Deep in the Gun Bill: A Break for Drug Middlemen

Many Americans across the political spectrum are calling for federal action on guns following a mass shooting at an elementary school in Uvalde, Texas, a grocery store in Buffalo, NY and hundreds of other places.

But buried in a bipartisan compromise reached by the US Senate on Tuesday is an unrelated provision they might not be so happy about. By the way, the gun bill would improve the exemption drug intermediaries working with Medicare have from the federal government”Anti-bribery law.”

This means that in this era of soaring costs, Senate negotiators have moved to further insulate the nation’s largest health care companies from a federal law prohibiting accepting”any bribe, bribe or rebate” – using a bill that is supposed to regulate guns.

The offices of the two main negotiators, Sens. John Cornyn, R-Texas, and Chris Murphy, D-Conn., did not immediately respond to requests for comment.

The cost of drugs has become an increasingly pressing issue in the United States, with Gallup estimating last year that 18 million Americans couldn’t afford at least one of their prescription drugs. Meanwhile, a poll conducted by the Pew Research Center last month indicated that the cost of health care was the #2 issue for Americans, ranking only behind inflation.

Still, the Senate-negotiated gun bill would protect some of the biggest players in prescription drugs and health care in general.

The three largest drug intermediaries, or drug benefit managers, in the United States control more than 70% of the market and they have a big influence on how this business is handled. They work on behalf of insurers (and they are increasingly owned by the same companies) to create pharmacy networks, determine reimbursements and facilitate transactions.

But it’s in their dealings with big drugmakers that the Bribery Act comes into play.

The big three PBMs – CVS Caremark, Express Scripts and OptumRx – create formularies: lists of drugs covered and with what co-pay. And because these PBMs represent more than seven-tenths of all insured Americans, drugmakers have a strong incentive to list their products on their formularies.

To gain more favorable placement on the formulary, drugmakers will offer discounts to PBMs in the form of “discounts” that the manufacturer pays to the PBM, which then pays the insurance company,” the American Economic Liberties wrote. Project, an anti-monopoly organization. in a report which was released on Wednesday. “Yet, because PBMs are exempt from an anti-kickback law under Medicare, they are allowed to take a share of the rebate. The larger a reimbursement for a drug, the more PBM can If not for the exemption, bribes like this are normally a criminal offence.

This exemption is discussed on page 55 of the firearms bill. It would extend it from January 1, 2026 to January 1, 2027.

It’s unclear how an extension was slipped into unrelated legislation. A spokesperson for an industry group PBM could not immediately be reached for comment.

In the background, a staffer for Sen. Sherrod Brown, D-Ohio, said a gun deal must be reached, adding that the fight against rising drug costs continues.

“This bill is the first significant bipartisan gun legislation Congress has advanced in decades,” the staffer said in an email. “The legislation will also fund school-based health programs and expand community mental health services which, as Senator Brown heard at roundtables across the state, are much needed.

“We will continue to fight for Pharmacy Benefit Manager (PBM) reform and have already successfully got the Centers for Medicare and Medicaid Services to finalize a rule that will prohibit PBMs from issuing retroactive direct and indirect compensation charges,” added the staff member. “This will help patients save money at the pharmacy counter and protect community pharmacies.”

Matthew Lloyd, spokesman for fellow senator who supports the gun bill, Rob Portman, R-Ohio, did not respond directly when asked how the bribe protections -vin PBM had been incorporated into the Firearms Bill. But he pointed out that the Biden administration had already extended them by one year, and last year’s bipartisan infrastructure bill extended them by another three.

In the latter case, Portman advocated the deferral because the federal government collects a portion of the reimbursements under the Medicare program. The Congressional Budget Office estimated that keeping the reimbursement rule would net the government about $180 billion over a decade, freeing up money to spend on things like infrastructure.

Lloyd also noted that the US Department of Health and Human Services estimates that Medicare premiums would increase by 25% if PBMs are no longer allowed to take bribes. This ignores, however, other expenses faced by Medicare beneficiaries and the general public.

Drug discounts are believed to be one of the main culprits behind the rising cost of prescription drugs. A 2020 study by the Schaeffer Center at the University of Southern California found that every $1 increase in rebates correlates with a $1.17 increase in list drug prices.

Medicare beneficiaries would feel those increases when their copayments are based on them — and when their costs are based on list prices when they enter the infamous “doughnut hole.”

“Because (Medicare) Part D sponsors typically base enrollee prescribing cost sharing on list prices, higher prices may increase beneficiary out-of-pocket costs,” a Congressional Research Service report said last month. .

Then, earlier this month, the Federal Trade Commission announced that it would investigate the system of manufacturers offering rebates and other fees in exchange for favorable treatment on PBM forms.

Community pharmacists in Ohio and elsewhere have complained for years that the unfair practices of PBMs — which own their own pharmacies — are driving them out of business. A spokeswoman for the National Community Pharmacists Association said on Wednesday that the expansion of bribery protections in the proposed gun bill was fishy.

“It’s wrong on two levels: First, giving PBMs an extension of one of their biggest scams hurts patients and prevents real drug price transparency,” she said. “Second, hiding it in an unrelated gun bill is slippery and prevents real debate.”

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