In a letter to the chief executives of the 3 largest pharmacy benefit managers (PBMs) in the United States—CVS Caremark, Optum Rx, and Express Scripts—Chairman James Comer (R-KY) of the House Committee on Oversight and Accountability requested corrections to the record for statements the company leaders made in a congressional hearing in July.1
During the hearing, titled “The Role of Pharmacy Benefit Managers in Prescription Drug Markets Part III: Transparency and Accountability,” the 3 chief executives “claimed that they do not steer patents to PBM-owned pharmacies,” according to a statement released by the committee.1
Overall, according to the committee, the CEOs contradicted findings from the Federal Trade Commission (FTC) that provided an overview of multiple aspects of PBMs management of pharmacies the commission deemed unfair, including their contract negotiation processes and opt outs and payments they provided to pharmacies.2
The interim report, released in July, strongly scrutinized the top PBMs in the pharmaceutical industry for unfairly wielding their influence over the affordability and availability of drugs. Lina M. Khan, chair of the FTC, said the report “lays out how dominant PBMs can hike the cost of drugs—including overcharging patients for cancer drugs.”2
As a follow-up to the report, the FTC has signaled its intention to sue the same 3 PBMs targeted by the Oversight Committee for their role in driving up the prices of drugs. The suit would specifically focus on the price for insulin, which can be drastically heightened due to the practice of PBMs providing favorable rebates to pharmacies under their umbrellas, squeezing independent pharmacies out of competition.3
In letters to each chief executive—David Joyner, president of CVS Caremark; Adam Kautzner, PharmD, president of Express Scripts; and Patrick Conway, MD, CEO of Optum RX—Chairman Comer highlighted laws that prohibit making false statements or representations to Congress or violating an oath, with violators being “fined under this title or imprisoned not more than 5 years, or both.”1
An additional report prepared by the Oversight Committee detailed their own findings regarding the role of PBMs in health care. Noting that there have been some arguments that the vertical integration structure of PBMs would benefit consumers by improving access and decreasing the cost of drugs, the Committee wrote “instead, the opposite has occurred: patients are seeing significantly higher costs with fewer choices and worse care.”4
Over 140,000 documents and communications from the companies form the basis of the committee’s report. “Instead of prioritizing the health of Americans across the country, evidence obtained by the House Oversight Committee shows how the three largest pharmacy benefit managers colluded to line their own pockets,” Comer said in a statement following the hearing.5
The recent pressure on PBMs regarding their business practices is notable because of the bipartisan, multi-faceted nature of the response. On the political front, both Democrats and Republicans on Capitol Hill have levied criticism toward PBMs, heightening the possibility of future successful legislative initiatives. Now, the PBMs’ chief executives are being threatened with potential fines or jail time due to alleged violations of US law.
Key Takeaways
1. Chairman James Comer of the House Oversight Committee sent a letter to the executives of 3 large pharmacy benefit managers requesting corrections to their testimony in a congressional hearing from July.
2. During the hearing, the executives claimed that they did not steer patients to their own pharmacies, contradicting findings from the committee and the Federal Trade Commission.
3. The development occurs as pressure on pharmacy benefit managers from the federal government increases.
Ron Lanton III, Esq, a regulatory attorney and partner at Lanton Law PLLC, spoke to these recent developments. Although noting significant impacts are unlikely to come from the Committee’s letters to the chief executives because they will likely claim they misspoke or utilized their own sources of information when they answered, Lanton believes that pressure will not be subsiding any time soon.6
“The lack of transparency in PBM pricing and network policies has been plaguing independent pharmacies for at least 20 years or more,” Lanton said in an interview. “The amount of independent pharmacies shutting down has risen so much that it has left many communities without a pharmacy.”6
Highlighting the bipartisan nature of PBM opposition, Lanton highlighted a particular exchange between Representative Ro Khanna (D-CA) and Conway of OptumRx, in which Conway could not commit to privileging a doctor’s recommendation for a drug over its cost after being repeatedly questioned by Khanna.6
“The inability to commit to something as simple as regarding a doctor’s recommendation over costs is an issue that neither party is willing to ignore.”6
REFERENCES
1. Committee on Oversight and Accountability. Chairman Comer calls on PBM executives to correct hearing testimony. News Release. Released August 28, 2024. Accessed August 30, 2024. https://oversight.house.gov/release/chairman-comer-calls-on-pbm-executives-to-correct-hearing-testimony/
2. Halpern L. FTC report acknowledges impact pharmacy benefit managers have on cost, accessibility of prescription drugs. Pharmacy Times. Published July 9, 2024. Accessed August 30, 2024. https://www.pharmacytimes.com/view/ftc-report-details-impact-pharmacy-benefit-managers-have-on-cost-accessibility-of-prescription-drugs
3. Halpern L. FTC intends to sue biggest pharmacy benefit managers for unfair negotiating tactics. Pharmacy Times. Published July 11, 2024. Accessed August 30, 2024. https://www.pharmacytimes.com/view/ftc-intends-to-sue-biggest-pharmacy-benefit-managers-for-unfair-negotiating-tactics
4. Committee on Oversight and Accountability. The Role of Pharmacy Benefit Managers in Prescription Drug Markets: Report Prepared by the House Committee on Oversight and Accountability Staff. Published July 23, 2024. Accessed online August 30, 2024. https://oversight.house.gov/wp-content/uploads/2024/07/PBM-Report-FINAL-with-Redactions.pdf
5. Committee on Oversight and Accountability. Hearing wrap up: Oversight Committee exposes how PBMs undermine patient health and increase drug costs. News Release. Released July 23, 2024. Accessed August 30, 2024. https://oversight.house.gov/release/hearing-wrap-up-oversight-committee-exposes-how-pbms-undermine-patient-health-and-increase-drug-costs/
6. Lanton R. Pharmacy Times Interview. August 30, 2024. Accessed August 30, 2024.
