Sens. Kennedy, Cassidy, others introduce legislation to cut costs of prescription drugs

Sens. Kennedy, Cassidy, others introduce legislation to cut costs of prescription drugs
The act aims to prevent middlemen from charging patients more for drugs than it costs pharmacies to dispense them. (Source: WAFB)

WASHINGTON, D.C. (WAFB) - Senators John Kennedy and Dr. Bill Cassidy, along with several other colleagues, introduced the Phair Relief Act on Wednesday, July 24 to lower drug costs for the elderly and improve financial certainty for some community pharmacies.

The senators say under Part D of Medicare, pharmacy benefit managers (PBMs) act as middlemen between pharmacies and insurers, negotiating drug prices for pharmacies. He says those managers should pass any cost savings on to the patients, but that is seldom the case. He goes on to say one of these abuses is the routine of PBMs requiring clawback fees from pharmacies. These fees are also known as direct or indirect remuneration (DIR) fees. The senators’ offices say when pharmacies are asked for unexpected, retroactive fees months after giving a drug to a patient, it’s hard for the pharmacies to plan ahead financially. DIR fees also increase seniors’ out-of-pocket costs and “contribute to an unstable environment that forces many community pharmacies to shutter their door.”

Officials say this legislation will put a five-year freeze on these DIR fees and establish oversight of these fees. The legislation also lays out standardized quality metrics PBMs would have to use to assess any fees after the freeze period ends.

When a similar policy was proposed in 2018 by the Centers for Medicare and Medicaid, it was estimated that requiring PBMs to account for these retroactive DIR fees would save seniors between $7.1 and $9.2 billion on their out-of-pocket costs over ten years.

Click here to read the full legislation.

“The high cost of prescription drugs is one of the biggest problems that Americans face today. This legislation will help change that. Middlemen negotiators like PBMs should not be receiving the benefits of lower drug costs. The customers at the pharmacy counter should be the primary beneficiaries of price cuts. This legislation promotes transparency and accountability in the pharmaceutical drug industry by prioritizing patient care instead of middlemen profits,” said Kennedy.

“Prescription drugs cost too much. Getting rid of loopholes and incentives lowers drug costs for patients and for taxpayers,” Cassidy said.

The other lawmakers behind this legislation are:

  • Jon Tester (D-Mont.)
  • Shelley Moore Capito (R-W.Va.)
  • Sherrod Brown (D-Ohio)
  • James Lankford (R-Okla.)
  • Steve Daines (R-Mont.)
  • Joe Manchin (D-W.Va)
  • Kevin Cramer (R-N.D.)
  • Cindy Hyde-Smith (R-Miss.)
  • Roger Wicker (R-Miss.)

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