PBMs Face More Regulatory Challenges Amid Transition

In the year ahead, Trump administration drug pricing policies are likely to be changed or revoked by the Biden administration and court challenges, although which policies will be affected — and to what extent — is still unclear, policy experts tell AIS Health.

Brian Anderson, a principal at Milliman Inc., observes that firms have to act as though they will need to comply with the Trump administration’s rules, even if there is consensus that the new administration will make changes.

“We are recovering from new plan installations, benefit updates, open enrollment, all the things that happen on [Jan. 1]. And now, everybody’s taking a breath, going, ‘Okay, now I’ve got to dive into the new legislative updates,’” Anderson tells AIS Health.

Anderson says plans and PBMs are just beginning to make sense of a provision in the Consolidated Appropriations Act, 2021, the pandemic relief and omnibus spending bill passed by Congress on Dec. 21, 2020, which requires increased reporting on drug prices by plans to HHS, and the Labor and Treasury departments.

The Biden administration has not yet made clear which Trump regulations it will revise or eliminate. But PBMs aren’t waiting to find out: The Pharmaceutical Care Management Association (PCMA) filed a lawsuit on Jan. 12 seeking to overturn the so-called rebate rule, which the Trump administration finalized on Nov 20.

It’s an open question whether the Biden administration will make substantive changes to the rule, or even defend it in court, according to Ge Bai, Ph.D., a professor at the Johns Hopkins Carey Business School who studies health care finance.

“I don’t have a take on whether Biden will continue with the rebate rule,” Bai tells AIS Health. “The biggest problem is that premiums will increase. So that is the hurdle for the future implementation of this rule. But on the other hand, the benefit is that the patient is absolutely going to see savings at the pharmacy counter.”

Political Scrutiny on PBMs Is Growing

In general, Bai says that PBMs are facing much more political scrutiny than they have in the past.

Dan Mendelson, founder of consultancy Avalere Health, says that increased awareness of PBMs’ role in drug pricing has mainly attracted the attention of state legislators so far, and therefore state-level action on PBMs is “more likely” than aggressive moves by Congress. But Mendelson predicts that could change if Congress makes the big push on health care reform that progressives hope for.

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