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Collins and Loebsack call for Transparency in Prescription Drug Pricing

Feb 22, 2016
Press Release

WASHINGTON – Today, Congressman Doug Collins and Congressman Dave Loebsack, along with 14 other Members of Congress, sent a letter to the Chairmen and Ranking Members of the Energy and Commerce, Ways and Means, and Armed Services Committees to renew the call for transparency in the pricing of generic prescription drugs dispensed under Medicare Part D, FEHBP and DoD TRICARE.

Currently, weak oversight of the reimbursement system leaves taxpayers on the hook for the constantly fluctuating cost of generic drugs. H.R. 244, the MAC Transparency Act, introduced by Collins and Loebsack, will require Pharmacy Benefit Managers, the entities responsible for managing prescription drug plans for more than 253 million Americans, to update their pricing more frequently to ensure transparency in the system. In the letter, Congressmen Collins and Loebsack encourage the Chairmen of these three committees to examine the merits of this legislation at a hearing, and how it could improve the current system by increasing fairness and transparency.  

Below is the text of the letter:

Dear Chairman Upton, Ranking Member Pallone, Chairman Brady, Ranking Member Levin, Chairman Thornberry and Ranking Member Smith,

We write to you today to highlight the need for transparency and openness in the federal government’s very large business partnership with the pharmacy benefit managers (PBMs) who as you know manage prescription drug plans for more than 253 million Americans.  The PBM industry is not well understood by many in Congress and the Administration and that is why we believe it is imperative for your committees to examine and consider putting the appropriate safeguards in place to ensure integrity in Medicare Part D, FEHBP and DoD TRICARE.

H.R. 244, the “MAC Transparency Act”, would bring greater transparency to generic drug payments in the federal programs mentioned above. Generic prescription drugs account for approximately 80 percent of drugs dispensed, but the reimbursement system for these medications is a mystery and it is incumbent upon us to conduct the appropriate oversight of this very large PBM industry to make sure taxpayers are not “footing the bill” for generic prescriptions simply because the PBMs are not required to update the drastic and unpredictable fluctuations we have seen in the generic drug marketplace.  

There is precedent for PBM transparency on the federal books as CMS just began to implement transparency provisions in its 2014 Part D rule.  These provisions will require the PBMs to update the prices of generic drugs at least once every seven days and inform the health plans and pharmacies how they arrived at the drug prices on their maximum allowable costs (MAC) lists.  This is a positive development but unfortunately we have already heard from pharmacists being reimbursed with outdated prices and also that the PBMs are now charging an additional fee after the point of sale when the contract is being reconciled.  This fee is called direct and indirect remuneration (DIR) and we believe the PBMs are moving to this fee because they are now being required to update generic fluctuations in a timely manner. 

We very much appreciate your leadership on the Energy and Commerce, Ways and Means, and Armed Services Committees.  Again we appreciate you taking a look at the merits of H.R. 244 and also the need for greater transparency and sunlight in business relationship PBMs have with taxpayer funded federal programs.  Thank you for your service to the U.S. House of Representatives.  

Sincerely,

Doug Collins                                                                                                   Dave Loebsack

Member of Congress                                                                                     Member of Congress

 

Earl L. “Buddy” Carter                                                                                  Austin Scott

Member of Congress                                                                                     Member of Congress

 

Peter Welch                                                                                                   Walter B. Jones

Member of Congress                                                                                     Member of Congress

 

Sam Farr                                                                                                         Pete Visclosky

Member of Congress                                                                                     Member of Congress

 

Rod Blum                                                                                                        Steve King

Member of Congress                                                                                     Member of Congress

 

Lou Barletta                                                                                                   Steven Palazzo

Member of Congress                                                                                     Member of Congress

 

Jim Bridenstine                                                                                              David Rouzer

Member of Congress                                                                                     Member of Congress

 

Rick Crawford                                                                                                Brian Babin

Member of Congress                                                                                     Member of Congress