Lawmakers on both sides of the aisle slammed pharmacy benefit managers for allegedly profiting at the expense of patients and taxpayers during a House oversight hearing on Tuesday, the latest congressional inquiry into PBMs.
“They’re having a field day out there getting rich over and over and over again,” said Rep. Kweisi Mfume, D-Md. “It is a sin, it is an abomination, and it is an affront to everything that we hold moral and right in this country.”
Meanwhile, a key PBM lobby was critical of lawmakers for not inviting its members to testify at the hearing.
The Pharmaceutical Care Management Association in a statement denounced the House Oversight and Accountability Committee — one of many government entities currently conducting an investigation into PBMs — saying the hearing’s lack of a representative PBM witness “should raise concerns about a powerful panel pursuing predetermined conclusions.”
PBMs — middlemen that negotiate rebates and fees with drugmakers, create formularies and reimburse pharmacies for prescriptions — have been on the defensive amid rising criticism of their role in rising healthcare costs. Critics point to their complicated and often opaque contracts, controversial business practices and vertical consolidation that has resulted in the biggest PBMs being financially tied to the biggest health insurance companies.
Three PBMs — Caremark, owned by CVS; Express Scripts, owned by Cigna; and OptumRx, owned by UnitedHealth Group — control roughly 80% of the market.
Rep. James Comer, R-Ky., chairman of the committee, said the oversight committee would hold another hearing to get the PCMA’s opinion after Democrats and Republicans discuss and agree on potential solutions.
‘Higher cost’
During the hearing, Miriam Atkins, president of the Community Oncology Alliance, testified that PBM policies hinder patients’ access by steering them to mail-order pharmacies owned by or affiliated with the PBM, which can take longer to fill prescriptions. In addition, PBMs often require patients to fail on a cheaper and often inferior drug before they are allowed to receive a stronger treatment, hurting outcomes, according to the physician.
“Who knows best how to treat my patients? Me, or some faceless profit-seeking corporation?” Atkins said.
Greg Baker, CEO of AffirmedRx, which he described as a “transparent PBM,” accused the biggest PBMs of price gouging through oligopoly control of the market.
The three main rebate aggregators are also all owned by the three biggest PBMs, and negotiate rebates for them along with “almost every other PBM in the industry,” Baker said.
It’s unclear what value the group purchasing organizations bring to PBMs — they’ve been accused of being a strategy to avoid oversight in the U.S. — and are one of numerous concerning practices, Baker testified.
“My contention is it’s not always driving to a lower cost. It’s more frequently driving to a higher cost, because when you as a for-profit company make a percentage of revenue, would you want to make 7% off a $50,000 drug, or 7% off a $50 drug? And that’s the conflict that exists,” Baker said.
PBM practices are also hurting independent pharmacies, testified Kevin Duane, who owns PharmD, one of the oldest community pharmacies in Jacksonville, Florida. By steering patients to their own mail-order pharmacies, PBMs can create delays in treatment of weeks or longer, and “wreak havoc on our stores’ financial health,” Duane said.
“We can’t negotiate any aspect of our contracts with them in any meaningful type of fashion. It’s just take it or leave it,” Duane said. “Some of the most basic yet most life-sustaining medications ... are commonly underpaid compared to the true cost in the market.”
Reform
To ameliorate anticompetitive business practices, Congress should work to increase transparency between PBMs and the employers that pay for their services, witnesses testified. If employers know the specifics of the drug negotiation process, they can hold their PBMs accountable for prices, said Frederick Isasi, executive director of Families USA.
“This is an area where I think we have bipartisan cooperation. I know Congress isn’t known for its speed, but we need to do something about this pretty quick,” said Rep. Stephen Lynch, D-Mass.
Duane suggested getting rid of rebates, arguing they obscure a drug’s true price. Instead, drugs should be paid for through a fair and evidence-based pricing system based on ingredient cost and service fee, Duane said.
However, Isasi noted that past legislation to repeal rebates would add an estimated $180 billion in cost over a decade, because PBMs are currently saving the system money by negotiating with pharmaceutical manufacturers. In the near term, it’s more important to tamp down on other PBM tactics to make profits, such as holding them to a medical loss ratio like in Medicare, or requiring patient cost-sharing to be based on the list price of a drug, Isasi argued.
Comer suggested Congress could go after vertical integration in the pharmacy benefits industry, while eliminating clawbacks like direct and indirect renumeration fees.
“DIR payment reform at best — reform, I’m going to be very friendly here — that’s something we can address in Congress. And I think most of us would agree PBMs shouldn’t be vertically integrated,” said Comer. “I know there’s an investigation now but I think that’s something that Congress needs to play a role in fixing.”
