House Committee Hearing Addresses PBMs, Anticompetitive Drug Pricing Tactics

PBMs’ tactics are causing United States citizens to suffer from rising health care premiums and costly drug prices, explained the House Committee on Oversight and Accountability Chairman James Comer during his remarks at a hearing to examine pricing tactics implemented by Pharmacy Benefit Managers (PBMs). This hearing was the second hearing on PBMs to be initiated by the Committee.¹

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“Congress can work in a bipartisan fashion to shine a light on PBMs, and this oversight hearing will examine how the PBM industry is making a concerted effort to drive up drug costs to line their own pockets,” explained Chairman Comer upon ordering the hearing.To improve the sustainability of generic drug markets and its medicines, Congress must ensure rapid plan coverage of new generics and biosimilars.^2,3

The Chairman emphasized during the hearing that there are deliberate, anticompetitive pricing tactics in place to prevent payers—including government stakeholders such as Medicare, Medicaid, Tricare, and the Federal Employee Health Benefits program—from understanding how PBMs are making profits at the expense of patients and taxpayers. Further, drug manufacturers pay rebates to PBMs, making it more difficult for competing prescriptions, often generics or biosimilars, to get on formularies. Patients often have to pay deductibles and coinsurance based on a medicine’s undiscounted price because PBMs deny or restrict coverage for these medicines.^1,3

“Instead of fierce competition, now just 3 PBMs control 80% of the market. Each of the 3 major PBMs—CVS Caremark, Express Scripts, and Optum Rx—is owned by a major health insurer [which] owns, or is owned, by a pharmacy,” said Chairman Comer at the hearing. “This means that when PBMs negotiate with a pharmacy or a health insurer, they are either negotiating with themselves or one of their direct competitors. This can create incentives to do things that have negative impacts on patients.”⁴

The Committee hearing follows a prior investigation into PBMs’ role in rising health care costs, in which Chairman Comer requested CVS Caremark, Express Scripts, and OptumRx provide documents, communications, and information on their practices that are altering the pharmaceutical market. In addition, senior officials at the Office of Personnel Management, Centers for Medicare and Medicaid Services, and the Defense Health Agency provided documents and communications to determine the significance of the PBMs’ impact on health care programs.²

Chairman Comer expressed that further transparency and accountability is required in the PBM industry. The lack of transparency and complexity of rebates and fees can make it difficult for plan sponsors to determine whether they are benefiting from the price concessions PBMs negotiate on their behalf. Comer noted that for this reason, the Committee will continue to push forward to develop legislative solutions to unveil the PBMs’ health practices.^1,3

“Greater transparency in the PBM industry is vital and the Oversight Committee will work to inform legislative solutions that can greatly benefit patients and reduce drug costs,” Chairman Comer said during the hearing. “We know that PBMs regularly engage in spread pricing, where PBMs overcharge payers and underpay pharmacies, and pocket the extra money. We also know that drug manufacturers pay rebates to PBMs in order to be placed in a favorable tier on a formulary, which can make it difficult for competing prescriptions—often generics or biosimilars—to get on formularies. These practices have real world consequences.”^1,3

According to Lori Reilly, COO, Pharmaceutical Research and Manufacturers of America, policies to establish transparency surrounding PBM practices and to de-link PBM compensation from the price of medicines has broad support from stakeholders, including from Medicare beneficiary advocates.³

“Calls to increase PBM transparency have been a prominent theme in Congressional hearings,” Reilly said. “Lack of transparency and the complexity of rebates and fees can make it difficult for plan sponsors to assess whether they are fully benefiting from all price concessions that PBMs negotiate on their behalf.”³

Craig Burton, executive director, Biosimilars Council, noted during the hearing that another concern is when PBMs pursue varying rebate agreements with plan sponsors. This can ultimately result in the coverage of generics being delayed, with patients suffering as a result.³

“Delays in coverage restrict patient access to lower-cost generics and expose patients to unnecessarily high cost-sharing, even though lower-cost alternatives are available,” Craig Burton, executive director, Biosimilars Council, said during the hearing. “To realize the full value of new generic competition, as well as savings from new biosimilar medicines, Congress must ensure rapid plan coverage of new generics and biosimilars to help improve the sustainability of generic drug markets and a stable supply of lifesaving generic medicines.”³

References

1. The House Committee on Oversight and Accountability. Comer: Pharmacy Benefit Managers Deploy Drug Pricing Tactics to Line Their Own Pockets. News release. September 19, 2023. Accessed September 21, 2023.

2. The House Committee on Oversight and Accountability. Comer: Pharmacy Benefit Managers Are Harming Patients by Driving Up Drug Costs to Line Their Own Pockets. News release. September 12, 2023. Accessed September 21, 2023.

3. The House Committee on Oversight and Accountability. Hearing Wrap Up: Pharmacy Benefit Managers Push Anticompetitive Drug Pricing Tactics to Line Their Own Pockets. News release. September 19 2023. Accessed September 21, 2023.

4. @GOPoversight. “Instead of fierce competition, now just 3 PBMs control 80% of the market. ”And each of the 3 major PBMs—CVS Caremark, Express Scripts, and Optum Rx—is owned by a major health insurer and owns, or is owned, by a pharmacy. “This means that when PBMs negotiate with a pharmacy or a health insurer, they are either negotiating with themselves or one of their direct competitors. “This can create incentives to do things that have negative impacts on patients.” @RepJamesComer opens hearing on Pharmacy Benefit Managers. https://twitter.com/GOPoversight/status/1704136650610049056. September 19, 2023. Accessed September 21, 2023.