Pharmacy Benefit Manager Reform Scuttled, Despite Bipartisan Support

Last updated: March 18, 2025 8:26 pm

Opponents of PBMs argue that the lack of transparency in their operations, particularly around rebate negotiations, leads to higher drug prices for patients. They also point to the conflicts of interest that arise when PBMs own their own pharmacies and prioritize their own profits over patient access to affordable medications.

Moreover, critics say that PBMs have too much power in the pharmaceutical supply chain, allowing them to dictate which drugs are available to patients and at what cost. This can lead to limited access to cheaper generic or biosimilar medications, as PBMs may push patients towards more expensive brand-name drugs that offer higher rebates.

Despite the ongoing push for PBM reform in Congress, the recent failure to pass a healthcare package with PBM reforms highlights the challenges of enacting meaningful change in the pharmaceutical industry. With powerful lobbying interests and political pressures at play, it remains to be seen if lawmakers will be able to overcome these obstacles and implement reforms that benefit patients and reduce healthcare costs.

As the debate over PBM reform continues, patients, healthcare providers, and policymakers will need to closely monitor developments in Congress and advocate for changes that prioritize affordable and accessible healthcare for all Americans.

In the meantime, the role of PBMs in the pharmaceutical supply chain will remain a contentious issue, with stakeholders on all sides advocating for their interests and pushing for reforms that align with their goals and priorities.

Ultimately, the future of PBM reform in the United States will depend on the ability of lawmakers to navigate the complex political landscape and prioritize the needs of patients and healthcare consumers above all else.

See also Eliminating Waste, Fraud, and Abuse in Medicaid My Administration has been relentlessly committed to rooting out waste, fraud, and abuse in Government programs to preserve and protect them for those who rely most on them. The Medicaid program was designed to be a program to compassionately provide taxpayer dollars to healthcare providers who offer care to the most vulnerable Americans. To keep payments reasonable, billable costs for such care were historically capped at the same level that healthcare providers could receive from Medicare. The State and Federal Governments jointly shared this cost burden to ensure those of lesser means did not go untreated. Under the Biden Administration, States and healthcare providers were permitted to game the system. For example, States "taxed" healthcare providers, but sent the same money back to them in the form of a "Medicaid payment," which automatically unlocked for healthcare providers an additional "burden-sharing" payment from the Federal Government. Through this gimmick, the State could avoid contributing money toward Medicaid services, meaning the State no longer had a reason to be prudent in the amount of reimbursement provided. Instead of paying Medicare rates, many States that utilize these arrangements now pay the same healthcare providers almost three times the Medicare amount, a practice encouraged by the Biden Administration. These State Directed Payments have rapidly accelerated, quadrupling in magnitude over the last 4 years and reaching $110 billion in 2024 alone. This trajectory threatens the Federal Treasury and Medicaid's long-term stability, and the imbalance between Medicaid and Medicare patients threatens to jeopardize access to care for our seniors. I pledged to protect and improve these important Government healthcare programs for those that rely on them. Seniors on Medicare and Medicaid recipients both deserve access to quality care in a system free from the fraud, waste, and abuse, that enriches the unscrupulous and jeopardizes the programs themselves. We will take action to continue to love and cherish the Medicare and Medicaid programs to ensure they are preserved for those who need them most. The Secretary of Health and Human Services shall therefore take appropriate action to eliminate waste, fraud, and abuse in Medicaid, including by ensuring Medicaid payments rates are not higher than Medicare, to the extent permitted by applicable law. This memorandum is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person. DONALD J. TRUMP

Pharmaceutical pricing is a complex issue that involves negotiations between drug manufacturers and Pharmacy Benefit Managers (PBMs). These negotiations can sometimes result in practices that benefit the stakeholders but do not necessarily help patients. One such practice is “product hopping,” where manufacturers release reformulated versions of their original products to avoid competition from lower-cost rivals. PBMs may play a role in promoting these new formulations by giving them preferential placement on formularies.

The lack of PBM reform in recent legislative proposals indicates political friction among lawmakers in 2025 and the challenges of reaching a consensus on this issue. Moving forward, lawmakers may have better success with more focused proposals targeting PBMs specifically. For example, the Protecting Patients Against PBM Abuses Act, introduced by Earl “Buddy” Carter, Lisa Blunt Rochester, and Jake Auchincloss, aims to delink PBM compensation from medication list prices to remove incentives for driving up costs. The bill also seeks to increase transparency and address conflicts of interest. Additionally, Mariannette Miller-Meeks, M.D., introduced bipartisan legislation called the Delinking Revenue from Unfair Gouging Act, with the support of representatives from both parties.

Despite these efforts, PBMs have managed to evade significant reform thus far. It remains to be seen what the future holds for addressing these issues and ensuring fair pharmaceutical pricing practices.