By Catherine Dunn
A new proposal in Congress is adding pressure to the embattled industry of pharmacy-benefit managers, or PBMs, middlemen companies with significant influence in the drug supply chain.
Bipartisan legislation introduced Wednesday would prohibit ownership of pharmacies and PBMs under the same roof, and would require companies that currently own both types of businesses to divest the pharmacies within three years.
The three largest PBMs are integrated inside UnitedHealth Group, CVS Health, and Cigna Group. Shares of all three companies were down sharply on Wednesday, with declines around 5% for each stock. The broader healthcare sector was falling, as well, even as the rest of the market rallied.
As benefit managers for insurance plans nationwide, the big three PBMs administer prescription claims for patients, bargain rebates from drug companies, and reimburse pharmacies where patients fill prescriptions. PBMs say their negotiations help lower healthcare costs for clients, such as employer-sponsored insurance plans.
Independent pharmacies, however, have argued their reimbursement is at the mercy of competitors, since CVS, UnitedHealth, and Cigna also operate pharmacies.
The Patients Before Monopolies Act is sponsored by Sens. Elizabeth Warren (D., Mass.) and Josh Hawley (R., Mo.) in the Senate, and by Reps. Diana Harshbarger (R-Tenn.) and Jake Auchincloss (D-Mass.) in the House.
"PBMs have manipulated the market to enrich themselves -- hiking up drug costs, cheating employers, and driving small pharmacies out of business, " Warren said in a statement.
Harshbarger, a pharmacist, said unchecked industry consolidation has allowed PBMs to "manipulate the system in ways that are driving up drug costs, limiting patient choices, and putting the financial screws to independent community pharmacies," according to a press release.
A series of bills to change PBM business practices has attracted notable bipartisan support on Capitol Hill, though major industry reforms have not yet passed. PBM executives were called to appear in a House committee hearing over the summer. In September, the Federal Trade Commission accused the major PBMs of inflating insulin prices, in a lawsuit the companies are defending against.
A bipartisan congressional group also recently asked the Department of Justice to look into PBMs' business related to opioids, following a Barron's investigation into the rebate payments that PBMs received on sales of OxyContin.
A CVS spokesperson told Barron's Wednesday that its PBM business "reimburses independent pharmacies at higher levels than CVS Pharmacy."
The company added: "Any policies that would limit our ability to negotiate with drugmakers and pharmacies would ultimately increase the cost of medicine in the United States, and in many cases, serve as a handout to the pharmaceutical industry."
Write to Catherine Dunn at catherine.dunn@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
December 11, 2024 14:58 ET (19:58 GMT)
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