From Lame Duck to GOP Trifecta, Path for PBM Reform Remains Fuzzy

With Donald Trump set to be the 47th president and Republicans in control of both chambers of Congress, 2025 is shaping up to be a year in which the GOP has enough political might to pass PBM reform — if it has the political will.

Yet two pharmaceutical industry trade groups do not appear to be counting on Republicans’ ability to quickly prioritize a health care issue. Instead, the Pharmaceutical Research and Manufacturers of America (PhRMA) and the National Association of Manufacturers (NAM) are both launching ad blitzes aimed at pressing Congress to target PBMs before the year is over.

“As Congress returns for the final legislative session, they have an opportunity to pass PBM reform that will make medicines more affordable and accessible for patients,” stated a Nov. 11 press release from PhRMA about its new ad campaign. “In Congress, both chambers have made progress on PBM reforms including on rebate pass through, PBM transparency, and delinking PBM payments from list price. Our campaign adds to the growing chorus of voices, including pharmacies, providers, employers, AARP and others, calling on policymakers to help patients by pushing these critical PBM reforms over the finish line.”

And on Nov. 12, NAM President and CEO Jay Timmons said that “manufacturers are clamoring for Congress to rein in PBMs this year. The momentum is with lawmakers to enact comprehensive reform in both the government and commercial health insurance market that increases transparency and reduces prices for everyone,” he said.

However, significant uncertainty remains about whether PBM reform and other health care policy items have a chance of passing during the post-election (or lame duck) legislative session. Even Joe Shields, managing director of the pro-PBM-reform group Transparency-Rx, appears to have some doubts that an end-of-year deadline is realistic.

“I think Congress will move forward with meaningful reforms, and in our view, ideally comprehensive reforms into the next Congress — and even efforts to try to address some things in lame duck,” Shields tells AIS Health, a division of MMIT. But he also admits that since there’s a “transition in the presidential cycle, I think there’s a lot happening over the next 45 or 60 days that could eat up a lot of airtime from the legislative calendar.”

If PBM-targeting legislation does pass during the lame duck session, it will likely be because there's a sizable package of health care provisions that need to be offset cost-wise, Ethan Siegal, principal of The Washington Exchange research group, said during a recent investor call hosted by UBS Research. Siegal also suggested it will be challenging for lawmakers to agree on what should be included in any PBM reform bill, as multiple committees across both the House and Senate have been involved in crafting and advancing a variety of measures.

Earlier this year, disagreements among lawmakers over how prescriptive PBM legislation should be scuttled attempts to tuck PBM reform measures into a government funding bill.

The Lower Costs, More Transparency Act, which passed the House in December 2023, is the closest Congress has come to enacting legislation that alters how PBMs do business. The bill would require significant new transparency and data-reporting requirements of PBMs and ban the practice of spread pricing in Medicaid, but it doesn’t go as far as some heftier PBM reform measures advanced by different congressional committees — particularly one that would “delink” PBM profits from the price and utilization of Medicare Part D drugs.

Shields, whose organization represents smaller PBMs that want an industry overhaul, has told AIS Health previously that transparency measures alone aren’t enough to create meaningful change in an industry many critics see as opaque and responsible for inflating drug prices.

What Will 2025 Look Like for PBMs?

Looking ahead to 2025, industry experts’ opinions appear to be mixed on what Trump’s election and Republicans’ control of Congress means for PBMs.

“The reality of the Republican Party owning the White House, the Senate and the House means that they have an opportunity to move legislation now in a way that is much more streamlined,” says Dan Mendelson, CEO of JPMorgan Chase’s Morgan Health division and a former health official in the Clinton administration. “I think it’s likely that something happens in the PBM sector that focuses on transparency” and curtailing practices in the prescription drug rebate system, which “have given the members, on a bipartisan basis, a lot of heartburn,” Mendelson adds.

In the final days of the first Trump administration, HHS finalized a rule that would have removed the safe harbor reserved for drug rebates in Medicare Part D and set up a new safe harbor for rebates that are passed onto patients at the point of sale. But the Biden administration delayed its implementation amid growing concerns about how it would impact Part D premiums, and the Inflation Reduction Act pushed its effective date to 2032.

How a second Trump administration would approach that issue is an open question, some experts say. “Trump has said he wants to make changes to make PBMs more transparent but has not offered a plan yet,” TD Cowen analyst Rick Weissenstein wrote in a Nov. 6 research note.

“It’s unclear if Trump would take steps to pursue a similar policy in a new rulemaking,” says Lindsay Bealor Greenleaf, who leads the policy team at the Washington, D.C., consulting firm ADVI Health. “Regardless, addressing the supply chain distortions caused by PBMs is a key piece of unfinished business for Trump, so we expect him to attempt some sort of policy change (the shape of which isn’t clear at the moment).”

Regarding PBM reform in general, “I don’t have a good feeling for what might happen there,” weighs in Joseph Antos, a health policy-focused senior fellow emeritus at the right-leaning American Enterprise Institute. “I haven’t seen anything that I would view as credible coming from the right on this issue.”

Antos also predicts that whatever course the new Trump administration takes, it’s likely to confront the fact that health care policies nearly always come with trade-offs. “There is this struggle that I think Republicans are going to have because they want to support innovation, especially in the drug space,” he says. “They don’t want to spend more money in Part D. They want to actually claim that people, in addition to Medicare beneficiaries, are going to see lower drug prices. And a problem that they have is that they can’t just shift the cost back to the taxpayer.”

Fate of FTC Lawsuit Is in Flux

Antos says he’s also doubtful that the Federal Trade Commission (FTC) lawsuit filed against the “Big Three” PBMs — CVS Health Corp.’s Caremark, The Cigna Group’s Express Scripts and UnitedHealth Group’s Optum Rx — will continue to be pursued during the Trump administration. “I don’t think Republicans are that eager to use antitrust activities” to go after PBMs, he tells AIS Health.

Generally, the Trump administration is expected to have a far more permissive stance on mergers and acquisitions than the Biden administration, which pushed back against consolidation in multiple sectors — including health care. Most recently, the Dept. of Justice sued to block UnitedHealth Group’s proposed $3.3 billion acquisition of the home care company Amedisys.

The FTC’s lawsuit, filed in September, accuses the country’s three largest PBMs and their affiliated group purchasing organizations of artificially inflating insulin prices by creating a “perverse” system that uses exclusionary formularies to prioritize high rebates from drug manufacturers over lower-list-price products. It follows an interim report issued by the FTC that is highly critical of PBMs’ business practices, which the commission released after a multiyear investigation.

The FTC’s report led Express Scripts to sue the FTC, claiming its business and reputation have been harmed by the commission’s “unlawful, unconstitutional and arbitrary and capricious conduct and defamatory statements.”

David Balto, an antitrust attorney and former FTC official, predicts that the Trump administration will be no friend of the PBMs.

“Republicans hate PBMs, and so I don’t think that case is going anywhere, and the case will continue to be actively pursued in the new administration,” Balto tells AIS Health.

This article was reprinted from AIS Health’s biweekly publication Radar on Drug Benefits.