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The California Attorney General joined a bipartisan coalition of 39 attorneys general urging Congress to pass legislation that will hold Pharmacy Benefits Managers (PBMs) accountable for what they say are unfair and deceptive practices that drive up the costs of prescription drugs.

PBMs act as middlemen between pharmacies, drug manufacturers, health insurance plans, and consumers. Their position gives them an enormous impact on consumers’ access to prescription drugs.

In the letter, the coalition asks House Speaker Mike Johnson, Senate Majority Leader Chuck Schumer, House Minority Leader Hakeem Jeffries, and Senate Minority Leader Mitch McConnell to urge Congress to implement reform and regulate PBM business practices. Importantly, the attorneys general note three pieces of pending federal legislation that include proposals that would convey important steps to reform the industry and combat high healthcare costs: DRUG Act (S1542/HR6283), Protecting Patients Against PBM Abuses Act (HR2880), and Lower Costs, More Transparency Act (HR5378).The following are some of the key provisions of these three proposed federal laws.

The DRUG Act:

– – Eliminates rebates at the point of sale: This practice allows PBMs to receive rebates from drug manufacturers based on the amount of a drug they manage, incentivizing them to select higher-cost drugs even if cheaper alternatives exist.
– – Bans spread pricing: This involves charging pharmacies more for a drug than they can bill the patient, creating a profit margin for the PBM.
– – Restricts fees on generic drugs: The bill limits the fees PBMs can charge pharmacies for generic drugs, aiming to increase access and affordability.

Protecting Patients Against PBM Abuses Act:

– – Limits PBM income: Restricts PBMs to receiving flat service fees, prohibiting income based on drug prices, discounts, or rebates, which critics argue incentivizes them to choose pricier drugs.
– – Transparency in fees: Requires PBMs to disclose fees to plan sponsors, fostering clearer understanding of pricing structures.
– – Fair reimbursement for pharmacies: Prohibits PBMs from reimbursing network pharmacies less than PBM-affiliated pharmacies, aiming to level the playing field and enhance competition.
– – No hidden costs: Bans charging plan sponsors for ingredient costs or dispensing fees different from what’s reimbursed to pharmacies, addressing potential cost markups.

Lower Costs, More Transparency Act (HR5378):

– – Hospitals: Requires hospitals to publicly disclose charges for standard procedures and services, including the discounted cash price and negotiated rates with insurers.
– – Clinical labs and imaging facilities: Similar transparency requirements for clinical diagnostic labs and imaging facilities.
– – Pharmacy Benefit Managers (PBMs): Increased reporting requirements for PBMs to health plan sponsors, revealing details on spending, rebates, and fees associated with covered drugs.
– – Employer-sponsored plans: Enhanced access for employers to claims and cost information, allowing them to make more informed choices about health insurance plans.

The California Attorney General joins the attorneys general of Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Hawaii, Illinois, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Nevada, New Hampshire, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virgin Islands, Virginia, Wisconsin, and Wyoming.