Colorado beats U.S. Congress to the punch on critical PBM reform. Congress must finish the job of PBM reform NOW.
Over the past five years, several not-so-productive bills have passed the Colorado legislature to supposedly lower prescription drug prices. This legislative session, however, something really meaningful happened for Colorado patients.
The Colorado General Assembly passed House Bill 23-1201, which prohibits one of the many underhanded practices pharmacy benefit managers, known as “PBMs”, use to artificially inflate profits and drive up the cost of prescription medicines for everyone.
HB23-1201 was a bipartisan bill sponsored by Colorado Representatives Daugherty and Soper as well as Senators Mullica and Smallwood. The bill prohibits PBMs from further using ‘spread pricing.’ In simple terms, this is the practice of having the PBM charge its client – an insurance company or company that self-insures its employees – a higher price than the PBM pays the pharmacy for dispensing the same drug to the same covered member.
In other words, PBMs have been charging the equivalent of a hotel ‘resort fee,’ a meaningless mark-up that provides nothing but increased profits that in turn drives up prescription drug prices while shorting local pharmacists. It’s a lose-lose-lose scheme that our state legislature finally outlawed. The bill now sits on Gov. Polis’ desk, and we urge its immediate signing.
Last year the top PBMS — companies who claim their role is to save Americans money on the skyrocketing cost of medicines — took in $450,000,000,000. That’s $450 billion, $50 billion more than the top six drug makers earned in 2021.
They derive this windfall from an impenetrable web of rigged contracts and high-pressure tactics that would make a crime boss blush. A blizzard of reports by Congress, non-partisan groups, and industry experts have highlighted these practices and called for a massive overhaul of the PBM system.
Thankfully a hearing is set for Thursday, May 11, to consolidate PBM reform efforts and write meaningful legislation to reform the PBM’s unsavory practices.
Senators Bernie Sanders (D-VT) and William Cassidy (R-LA) are leading the charge, with Colorado Senator John Hickenlooper as a member of the HELP Committee. They need our support against the intense pressure coming from the battalion of lobbyists that we – America’s prescription drug patients – help pay for.
CHAIN backs the herculean effort to crack down on the PBM monopoly and go after the real cause of skyrocketing drug prices in America. And we urge Colorado’s US Senators Hickenlooper and Bennet to be front and center in finishing the job Congress has started.
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