PBMs Must Prepare for Revival of Drug Price Transparency Requirements

While a previous effort to force the disclosure of net drug prices was scuttled amid legal challenges, President Donald Trump recently made it clear that he hopes to revisit the issue amid a renewed push for health care price transparency. “There’s no more hope that this will go away,” says Chris O’Dell, senior vice president of market solutions with Turquoise Health, a company that cleans and aggregates pricing data from hospitals and health plans. “It’s going to happen, so get ready for it, research it, comment on it, and do what you can to prepare.” In addition to a previous rule targeting hospitals, a rule finalized in 2020 requires health insurers to release public, machine-readable files with detailed price information, including negotiated rates and prices for in- and out-of-network services. That Transparency in Coverage (TiC) rule also requires insurers to create online price comparison tools for consumers to see what certain services and procedures will cost. The rule took effect in 2022. But hospitals’ compliance with their transparency requirements has been spotty, and the reams of information reported by health insurers have proven challenging to dissect and interpret. Noting those issues, Trump in late February signed an executive order pushing for greater enforcement of the hospital and health insurer price transparency rules. In the order, the White House wrote that “hospitals and health plans were not adequately held to account when their price transparency data was incomplete or not even posted at all.” Trump’s executive order also argues that the Biden administration “failed to take sufficient steps to fully enforce my Administration’s requirement that would end the opaque nature of drug prices by ensuring health plans publicly post the true prices they pay for prescription drugs.” Therefore, the executive order directs HHS and the Labor and Treasury departments, in the next 90 days (by May 25), to “issue guidance or proposed regulatory action” that steps up enforcement of the hospital and health plan price transparency regulations. It is likely that dates will be set for guidance and enforcement this year, O’Dell says. Whether enforcement will start this year is harder to predict, he adds, “but if history is an indicator, [CMS] will likely give [insurers and PBMs] six months to a year to comply.” Prescription drug price transparency provisions were originally included in the TiC rule, but they drew lawsuits from the U.S. Chamber of Commerce and the Pharmaceutical Care Management Association (PCMA). These lawsuits challenged the “machine-readable file” requirement, claiming it conflicted with the Affordable Care Act’s plain language rule. The suits also claimed that disclosing historical net price information would force plans and PBMs to reveal an unprecedented amount of data regarding price negotiations, how rebates affect drug costs, and more. Given the ongoing legal challenges, the Biden administration in 2021 delayed the drug transparency portion of the TiC to evaluate whether it conflicted with Consolidated Appropriations Act reporting requirements. That information, which includes the most frequently dispensed drugs, the costliest drugs, total rebates and more, is also reported to HHS and the Labor and Treasury departments, but it is not made publicly available. PCMA and the Chamber dropped their lawsuits following the delay. In 2023, CMS announced that the transparency rule did not conflict with the CAA and further compliance guidance would be forthcoming. The two things O’Dell says he took away from the executive order are enforcement and drug prices. These are important to consumers “because there’s this weird loophole where if a drug gets put into your body by a doctor via injection or infusion, then we already have really good drug price transparency,” he explains, referring to physician-administered drugs that are typically covered by patients’ medical benefits. “We can see how much those drugs cost, we can see how payers reimburse them. But if the doctor gives you a prescription and you walk across the street to your favorite pharmacy, you can’t see what that costs. That’s what the executive order is set to enforce.” Will PBM Industry Push Back? The likelihood of lawsuits against new drug price transparency requirements depends on the broader landscape of regulatory and PBM reforms, says Emily Donaldson, principal at Avalere Health. “It’s conceivable that once new guidance is issued, lawsuits similar to what we saw in 2021 could be filed — especially if the guidance remains the same or substantially similar,” she says. “But there are other factors in play.” Provisions of TiC have been discussed in federal PBM reform proposals, along with rebate pass-through and provisions that delink PBM compensation from drug prices and utilization in Medicare Part D, Donaldson explains. “If the rebate or delinking provisions were to pass in some form, that could change the litigation calculus because there is a level of transparency involved when those are effectuated,” she adds. O’Dell believes PBMs and insurers will try to revive lawsuits and lobby against publishing the data. “I think that will not be successful,” he predicts. “The administration has clearly called this out and it will be fruitless to try to resist publishing files.” A lot of the worries companies have about publishing the data are probably unfounded, O’Dell says. “I remember when a lot of hospital CFOs said, ‘This is terrible, we don’t want to do this, this is our secret sauce’ — none of that has turned out to be true,” he notes. “There will be more files, and they will get more useful and more accurate.” Prepare for the Data Release The best thing PBMs and insurers can do to prepare for updates to transparency regulations is to familiarize themselves with the standards, O’Dell and Donaldson agree. Donaldson points out that CMS published schema for the prescription drug machine-readable files before the rule was delayed. “CMS removed those schema files due to the delays, but Texas decided to use that CMS schema when implementing its law that mirrors the TiC rule,” she says. Data submitters may not be able to gauge the technical requirements and level of effort until the full guidance is released. “Employer-sponsored plans may also want to coordinate with or make sure their benefits/third party administrators are keeping up with guidance and enforcement and working toward compliance,” Donaldson adds. O’Dell notes that trade groups and others have been collaborating to determine what compliance with new drug price transparency requirements would entail. “They are saying, ‘If we were to publish, what would this look like such that it has the best benefit for the consumer?’ There are even some PBMs that have gone out and started publishing this information — I think it’s a great example.” At the end of the day, O’Dell says, the information will be used for consumers to make more informed choices. “Folks have medicines that they’re used to picking up. If they find that they’re even more affordable or predictable, then that is an implication that I really look forward to,” he says.