Lawmakers have introduced a bipartisan bill that could apply Employee Retirement Income Security Act fiduciary requirements to employer health plans’ pharmacy benefit managers.
The bill, the PBM Fiduciary, Accountability, Integrity and Reform Act, or PBM FAIR Act, would add a PBM fiduciary section to ERISA section 3(21), according to a version of the text posted by Sen. Roger Marshall, R-Kan., the lead sponsor in the Senate.
The bill would also add a section to ERISA that would require PBMs and health plans’ “third party administrators” to give an employer plan sponsor or other “responsible plan fiduciary” detailed compensation disclosures.
Marshall introduced the bill in the Senate together with three cosponsors: Sen. Chuck Grassley, R-Iowa; Sen. Tim Kaine, D-Va.; and Sen. Maggie Hassan, D-N.H.
Rep. Jack Auchincloss, D-Mass., joined with Rep. Ryan Mackenzie, R-Pa., to introduce a companion bill in the House.
Marshall said in a statement that making employer plans’ PBMs fiduciaries would discourage them from doing things like steering patients toward drugs with higher list prices to increase the amount of discounts received and the PBMs’ own discount-based revenue.
“PBMs shouldn’t profit by steering plans toward higher-cost drugs or practices that drive up prices,” Marshall said.
The ERISA Industry Committee, a group for health plans covered by ERISA, is supporting the bill.
What it means: Mackenzie, the Republican who helped introduce the bill in the House, is also one of the four House Republicans who are backing a Democratic effort force an Affordable Care Act premium subsidy bill to the House floor in January.
The Democratic bill would extend the current relatively high level of federal premium subsidies for people who buy individual or family coverage through HealthCare.gov, Covered California and other Affordable Care Act public exchange programs.
MacKenzie’s role as a cosponsor of the new PBM fiduciary bill and a supporter of the ACA subsidy boost extension bill raises questions about whether the PBM fiduciary bill could be part of a major round of health legislation dealmaking in January.
Any new wave of health legislation dealmaking in January could help measures related to health savings accounts, association health plans, individual coverage health reimbursement arrangements and other health benefits arrangements, as well as PBM and ACA subsidy measures.
The backdrop: The big PBMs have argued that drug manufacturers, pharmacy owners and other prescription drug manufacturing and distribution players are angry at PBMs because PBMs have succeeded at squeezing other players’ profit margins.
The big PBMs have pointed out that average U.S. prices for generic drugs are now below the average prices for generic drugs in Western Europe and Japan.
Many employers have agreed with the PBMs’ critics that the big PBMs tend to use confusing, opaque strategies that make it hard for employers to know what the PBMs are doing to plan pharmacy costs and may be unfair to local brick-and-mortar pharmacies.
Some of those employers have backed the PBM critics’ efforts to pass PBM regulation bills in state legislatures.
In the past, ERIC has acknowledged the frustration of employers about PBM practices but has argued that the federal government should be in charge of any new PBM regulation efforts, to avoid creating a system in which a multistate employer might have to deal with a patchwork quilt of different state PBM laws.