Medication middlemen face bipartisan criticism as Congress eyes industry reforms

Executives from three of the largest pharmacy benefit managers (PBMs) pushed back against bipartisan criticism during a House Oversight Committee hearing Tuesday where lawmakers faulted the industry for high drug prices.

The executives blamed drug companies for those prices, saying PBMs save patients money, and that customers actively choose to partner with them because of those savings.

Without PBMs to negotiate, they argued, patient pharmacy costs would be substantially higher.

“We are the connected fiber fighting to ensure access to safe, effective and affordable medications,” Adam Kautzner, president of Express Scripts.

He said Express Scripts saved its clients $64 billion last year and kept patient out-of-pocket costs on a per-prescription basis at $15, “despite brand manufacturers raising drug prices on 60 percent of those products.”

CVS Caremark President David Joyner said brand-name products “with little or no competition remain the chief source of rising drug costs, spurred by their high list prices.”

The hearing showed lawmakers were interested in a range of areas for potential reform, including PBMs that steer patients to higher priced medications and to preferred pharmacies they also own.

“We hear that you’re the problem,” Chairman James Comer (R-Ky.) said. “There’s a credibility issue with PBMs.”

PBMs negotiate the terms and conditions for access to prescription drugs for hundreds of millions of Americans. They are responsible for negotiating prices with drug companies, paying pharmacies and determining which drugs patients can access and how much they cost.

Much of the hearing focused on a report released by the Oversight Committee’s majority staff, which showed how the three largest PBMs — CVS Caremark, Express Scripts and OptumRx — have designed formularies that encourage the use of higher-cost drugs even when there are lower-cost and equally safe and effective competing options.

The report said PBMs often favor branded drugs, because the higher prices lead to likely larger rebates that can benefit the PBM, but cost patients, PBM clients and taxpayers more money.

Those three companies control roughly 80 percent of U.S. prescriptions, and are all vertically integrated with health insurers, pharmacies and providers.

The report, which was the culmination of a 32-month investigation, found PBMs also force patients to pay more to use a local pharmacy, rather than the PBM-owned mail-order one, and reduce reimbursement rates for competing pharmacies.

“Simply put, the Committee’s investigation has found that — while PBMs position as middlemen should have enabled them to reduce the costs of prescription drugs and improve Americans’ health outcomes — they have not,” Comer said during the hearing Tuesday.

The Federal Trade Commission, which has also been investigating PBM business practices, released an interim report earlier this month with similar findings that blamed anti-competitive PBM business practices for driving up prescription drug costs.

The hearing also focused on independent pharmacists, which say PBMs are running them out of business.

Rep. Raja Krishnamoorthi (D-Ill.) cited federal figures that show the price concession fees pharmacies pay to PBMs increased 107,400 percent between 2010 and 2020.

It’s “a rate of increase that literally staggers the imagination,” Krishnamoorthi said.

All the executives said they don’t steer patients to preferred pharmacies, though lawmakers on both sides of the aisle responded with skepticism.

When Comer pressed the executives to commit not to steer patients to their own pharmacies, he indicated that they were dodging the question.

“I’m going to take that as an answer [that] you’re going to continue to steer patients away from independent pharmacies,” he said.

Congressional pressure on PBMs has been building, and Tuesday’s hearing could serve to jumpstart efforts to include PBM reforms in a legislative package during the lame duck legislative session after the November election.

Legislation aimed at PBM practices passed the House and a Senate committee last year but failed to be included as part of a spending deal in March.

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