TransparencyRx and the Mission to Fix Broken Drug Pricing
The demand for transparency and affordability in prescription drug pricing has never been more critical. Patients, healthcare professionals, and policymakers are grappling with the challenges of high drug costs within a system masked in complexity. The American Medical Association (AMA) has recently highlighted the issue of rising drug prices and attributed it to the lack of competition within the Pharmacy Benefit Manager (PBM) industry. AMA’s analysis highlighted the concern of increased vertical integration across health plans, PBMs, and pharmacies, revealing a growing concentration of PBMs, promoting concerns about competition.
Here at SmithRx, we’re excited to be a founding member of the revolutionary movement to disrupt the existing traditional PBM model of hidden costs. Along with several other transparent PBMs we’ve formed a non-profit that aims to transform drug pricing called Transparency-Rx. We’re focused on educating lawmakers (and dispelling myths) on Capitol Hill about the importance of PBM reform. We hope that by lending our expertise and perspective, the legislation that is proposed provides drug transparency and affordability.
Transparency-Rx acts as a counterweight to the Pharmaceutical Care Management Association (PCMA) which advocates for the interests of traditional PBMs and has expressed strong reservations about the proposed legislation that promotes drug transparency and pass-through models. Despite growing concerns about healthcare affordability, PCMA insists that policymakers should avoid interfering with the spread pricing model and instead concentrate on issues related to drug supply chains. PCMA’s stance raises concern as it counters proposals that seek to eliminate hidden fees which questions their alignment with the goal of greater pricing transparency in the PBM landscape.
There are several legislative efforts underway aimed at reforming the PBM industry addressing the broken drug pricing system.
- The Pharmacy Benefit Manager Transparency Act of 2023 (S.127) prohibits spread pricing which is when a PBMs charges the plan a different amount than the amount reimbursed to the pharmacy and then the PBM keeps the "spread" or difference as profit. The bill also prohibits unfair reimbursement and fees to pharmacies and requires annual PBM reports to the Federal Trade Commission.
- The Pharmacy Benefit Manager Reform Act (S.1339) also prohibits spread pricing and aims to impose several regulations on PBMs regarding their provided services to plans. It also requires annual reporting on copayment assistance programs, covered drugs, drug spend, member spend, and funds received from rebates.
- The Delinking Revenue from Unfair Gouging (DRUG) Act (S.1542) only allows PBMs to charge flat service fees. It also addresses issues related to PBMs charging different amounts for prescription drugs, reimbursing pharmacies unfairly, and prohibiting steering patients towards the PBM’s owned affiliated pharmacies.
- The Pharmacy Benefit Manager Sunshine and Accountability Act (H.R.2816) requires more transparency through financial reporting requirements from PBMs to the plans which includes details surrounding rebates, administrative fees, and post-claim adjudication payments.
These four bipartisan bills collectively share common objectives: they all aim to enhance PBM transparency, fairness and accountability. Whether by prohibiting spread pricing, imposing regulations, requiring detailed reporting, or limiting fees to a flat service model, each bipartisan bill seeks to address the games that traditional PBMs have long played.
We firmly believe that drug prices can and should be transparent. It helps to ensure that patients – whether they are insured, underinsured or uninsured – get a fair deal. It helps to ensure that small businesses across America are able to provide their employees with health care benefits without breaking the bank. And, it helps to ensure that the right organizations, not the middlemen, are benefiting from the research and development of new drugs.
SmithRx, in collaboration with our partners at Transparency-Rx, are committed to disrupting traditional PBMs by supporting legislative efforts that pave the way for a new era of fair drug pricing and transparency for all.
A new type of pharmacy benefits manager, SmithRx is working to reduce pharmacy costs by reimagining the traditional PBM as a Drug Acquisition Platform built on transparent modern technology that aligns with the needs of our customers.