High drug prices can prevent patients from getting the medications they need to manage conditions and control symptoms. Outrageous costs of prescription drugs in Montana have led to thousands of patients foregoing medications that could significantly improve their lives. Now, U.S. Senator Steve Daines says a bill he is cosponsoring will bring long overdue transparency and accountability to drug pricing – potentially driving costs down and helping patients afford the medications they need.

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The Prescription Pricing for the People Act of 2019

The bipartisan bill, known as the Prescription Pricing for the People Act of 2019, would require the Federal Trade Commission (FTC) to analyze the activities of pharmacy benefit managers to search for anticompetitive behaviors. The Act would ideally expose misconduct and potentially abusive behaviors that could be contributing to the increasing costs of prescription medications. The FTC will have to give its recommendations to Congress on how to protect consumers from rising costs and improve competition in the industry.

Chuck Grassley, Senate Finance Committee Chairman, says pharmacy benefit managers play key roles in determining how much patients pay for drugs, yet their business models remain under a cloak of secrecy. In recent years, considerable consolidation may have played a role in the increase in prescription medication prices. The required FTC review will provide a comprehensive look into the state of the industry, and protect patients by shedding light on unfair practices and lack of competition. The bill is one of many steps Grassley says he is taking as chairman to achieve better access to affordable drugs.

The text of the Act requires the FTC to study the role of intermediaries in the pharmaceutical supply chain. Then, the FTC must give Congress appropriate policy recommendations for how to improve the current state of the market. The FTC will have no later than one year from the passing of the act to submit its report with recommendations to Congress. Daines, Grassley, and Senator Maria Cantwell introduced the bipartisan bill on April 30th, 2019.

What Must the FTC’s Report Include?

The language of the proposed bill outlines in detail the elements the FTC’s report to Congress must contain. The FTC will need to examine all required elements and report back to Congress by the deadline. The report must discuss whether pharmacy benefit managers engage in a number of activities that could be contributing to the increase in prescription drug prices.

  • Charging payers higher prices than the reimbursement rate at which they reimburse competing pharmacies, while reimbursing pharmacies where they have ownership interests at the rate they should charge to payers
  • Directing patients to pharmacies in which the pharmacy benefit managers have interests as owners
  • Auditing or reviewing important and sensitive data of competing pharmacies to use for anticompetitive purposes (including patient information and acquisition costs)
  • Using formulary designs to reduce the number of low-cost, lower-rebate drugs on the market

The FTC will also need to assess the current competitive environment in the pharmaceutical supply chain for potential issues, especially in regard to intermediaries and the recent consolidations, as well as how payers assess the benefits and risks of signing contracts with intermediaries. Finally, the FTC will analyze whether the Commission currently faces any legal obstacles that could interfere with a competitive and transparent pharmaceutical marketplace.

Once the FTC finishes its investigation, it must write a report outline specific actions the Commission recommends Congress take to prevent future issues in the supply chain, as well as to repair the current broken market. The goal will be to improve transparency, competition, and accountability in the pharmaceutical supply chain. Should the act pass into law, the FTC’s findings and recommendations will ideally work to reshape the supply chain. It will ultimately benefit patients by bringing down the costs of prescription drugs and ensuring access to any cost savings that could result from consolidations.