Subscribe and receive new posts by email from Northwood. You can withdraw your consent at any time.

  • C-THRU Act Would Increase Federal Spending by $20 Billion

    Senate Finance Committee Ranking Member Ron Wyden (D- Ore.) introduced the C-Thru Act which would require a greater transparency between entities such as pharmacy benefit managers (PBMs) and pharmaceutical companies regarding rebates they receive on behalf of their health plan clients. While it is considered common knowledge that PBMs negotiate rebates, it is unclear how they are set up. Mr. Wyden would like to change that.

    The information regarding the rebate amount would be made available on the Department of Health & Human Services website. Additionally, the Secretary of HHS would want the PBMs to have a minimum percentage of rebates that they need to implement through their Part D or Exchange Plan clients. Currently, information available is an aggregate of the rebates and discounts that the PBM negotiates. As well, the PBM discloses the aggregate difference between what clients are charged and what the PBM pays the pharmacies for drugs. This information is not made public though. Section1150A of the Social Security Act prohibits this disclosure unless specific circumstances dictate that it is needed. The C-Thru Act seemingly ignores this.

    Research done regarding these changes resulted in determining that within the next 10 year period this could result in an increase in Federal spending of $20 billion. One of the issues that has arisen is the fact that other PBMs and pharmaceutical companies would see how each other’s rates were negotiated which could result in an increase in competitive pricing. Another issue that could create a problem is that some PBMs negotiate a rate, but that is not what they receive. When looking at the minimum percentage, this could mean that they might have negotiated the amount to cover the minimum, but in actuality, they did not receive the proper amount to be in compliance. Or they negotiated the amount to cover the minimum, but the payments were received up to 18 months after the actual patient utilization. This would also result in not being in compliance for the time period required. These along with potential disputes between qualified rebates and correct percentages could mean that the C-Thru Act would create more work for everyone involved.

    The goal of this Act would be to show whether the PBM is working with the pharmaceutical companies to lower the cost of prescription drugs for the consumer. The side effect is that inside information would be shared could result in increased pricing for the consumer.

    Leave a reply →