Menendez ‘Patients Before Middlemen’ bill clears Senate committee

A bill spearheaded by Senator Bob Menendez targeting the current pharmacy benefit manager (PBM) compensation system cleared the Senate Finance Committee today on a widely bipartisan 26-1 vote, potentially setting the bill up for passage in the full Senate once Congress returns after its August recess.

Under the current system, PBMs – essentially middlemen who choose prescription drugs for health plans, including Medicare Part D plans – are often compensated based on the price of the drugs they select, thus incentivizing them to push for more expensive drugs. Menendez’s bill, the “Patients Before Middlemen Act,” is aimed at changing that.

“For too long, PBMs have held a vise grip over the prescription drug supply chain, price gouging hardworking families and seniors alike,” Menendez said at today’s committee meeting. “Through the current incentive structure, whereby they turn a profit as a percentage of the list price of a prescription, PBMs wield their influence to have health insurers cover more and more expensive drugs – even when cheaper options are available.”

The senator’s bill would de-link compensation of PBMs from the cost of the drug itself and replace it with a flat fee, thus removing the incentive to select pricier drugs. It would also create an enforcement mechanism to require PBMs to relinquish any additional payments.

Menendez has accumulated a number of Republican cosponsors of the bill, most prominently Senator Marsha Blackburn (R-Tennessee). That bipartisan backing helped the bill, which was included as part of a larger PBM reform package, pass near-unanimously today, with only Senator Ron Johnson (R-Wisconsin) voting no.

At an event at Sugarman’s Pharmacy in Union City yesterday, Menendez highlighted the importance of his bill for New Jersey patients and pharmacies, saying that while the PBM system itself may be difficult for most people to understand, the necessity for reform is not.

“It doesn’t take a PhD in public health or economics to realize that the current status quo on PBMs is unacceptable,” he said. “When residents come to pharmacies like Sugarman’s, they deserve to know that their drug costs aren’t lining the pockets of a PBM company they’ve never heard of.”