Could This Be the Year for PBM Reform? COA Panel Weighs in

Leaders of the Community Oncology Alliance (COA) have spent years sounding the alarm about unfair practices by pharmacy benefit managers (PBMs), only to see vertical integration of these entities with payers make prior authorization even more challenging for oncologists.

But Capitol Hill experts taking part in COA’s Community Oncology Conference said Friday that bipartisan awareness of PBM practices has reached a point that they believe Congress may finally act, if only to require greater transparency.

Moderated by COA Executive Director Ted Okon, MBA, the legislative update is a highlight of the annual conference, and this year’s session featured the following panelists:

• Christian B. Downs, JD, MHA, executive director, Association of Community Cancer Centers
• Ben Jones, vice president, Government Relations & Public Policy, The US Oncology Network
• Jerrica Mathis, director, Government Relations, Cardinal Health
• Kristine Rufener, director, Congressional Affairs, American Society of Clinical Oncology
• Tony Lee, director of public policy, AmerisourceBergen

The group agreed that no one should expect a piece of legislation on par with the Inflation Reduction Act (IRA), which community practices are still sifting through, as they work to understand how providers will be affected. But longtime COA priorities such as PBM and 340B reform are gaining traction, they said. Despite the divided Congress, with Republicans controlling the House and Democrats running the Senate, there is interest in bipartisan work when the parties can find common ground.

“Who had on their bingo card that banning TikTok would be bipartisan?” Mathis said. On a serious note, she said there is interest in extending the flexibilities offering during the public health emergency—such as telehealth in Medicare—and in greater transparency across health care. Mathis sees issues of pricing and access gaining bipartisan attention.

Downs agreed that the health care items settled this year with be those “on the margins,” but PBM reform could make the list. “I think there’s space there right now,” he said. With some issues, “it doesn’t matter if you’re an R or a D; you hear about it from your constituents.”

In fact, on Wednesday, the Senate Commerce Committee had voted 18 to 9 to advance the PBM Transparency Act of 2023, sending the bill to the full Senate. It would address lack of transparency, including such practices as direct-and-indirect renumeration fees and claw back fees, which have been troublesome for oncologists.

A key dynamic of the current session of Congress, Jones said, is that the partisan makeup of the House and Senate—and the slim margins in each—were not anticipated going into last November’s election. “No one expected us to be here,” he said, and there is nothing typical about current environment.

However, that can work for an issue such as PBM reform, which finds supporters as politically diverse as Senator Ron Wyden, D-Oregon, and Rep. Earl L. “Buddy” Carter, R-Georgia. Jones noted that the IRA had only just been settled when Wyden said PBM reform would be his next priority.

Okon said legislators are gaining awareness of the effects of vertical integration, and the resulting behavior by PBMs in areas such as prior authorization. He recapped COA’s recent visit to a Senate hearing when Debra Patt, MD, PhD, MBA, the COA vice president and executive vice president of Texas Oncology, recounted her experience of being unable to give a young patient with aggressive breast cancer an innovative regimen she thought would offer the best chance of survival. Told she would have to wait up to 6 weeks for a peer-to-peer consult, Patt started the patient on chemotherapy instead. After the hearing, Patt learned the patient died.

“You get robbed of hope,” Okon said.

Implementation of the IRA. This law is designed to bring consumers relief through several measures, including Medicare price negotiations and other steps to put downward pressure on drug prices. Not only does this fail to appreciate that oncology providers are still reimbursed based on average sales price (ASP) of therapies + 6%, but it calls for payment of Part B drugs with negotiated drug prices to be compensated at average fair price + 6%.

“It's particularly not good when providers are caught in the middle, because it's going to artificially drag down to ASP in the Medicare market,” Jones said, reducing the add-on fee “without any costs going down on your end,” he said.

At the same time, Medicare is putting in cuts in physician payments, due to the 2015 Medicare Access and CHIP Reauthorization Act, which Jones said simply does not speak to the higher costs and staffing challenges of the post-COVID era.

“It’s not as though because of the IRA, it just magically became cheaper to deliver care,” he said.

Rufener agreed with Okon’s suggestion that the IRA’s good intentions add up to “unintended consequences” in the potential effects on oncology providers. “We all want to see drug prices come down; we want to see patients having access to the treatments that they need. And obviously we support that,” she said. “But where it gets tricky is…when the provider [feels like] they're getting caught in the middle.”

Lee said one of the puzzling aspects of the IRA is that is it highly proscriptive in some areas and much less so in others. AmericaSourceBergen is closely watching implementation of elements related to Part B pricing, and noted that some provisions “might go counter to the Cancer Moonshot Initiative.”

“So, that reflects the tension within the administration,” he said.

340B reform. The panelists agreed that the atmosphere surrounding this issue has shifted markedly, since articles in The New York Times and The Wall Street Journal explained to a wider audience how use of a provision to support safety net hospitals has become a profit center for some hospitals. Okon emphasized that COA does not oppose the idea behind the 340B provision—it just wants to see the discounts follow the underserved patients.

Drug companies that had to offer therapies at discount to qualifying entities have pushed back as well, and the Third Circuit recently ruled in favor of drugmakers that they can restrict health systems’ use of contract pharmacies.

Downs predicted that this issue would see movement, but that the action will come first outside the legislative arena. “I think you are going to see some business things happen,” he said. Downs and Jones discussed that it remains unsettled who enforces 340B once an entity qualifies, and the courts seem poised to settle the question.

Mathis predicted that despite the recent momentum, a final solution on PBM reform will await a report from the Federal Trade Commission, which opened an investigation in PBM practices in June 2022.

Jones said that he’s optimistic about resolution on the long-term COA priorities of PBM and 340B reform. He and Downs credited Okon for bringing these topics into “mainstream conversation.” When he meets with members of Congress to discuss 340B, Jones said, he no longer spends 20 minutes explaining what the program is. “We’ve eclipsed that first hurdle to having a serious conversation.”

The issues that COA has championed are ones that only Congress can fully resolve, but that message is breaking through. “I am a little more glass half full for the potential for reform,” he said.