James Gelfand, CEO of the ERISA Industry Committee (ERIC), a major employer group, recently expressed support for the PBM Kickback Prohibition Act at a hearing before the House Education & the Workforce Committee’s health subcommittee. Rep. Rick Allen, R-Ga, is the sponsor for the Act, which would prevent pharmacy benefit managers (PBMs) from paying referral fees, or kickbacks, whether the referral comes from a benefits broker, consultant, advisor, or any other individual.
In expressing his support for the Act, Gelfand pointed out that the bill would restore trust in the health insurance industry and create more affordable healthcare for workers. Although brokers and consultants provide an invaluable service and unparalleled expertise, he noted, trust in these individuals is paramount.
Some witnesses recounted the “pay-to-play” model that has allowed consultants assisting group health plans to obtain PBM contracts while receiving kickbacks from PBMs bidding on contracts with insurers. For instance, one consultant stated that a common health plan request for proposal from PBMs asked whether they would pay the broker $50,000 per year for the duration of the contract. Typically, the group health plan would never see bids from PBMs not willing to participate in the racket.
In contrast, the CEO of the Pharmaceutical Care Management Association, a PBM group, emphasized the role that PBMs play in maintaining lower drug prices and offering critical services. He claimed that the witnesses testifying at the hearings will further prejudice listeners about the PBM industry. The CEO also pointed out that a new PBM law already requires full disclosure of any fees paid to brokers and consultants, which are not kickbacks. He characterized PBMs as more transparent than other players in the prescription drug supply chain and remarked that the Act would do nothing to reduce health care costs for consumers.
HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.
