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The ERISA Industry Committee is backing a pharmacy benefit manager (PBM) bill that would establish a fiduciary duty under the Employee Retirement Income Security Act (ERISA) for PBMs to put the interests of employer plan sponsors and participants ahead of their own. Sen. Roger Marshall (R-Kan.) and three bipartisan sponsors have proposed the PBM Fiduciary, Accountability, Integrity, and Reform Act, or the PBM FAIR Act. Not only would the Act add a PBM fiduciary section to ERISA, but it would also require PBMs and third-party administrators to give detailed compensation disclosures to employer plan sponsors or other responsible plan fiduciaries. A companion version of the PBM FAIR Act has also been introduced in the House.
The purpose of the fiduciary requirement for PBMs is to discourage them from taking purely profit-based actions, such as steering patients toward higher-priced drugs to increase their own discount-based revenue.
One of the Republican co-sponsors of the PBM FAIR Act in the House is also one of four House Republicans supporting Democratic efforts to force a bill addressing Affordable Care Act (ACA) premium subsidies to the House floor in January. The bill would extend the current level of premium subsidies for individuals who purchase health insurance through HealthCare.gov and other public exchange programs established under the ACA. The timing of the two bills and the involvement of the same Republican sponsor indicate that health legislation could include both PBM and ACA subsidy measures. Other potential targets for reform include health savings accounts (HSAs), association health plans, and individual coverage health reimbursement arrangements (ICHRAs).
In response, major PBMs maintain that drug manufacturers, pharmacies, and other entities involved in drug manufacturing and distribution are blaming PBMs for their success in reducing their profit margins. According to the PBMs, average U.S. prices for generic drugs have dropped below those in Western Europe and Japan.
Nonetheless, many employers agree that PBMs' lack of transparency in their claimed efforts to reduce plan pharmacy costs may unfairly penalize independently-owned pharmacies. As a result, some employers support PBM regulation bills. ERIC has historically acknowledged frustration with PBM practices but has argued that federal legislation regulating PBMs is necessary to avoid creating different rules across states, which would adversely affect multistate employers.
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