Tester Provision Will Hold Massive PBM Corporations Accountable, Lower Drug Costs for Patients

Senator’s amendment would prevent PBMs from charging retroactive clawback fees that raise costs for rural pharmacies and patients

As part of his continued push to lower health care costs and hold massive corporations accountable, U.S. Senator Jon Tester this week successfully attached a provision to close a loophole that would allow Pharmacy Benefit Managers (PBMs) to charge retroactive “clawback” fees, to his PBM Transparency Act. The bipartisan bill is aimed at holding PBMs accountable and lowering the cost of prescription drugs.

“Massive PBM corporations continue to give rural pharmacies and the folks they serve the short end of the stick by jacking up the cost of lifesaving prescriptions,” said Tester. “These retroactive fees being charged by these PBM corporations are putting rural pharmacies out of business and threatening communities like the one I live in. That’s why I’m fighting to hold these massive corporations accountable, and ensure that Montanans have access to affordable prescriptions no matter where they live.”  

Under Medicare Part D, Medicare makes partially capitated payments to private insurers, also known as Part D sponsors, for delivering prescription drug benefits to Medicare beneficiaries. Often, the Part D sponsor or its PBM receives additional compensation after the point-of-sale that serves to change the final cost of the drug for the payer. These are called DIR clawback fees.

In recent years, PBMs have increasingly returned to pharmacies days or even weeks after the point-of-sale to demand more in DIR fees. From 2010 to 2019, CMS documented a 91,500 percent increase in DIR fees paid by pharmacies. Refusing to allow PBMs to exploit this process results in lower costs of prescription drugs and lower health care costs for patients.

Tester has led the charge to lower health care costs and hold massive PBM companies accountable. Last month, he condemned PBMs for squeezing small rural pharmacies in a hearing with representatives from small pharmacies. During the hearing, Tester underscored the lack of transparency in the PBM industry that allows massive companies to undercut small pharmacies, while price gouging consumers. 

Last May, Tester successfully pushed the Biden Administration to lower prescription drug costs for Montana seniors by closing a Center for Medicare and Medicaid Services (CMS) loophole that allowed PBMs to retroactively charge excessive fees. This will benefit patients by lowering out-of-pocket costs and help rural pharmacies stay in business by increasing predictability and transparency.

And last August, Tester voted to pass the Inflation Reduction Act, which cut health care costs for working families by allowing Medicare to negotiate drug prices and capping the price of prescription drugs, like insulin, for Medicare patients.