Ohio Capital Journal: Deep inside the gun bill: a break for drug middlemen

June 22, 2022 Media

Many Americans across the political spectrum are clamoring for federal action on guns in the wake of a mass shooting at an Uvalde, Texas, elementary school, a Buffalo, N.Y., grocery store and hundreds of other places.

But buried in a bipartisan compromise hashed out by the U.S. Senate on Tuesday is an unrelated provision they might not be so happy about. Apropos of nothing, the gun bill would enhance the exemption drug middlemen working with Medicare have from the federal “Anti-Kickback Statute.”

The big three PBMs — CVS Caremark, Express Scripts and OptumRx — create formularies: lists of drugs that are covered and with what copayment. And because those PBMs represent more than seven-tenths of all insured Americans, drugmakers have a big motivation to get their products on their formularies.

“To gain more favorable formulary placement, drug manufacturers will offer discounts to PBMs in the form of ‘rebates’ that the manufacturer pays to the PBM, who then pays the insurance company,” the American Economic Liberties Project, an anti-monopoly organization, wrote in a report that was released Wednesday. “Yet because PBMs are exempt from an anti-kickback statute under Medicare, they are allowed to take a cut of the rebate. The larger a rebate for a drug is, the more the PBM can profit. If not for the exemption, kickbacks like this are normally a felony offense.”