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The PBM defense playbook

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Illustration: Sarah Grillo/Axios

Congress isn't exactly off to a running start. But when the House gets its act together, one of the top potential areas for bipartisan action is PBMs, as we reported Tuesday.

  • So how are PBMs dealing with this scrutiny? Industry sources say they realize they need to to a better job educating members of Congress about what PBMs really do, and that they are the ones in the supply chain actually working to negotiate lower costs.

Behind the scenes: Notably, PBMs are not planning a major counterattack against PhRMA, which has long been targeting PBMs, arguing they should share more of the discounts they get with patients.

  • PBM officials say getting into a circular firing squad among industry groups is not productive for anyone and only ends up inviting the government to step in with regulations.
  • JC Scott, CEO of the Pharmaceutical Care Management Association, the PBM trade group, told Axios that "blame game tactics" across the supply chain are not productive.
  • "Where I think that led us to was collectively undermining confidence in the private market system to the degree that Congress perceived there was dysfunction, that they needed to step in," Scott said. "We should all pivot away from that finger-pointing strategy."
  • Asked to respond, PhRMA spokesperson Brian Newell said that "we’ve got to work together on solutions that look across the entire health care system" but added that any solution "has to include addressing the fact that many people are paying more for medicines than their PBM and health plan pay.”

So if not going on attack, what are PBMs doing? In addition to outreach to members of Congress, Scott said, PCMA plans to release its own policy proposals around drug costs in "the next couple of weeks."

  • These will focus on ways to increase competition through encouraging uptake of biosimilars and cracking down on "patent abuse."

By the numbers: PCMA has increased its lobbying dollars in recent years, spending $7.8 million in 2021, the last full year available, up from $4.25 million in 2019, according to Open Secrets data. That still is far less than the $30.41 million PhRMA spent in 2021.

  • "Advertising, media, grassroots engagement, advocacy, all of it, the sector's definitely intensifying its efforts," said a PBM industry source, while acknowledging that PBMs are not even trying to match what drug manufacturers spend.

What we're watching: PBM sources say it's not yet clear which bill has the best chance or is the biggest threat. The general dysfunction and divided government could make any major health policy action tough.

  • "We certainly are monitoring all bills. Is it a concern? Always. But is it a panic? No," said another PBM industry source.
  • Sens. Chuck Grassley and Maria Cantwell, for example, have a bipartisan measure that would take steps like banning PBMs from using "spread pricing," in which they charge a health plan more than they pay the pharmacy for a drug, then keep the difference.
  • Ron Wyden has the C-THRU Act, which includes requiring PBMs to pass on a minimum percentage of rebates to health plans.
  • Other proposals are focused on transparency and requiring PBMs to disclose more information.

What they're saying: "I think [PBMs] have a bit of a target on their back in 2023 because pharma just got walloped so badly in the IRA," said Joe Grogan, a former Trump administration health official who consults for both pharmaceutical companies and PBMs.

  • "So right after you pound pharma, where else do you go next? And the next industry that they don't understand is PBMs, so that's where they're going to go."
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