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Legislation providing more scrutiny for pharmacy benefit managers (PBMs) that failed to make it through Congress in the waning days of 2024 seems to still be viable for passage this year, according to a House staff member.

"I think there's plenty of political will there; that's what I've seen from members," Preston Bell, a professional staff member on the House Ways & Means Committee, said Thursday at sponsored by the American Enterprise Institute (AEI) on the future of the Medicare prescription drug benefit. "I do think there are disparate ideas across Congress as to how much intervention within the PBM market is appropriate. What you've seen come through Congress in the final package is probably the litmus test, or maximum, of what is feasible for that type of reform."

Last year's PBM bill -- which appeared poised for passage until President Trump adviser Elon Musk intervened -- would have required that PBMs provide detailed data on drug spending to group health plans, and also that they pass along 100% of drug rebates and discounts to the employer or health plan they negotiate on behalf of. The legislation also required CMS to define "reasonable" contract terms for Medicare Part D drug plans, and to allow "any willing pharmacy" to serve Medicare patients. It also barred PBMs from tying their compensation to a drug's Medicare price.

But after Musk the PBM provisions were removed from the bill along with many other provisions, including one that would have largely reversed a cut to the Medicare Physician Fee Schedule.

"One of the strongest things we can do is a transparency piece for the employer market, which will provide employers a lot more information about the drug benefit," Bell said. "That will enable them to better understand their benefit and focus on where they can find savings ... There is still an opportunity this year to do that; there is no reason why the calculus would have changed. I wouldn't expect that the political will has gone away at all."

Other panelists at the AEI event also expressed more general concerns about the U.S. market for prescription drugs. One problem, according to Kirsten Axelsen, an AEI nonresident fellow, is that when a new breakthrough drug is first developed, it's very expensive, but insurers have no idea how much money it will save them in the long run.

"If tomorrow we had three different new [and expensive] drugs that were really effective against Alzheimer's or Parkinson's disease, we know that would be good for society," she said. However, "we don't know how much it would save, and also the premiums would spike that year, and that would be seen as a crisis."

"There are not the mechanisms in place that align with the science," she continued. "The way drug development works is we figure out some [disease] mechanism, and then you get a bunch of new treatments as a result. And that right now is seen as a cost spike, but it's also a huge step forward in our ability to treat, and it's also just the way science is going to advance. So we need to figure out how to manage these periods of time when we get a lot of new drugs developed all at once that are transformative when we don't yet know what the downstream cost savings are going to be from them."

Another problem is that health insurers are only looking at the short-term benefits of a treatment because they don't know how long a particular patient is going to stay on their plan, said Bell, the House staff member. "They don't see it as valuable to invest in their patients more if they don't know that they're going to cover somebody" for a long period of time. "If you knew from age 21 that you were going to cover somebody with hepatitis C for 30 years, then yeah, that upfront investment in treating their hepatitis C and curing it makes a ton of sense. But if they're going to take that drug and move off your plan in a year, the risk adjustment changes a little bit."

Another issue to consider in the prescription drug space is how drug plans make use of prior authorization, said Axelsen. "I like PBMs and health plans doing the negotiation with drug companies around how drugs are covered, and [having them] try and get price discounts; I think they do a better job than the federal government, and also provide more patient choice," she said. "So I know prior authorization is one of those tools that insurance plans and PBMs have to say, 'No, we're not going to just let anybody take your drug.'"

However, "where I think we need to get smarter about prior authorization is, is the prior authorization helping the person and the physician make a better choice of treatment, or is the prior authorization making that person walk away with no treatment at all?" Axelsen said. She cited a looking at oncology drugs, which found that many patients end up with no treatment due to prior authorization rules. "I think we need to be thinking about, how do we use prior authorization ... If we really feel it's clinically appropriate for someone to try another drug first, fine, but if they did it last year, do we need to make them jump through the hoops again this year?"

"[We need to] be smarter about how these tools are used to control utilization," she added, "and ensure that when we do have utilization tools, they are not having the effect of a person walking away and getting nothing, because that's not prior authorization. That's just care denial."

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