issues, including requiring PBMs to annually provide plan sponsors with extensive reports. It would also require pass-through pricing and prohibit spread pricing for payment arrangements with PBMs under Medicaid.

Notwithstanding broad agreement on reforms affecting employer plans, there are differences and jurisdictional issues in the committee-passed bills that need to be reconciled within and between the House and Senate before a final package can be sent to the president. Congress must also grapple with a host of expiring federal healthcare programs and ongoing budget talks aimed at averting a government shutdown on September 30, suggesting that any final action on PBM reforms and other proposals to enhance healthcare transparency and competition may have to wait until late this year. Still, there is a solid chance that some could land in a “must-pass” year-end omnibus bill, especially if they are scored as raising enough revenue to help pay for other healthcare priorities.