Employers Mourn Loss of Drug Data Transparency in Stopgap Bill

Employers are regrouping in the wake of a roller coaster legislative fight that quashed what would have been a landmark win on health care price transparency.

The original stopgap spending bill unveiled by House lawmakers last week included language that would have required extensive data reporting from pharmacy benefit managers and insurance companies to employers around pricing, usage, distribution, and rebates for prescription drugs. Enrollees would also been allowed to request certain claims data.

The bill would also have required PBMs—which manage drug benefits for insurers—to pass through any manufacturer rebates to the health plan.

“If the incoming administration wants to reduce wasteful spending and inefficiencies, relooking at this provision is a great place to start,” Purchaser Business Group on Health CEO Elizabeth Mitchell said in a statement.

The move was expected to remake the legal landscape around drug pricing tactics, even if the immediate effect on current employee benefits and PBM-related cases would likely have been limited. The language was ultimately dropped amid House Republicans’ scramble to meet President-elect Donald Trump’s demands, but Trump’s aversion to PBMs means the legislation will likely be revisited.

Former employees are suing both Johnson & Johnson and Wells Fargo over prescription drug costs, while other employers like Kraft Heinz Co. have sued insurance companies over access to medical claims data and alleged improper payments.

“The bill didn’t do everything we wanted, but it did a lot of it,” said National Alliance of Healthcare Purchaser Coalitions President and CEO Shawn Gremminger.

The language would have given plans real insight into where fees and rebates were exchanging hands, said Ilyse Schuman, senior vice president of health and paid leave policy for the American Benefits Council.

“That’s why transparency, again, is so foundational to employers’ efforts to understand and effectively manage prescription drug costs,” she said.

The Pharmaceutical Care Management Association, which lobbies for PBMs, had called the bill “disastrous” and said it would trigger “unprecedented government intrusion” into employer contracting.

A dispute between committee leaders over the private market language had polarized talks around the bill’s broader health care package earlier in the year. The brief breakthrough on the draft bill language is a sign that lawmakers are more willing to challenge corporate health-care interests.

Still, the bill never included language to codify price transparency rules aimed at hospitals and insurers, which were released under the first Trump administration and are a major impetus for the current wave of lawsuits.

That was a “big disappointment,” said Mitchell, who also sits on California’s Office of Health Care Affordability board.

“This approach to regulating PBMs is actually something that should also be applied on the medical side,” she said, citing a recent case of a California teacher’s union that is planning to cut raises to pay a surprise $800,000 bill.

Interest in hospital oversight is expected to continue. The Republican-controlled House last year passed a bill with broad bipartisan support that would have expanded the transparency rules and eliminated price markups on certain drug administration services in off-campus facilities under Medicare.

Real-World Impacts

All big three PBMs—Express Scripts, CVS Caremark, and Optum Rx—now offer pass-through models in response to public backlash that has also boosted the profile of rival start-ups. Public scrutiny has united lawmakers and regulators across the political aisle, although critics say banning the traditional PBM model outright could increase costs for some employers.

The original bill would also have banned “spread pricing” in Medicaid, preventing PBMs from charging a higher price for a drug than what they paid. And PBM fees would have been “de-linked” from drug prices in Medicare, halting a practice that critics say incentivizes more expensive drugs. While Gremminger said he would like Congress to apply both policies to the commercial market, the Medicare and Medicaid provisions would likely reveal some helpful dynamics.

The original bill was “easily the most significant PBM reform legislation in history, and maybe that’s because there’s a low bar,” he said.

The language wouldn’t have taken effect until 2027, giving PBMs plenty of time to shift their business strategies. That could include increasing fees, leveraging their data troves in some way, or building out new businesses in areas like physician-administered drugs, Gremminger said.

PCMA did not respond to a request for comment on how PBMs would have adapted.

PBMs would still have been allowed “bona fide” service fees, but it could be difficult to get an accounting firm to sign off on some of the fees charged today, said Jonathan Levitt, who represents employers as a founding partner of Frier Levitt.

“There’s some exposure for these consultants—whether it’s Milliman or a big accounting firm—in giving these opinions,” he said. “Because these opinions are going to be scoured.”

A separate provision would have clarified which third-party service providers must disclose fees under the Employee Retirement Income Security Act, which would also have had a major impact on health plan contracts, said Joanne Roskey, who leads ERISA and employee benefits litigation at Miller & Chevalier.

The language would have amended the Consolidated Appropriations Act of 2021, which granted some exemptions to otherwise “prohibited transactions” with health plans by requiring fee disclosures from a wide range of service providers. Under the original spending bill, that would have explicitly included PBMs, stop-loss insurers, and group purchasing organizations as well as consultants for things like plan management, wellness programs, transparency tools, and employee assistance programs.

That kind of transparency should aid employers currently in the dark about how their health plans are being implemented, and where money is changing hands and why, Levitt said.

But more information brings more responsibility, as employers would have less of a defense when they’re sued over potential lapses in their fiduciary duties, Roskey said.

“In that sense it maybe puts more pressure on employers,” she said.