New Federal Reforms on Pharmacy Benefit Managers Impact Health Plans
A new reform targeting pharmacy benefit managers (PBMs) has been enacted as part of a comprehensive federal spending bill recently signed into law. This legislation introduces key changes for PBM operations, particularly concerning rebate management and pharmacy network participation. It presents significant implications for both commercial health plans and Medicare Part D.
Impact on Commercial Health Plans
The law mandates PBMs in the commercial sector to ensure a complete pass-through of received rebates. This affects how contracts are structured with pharmaceutical manufacturers and group purchasing organizations. Legal expert Theresa C. Carnegie from Mintz highlights that PBMs will need to reassess all existing commercial agreements to align with these new regulatory compliance requirements.
Changes to Medicare Part D
For Medicare Part D, the reform separates PBM compensation from drug list prices and introduces the "any willing provider" clause, applicable only to these plans. The legislation categorizes a bona fide service fee as a flat, fair value fee. PBMs that manage Part D plans can no longer retain rebates as part of their compensation, complying with the new regulations.
Transparency and Disclosure Requirements
The law clarifies provisions for the inclusion of independent pharmacies in Part D networks, solidifying existing CMS rules into statutory mandates. Attorney Lucas W. Morgan from Buchanan Ingersoll & Rooney notes this development removes ambiguity regarding independent pharmacy participation. The legislation imposes extensive disclosure and transparency obligations on PBMs regarding drug pricing, rebates, and pharmacy reimbursements, enhancing oversight of PBM practices and pricing models.
State-Level Reforms and Ongoing Challenges
Amid these federal developments, states like California have championed reforms imposing fiduciary duties on PBMs, addressing concerns about vertical integration in healthcare markets. Arizona's legislative attempts to limit PBM ownership of pharmacies have faced legal challenges, revealing ongoing tensions in the regulatory environment.
Industry Response and Future Outlook
Industry players such as CVS Caremark, Express Scripts, and Optum Rx are adopting innovative pricing and reimbursement models. These changes reflect broader industry efforts to align operations with evolving regulatory frameworks and market expectations. This legislation marks a notable shift in federal PBM regulation, setting the stage for increased accountability and transparency in the industry.