Warren, Hawley, Harshbarger, Auchincloss Introduce Bipartisan Bill to Cut Drug Costs, Rein in Pharmacy Benefit Managers (PBMs)

December 11, 2024

Warren, Hawley, Harshbarger, Auchincloss Introduce Bipartisan Bill to Cut Drug Costs, Rein in Pharmacy Benefit Managers (PBMs)

Patients Before Monopolies (PBM) Act will untangle health care middlemen's dual ownership of pharmacies, limiting expensive conflicts of interest

Text of Bill (PDF) | One-Pager (PDF)

Washington, D.C. - Today, Senators Elizabeth Warren (D-Mass.) and Josh Hawley (R-Mo.), alongside Representatives Diana Harshbarger (R-Tenn.) and Jake Auchincloss (D-Mass.), introduced the Patients Before Monopolies (PBM) Act. The bipartisan, bicameral bill will prohibit joint ownership of PBMs and pharmacies, a gross conflict of interest that enables these companies to enrich themselves at the expense of patients and independent pharmacies.

Over the past decade, pharmacy benefit managers (PBMs) - the middlemen between pharmacies and insurance companies - have morphed into large health care conglomerates that exercise control over every link in the prescription drug delivery chain. Today, the largest health care conglomerates each own a PBM - which pay for pharmacy services - as well as the pharmacy chains that provide those services. This inherent conflict of interest results in higher drug costs for patients and fewer independent pharmacies, but bigger profits for the corporate health care giants.

The Patients Before Monopolies (PBM) Act would address this by:

• Prohibiting a parent company of a PBM or an insurer from owning a pharmacy business;
• Requiring that a parent company in violation of the PBM Act divest its pharmacy business within three years;
• Enabling the FTC, Department of Health and Human Services, Antitrust Division of the Department of Justice, and state attorneys general to issue orders requiring violators of the PBM Act to divest its pharmacy business and disgorge any revenue received during the period of such violation;
• Directing the FTC to distribute any disgorged revenue to harmed communities, including consumers overcharged at vertically integrated pharmacies.
• Mandating reporting of all divestitures to the FTC, and allowing the FTC to review all divestitures and subsequent acquisitions to protect competition, financial viability, and the public interest.

"PBMs have manipulated the market to enrich themselves - hiking up drug costs, cheating employers, and driving small pharmacies out of business. My new bipartisan bill will untangle these conflicts of interest by reining in these middlemen," said Senator Warren.

"The insurance monopolies are ruining American health care. Patients and independent pharmacies are paying the price. This legislation will stop the insurance companies and PBMs from gobbling up even more of American health care and charging American families more and more for less," said Senator Hawley.

"As a life-long pharmacist, I know first-hand how unchecked PBM consolidation and vertical integration have allowed these shadowy middlemen to self-deal and manipulate the system in ways that are driving up drug costs, limiting patient choices, and putting the financial screws to independent community pharmacies," said Representative Harshbarger. "I'm a proud conservative Republican, but we have antitrust laws for a reason. That's why I'm joining my colleagues in introducing the bipartisan Patients Before Monopolies Act, which will protect consumers and taxpayers, and ensure fair competition by breaking-up these anticompetitive, conflict-of-interest arrangements. Federal regulators should never have let this excessive concentration of our healthcare industry happen in the first place, and so it's up to Congress to get the job done."

"The PBM industry is rife with self-dealing that raises costs for patients and bankrupts independent pharmacists. No PBM should be allowed to own pharmacies, because it poses an unacceptable conflict of interest when it then sets reimbursement rates for its own versus external pharmacies. Independent pharmacies deserve fair play," said Representative Auchincloss.

The Patients Before Monopolies (PBM) Act is endorsed by the American Economic Liberties Project (AELP), National Community Pharmacists Association (NCPA), American Pharmacy Cooperative Inc (APCI), Pharmacists United for Truth and Transparency (PUTT), Patients Rising, and AffirmedRx.

"Giant PBMs and insurers owning their own pharmacies has driven independent pharmacies out of business and reduced patient access to quality care. The Patients Before Monopolies Act addresses the root cause of this problem - consolidated market power - by eliminating the inherent conflicts of interest within the big three PBM business model," said Morgan Harper, Director of Policy and Advocacy at the American Economic Liberties Project. "We are thrilled to see Sen. Warren and Sen. Hawley lead this bipartisan effort to lower drug costs, protect independent retail pharmacies, and improve patient access to care."

"A particularly egregious result of the vertical integration of PBM-insurers with retail and mail-order pharmacies is that the PBM - which competes with independent pharmacies and others - decides what their rival pharmacy will be reimbursed and which patients will be allowed to use them. There are also countless examples of PBMs paying their pharmacies much higher reimbursement than non-affiliated pharmacies and using patient data to steer patients to their own pharmacies," said Anne Cassity, Senior Vice President of Government Affairs for the National Community Pharmacists Association. "We're grateful to Sens. Warren and Hawley and Reps. Harshbarger and Auchincloss for introducing the PBM Act, which will go a long way in eliminating the conflicts of interest that currently exist in this space."

"The inherent conflicts of interest between PBMs owning their own retail, mail-order, and specialty pharmacies have resulted in higher drug costs, reduced patient choice and access to care, and unsustainable reimbursements to non-PBM affiliated pharmacies. With retail pharmacies closing at an alarming rate and patients fighting life threatening diseases being steered to PBM owned pharmacies and often overcharged thousands of dollars for medications, Senator Warren's Patients Before Monopolies Act couldn't come soon enough," said Greg Reybold, Vice President of Healthcare Policy and General Counsel at the American Pharmacy Cooperative, Inc. "This commonsense legislation strikes at the heart of anti-competitive PBM behavior and roots out conflicts of interest by prohibiting ownership of both a PBM and a pharmacy. American Pharmacy Cooperative, Inc, is grateful to Senator Warren for her work and leadership on this issue and looks forward to fighting for this critically important piece of legislation."

"While there are a variety of conflicts of interest that can compromise the intended role of PBMs to act as counterweights to inflated drug prices, one of the chief areas of system misalignment arises from PBM ownership of pharmacies. As these large vertically integrated companies serve as both price-setter and price-taker for pharmacy transactions, PBM incentives to reduce drug markups and to manage pharmacy reimbursement and network decisions in an unconflicted manner are significantly undermined," said Antonio Ciaccia, President of 3 Axis Advisors. "In our work advising government programs and commercial plan sponsors, we stress that minimizing or eliminating these areas of misalignment are foundationally critical in order to achieve greater balance for medicine accessibility and affordability."

"For too long vertically integrated PBMs have put profits over patients, driving up costs, limiting access to essential medications and forcing countless independent pharmacies to close their doors. The Patients Before Monopolies Act is a step toward breaking these monopolies, restoring fairness and competition and, most importantly, ensuring patients get the care they need at a price they can afford," said Greg Baker, Pharmacist, CEO of AffirmedRx, a transparent PBM. "At the heart of our mission is the belief that transparency and integrity should be the foundation of health care. I congratulate Senators Warren and Hawley, and Representatives Harshbarger and Auchincloss for putting patients first, and urge Congress to pass this bipartisan bill."

"This bill is the next step in urgently-needed legislation to eliminate the profiteering and other conflicts of interest that exist when private health insurers and their pharmacy benefit managers are allowed to design and sell health benefit plans while also owning pharmacies, clinics and other point-of-care entities," said Monique Whitney, Executive Director of Pharmacists United for Truth and Transparency. "Vertical integration among the largest healthcare insurers has only served to saddle Americans with the priciest possible premiums for impossibly high-deductible plans that provide fewer options and ultimately result in poorer health outcomes. We applaud Senators Warren and Hawley for recognizing the need to dismantle the current system, which has failed consumers and taxpayers at just about every level."

"Across the country, patients feel increasingly disenfranchised by the healthcare system. The culprit: a complex web of powerful health conglomerates including health insurers, Pharmacy Benefit Managers (PBMs), and their affiliated pharmacies," said MacKay Jimeson, Executive Director of Patients Rising. "Patients Rising applauds Senators Elizabeth Warren and Josh Hawley, along with Representatives Diana Harshbarger and Jake Auchincloss for putting forward bi-partisan legislation to put patients before monopolies. It is critical we crack down on health conglomerate conflicts of interest and encourage businesses to operate in the interest of patients' long term health and wellbeing."

Senator Warren has led efforts to use every tool available to lower drug prices and fight Big Pharma's anti-competitive business practices:

• In October 2024, Senators Elizabeth Warren (D-Mass.) and Marco Rubio (R-Fla.) reintroduced the United States Pharmaceutical Supply Chain Review Act, legislation to require the Federal Trade Commission (FTC), in consultation with the Department of Commerce, to produce a report on the impacts of foreign investment in the United States' pharmaceutical industry.
• In June 2024, Senator Warren and U.S. Representative Pramila Jayapal (D-Wash.) sent letters to eight pharmaceutical companies urging them to voluntarily de-list over 100 "sham" patent listenings, which would create opportunity for more competition and lower drug prices.
• In May 2024, Senator Warren and Representative Lloyd Doggett (D-Texas) sent a letter to Secretary of the Department of Commerce, Gina Raimondo, and Under Secretary Laurie Locascio, highlighting the lawmakers' new review of public comments on the agency's Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights and urged them to strengthen and finalize the guidance.
• In May 2024, Senators Warren, Bernie Sanders (I-Vt.), and Jeff Merkley (D-Ore.) wrote to the Chamber of Commerce expressing concern and demanding an explanation for the organization's opposition to the Biden administration's proposal to boost competition and lower drug prices for American families and businesses by allowing agencies to consider price when deciding to exercise their "march-in rights" under the Bayh-Dole Act.
• In March 2024, Senator Warren sent the letter in response to GlaxoSmithKline (GSK) discontinuing the brand-name version of Flovent HFA, the go-to inhaler for children, blasting the company for its price-gouging strategy that may cause millions of children to lose access to one of the few drugs that is appropriate to treat their asthma and allergies.
• In February 2024, Senators Warren and Angus King (I-Maine) and U.S. Representative Lloyd Doggett (D-Texas) led 75 lawmakers in sending a letter to the Biden administration in support of strengthening and finalizing its draft guidance to protect taxpayers and reduce prescription drug prices. The lawmakers submitted a public comment supporting the "Interagency Guidance Framework for Considering the Exercise of March-In Rights" and calling for changes to ensure increased transparency, oversight, and accessibility of medical products invented through taxpayer-funded research and development.
• In February 2024, Senator Warren and Representative Jayapal announced that three drug manufacturers pulled their sham patents after warnings, and urged the FDA to continue fighting against Big Pharma's patent abuse.
• In December 2023, Senator Warren published an op-ed in Newsweek commending the Biden administration's announcement that price can be considered in the government's decision to march-in on a drug, effectively lowering drug costs, and calling on Americans to fight back against an industry that has been taking advantage of them for decades.
• In December 2023, Senator Warren issued a statement after the Biden administration announced it would issue guidance to federal agencies that would allow the government to seize patents of certain expensive drugs developed with taxpayer support to create more competition and lower prices.
• In December 2023, Senator Warren and Representative Jayapal sent letters to the CEOs of 8 pharmaceutical companies urging them to voluntarily remove sham patent claims improperly included in the FDA's Orange Book and end their unlawful practices that delay competition and drive up costs for patients and taxpayers.
• In December 2023, Senator Warren and Representative Jan Schakowsky (D-Ill.) reintroduced the Affordable Drug Manufacturing Act, legislation that would radically reduce drug prices through public manufacturing of prescription drugs.
• In September 2023, Senator Warren and Representative Jayapal sent a letter to FTC Chair Lina Khan urging the FTC to issue a policy statement about the improper listing of drug-related patents in the FDA's Orange Book.
• In August 2023, Senator Warren and Representative Jayapal sent a letter to FDA Commissioner Dr. Robert M. Califf, urging him to close loopholes that pharmaceutical companies have exploited to block generics from entering the market, keeping drug prices high and maximizing profits.
• In June 2023, Senators Warren and Angus King (I-Maine) and Representative Lloyd Doggett (D-Texas) sent a letter to Department of Commerce (DOC) Secretary Gina Raimondo and Department of Health and Human Services (HHS) Secretary Xavier Becerra asking for information on the membership, process, timeline, and scope of work of the recently announced Interagency Working Group for Bayh-Dole.
• In April 2023, Senator Warren and Representative Jayapal sent a letter to Kathi Vidal, Director of the USPTO, calling on USPTO to take immediate action and use its existing administrative authorities to help lower drug prices and hold pharmaceutical companies accountable for anti-competitive business practices. The lawmakers outlined six specific actions that the USPTO should take.
• In February 2023, Senators Warren and Bernie Sanders (I-Vt.) and Representatives Jayapal and Katie Porter (D-Calif.) sent a letter to the USPTO, calling on the agency to give close scrutiny to any of Merck's requests for new patents for Keytruda, a biological treatment used to treat cancer, citing new reports about Merck's ongoing abuse of the patent system to protect its monopoly on the drug.
• In January 2023, Senators Warren and King and Representative Doggett led their colleagues in sending a follow-up letter to HHS Secretary Xavier Becerra that urged the Secretary to exercise his authority to lower the price of cancer treatment Xtandi.
• In December 2022, Senator Warren and Rep. Jayapal sent a letter to Director Kathi Vidal following up on their June 2021 letter about USPTO's efforts to hold pharmaceutical companies accountable for anti-competitive business practices and tackle high drug prices.
• In June 2022, Senators Warren and King and Representatives Doggett, Joaquin Castro (D-Texas), Sara Jacobs (D-Calif.), and Porter led a group of 100 members from across the ideological spectrum to urge HHS Secretary Xavier Becerra to swiftly act and use his existing authorities to lower prices on critical prescription drugs.
• In April 2022, Senator Warren sent a letter to HHS Secretary Becerra, sharing the findings from a letter that over 25 legal and public health experts sent to her outlining three powerful legal tools the Biden administration could use to lower drug prices.
• In March 2022, Senator Warren and her colleagues called out drug manufacturers for squeezing American families with rapid and widespread price hikes on prescription drugs.
• In February 2022, Senators Warren and King and Representative Doggett urged HHS to exercise its march-in rights for the life-saving cancer drug Xtandi to dramatically lower its price for millions of Americans.
• In June 2021, Senator Warren led a letter questioning PhRMA's lobbying efforts to block policies that would lower drug costs for millions of Americans.

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