Photo by Simone van der Koelen on Unsplash

Senate Commerce Committee Chair Maria Cantwell (D-Wash.) has introduced S. 4293, the ” Pharmacy Benefit Manager Transparency Act.” It is expected that this legislation will be marked up by the Senate Commerce Committee this week.

This legislation would dramatically expand the Federal Trade Commission (FTC), giving federal bureaucrats the power to impose new regulations and reporting requirements on Pharmacy Benefit Managers (PBMs). It will ban and restrict basic business practices that PBMs use to provide accessible and affordable medicines to patients.

Lawmakers should oppose this harmful legislation. 

PBMs administer prescription drug plans for millions of Americans including commercial health plans, Medicare Part D, and federal and state government health plans. They help deliver savings to patients by negotiating the prices that pharmacies get reimbursed for prescription medicines. In addition, they frequently utilize contracting  to help reduce costs.

Senator Cantwell’s bill contains numerous provisions that would impose new regulations that would insert the FTC into business to business contracts, with no benefits for consumers. For instance:

  • The bill prohibit PBMs from using basic auditing practices to combat fraud, waste and abuse.
  • The bill would prohibit routine contracting processes used by PBMs to insulate payers from price fluctuations in the market.
  • It would also require PBMs to disclose pricing information that can lead to tacit collusion and price increases.
  • PBMs would be prohibited from lowering reimbursements for drugs.

This bill is unnecessary because PBMs are already transparent. They provide extensive information to patients including information on premiums, out-of-pocket costs, and coverage and provide employers and other health plan sponsors detailed information about rebates, fees, and payments and provide.

The proposal is just another example of lawmakers seeking to impose government mandates and rules on private businesses. Like other proposals, this will only increase costs on the US healthcare system and distort economically efficient behavior and natural incentives created by the free market.

The Left is pushing to give the Biden Administration sweeping new power to reshape entire industries. Since taking office last year, FTC Chair Lina Khan has taken aim at numerous industries including agriculture, health, telecommunications, and technology companies.

As part of this effort, they are pushing transparency measures that they say make the system “fairer.” In reality, transparency is used as a justification for expanding the power of the federal government through the imposition of new mandates and restrictions on businesses and to force the disclosure of sensitive information that does nothing to help consumers or inform the public.

Senators should reject the Pharmacy Benefit Manager Transparency Act. The legislation would drastically expand the Biden FTC’s ability to regulate PBMs and would ban or restrict many practices they use to lower costs for consumers.