[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
IMPACT OF OUR ANTITRUST LAWS ON COMMUNITY PHARMACIES AND THEIR PATIENTS

=======================================================================

                                HEARING

                               BEFORE THE

                        TASK FORCE ON ANTITRUST
                         AND COMPETITION POLICY

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 18, 2007

                               __________

                           Serial No. 110-85

                               __________

         Printed for the use of the Committee on the Judiciary


      Available via the World Wide Web: http://judiciary.house.gov


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                       COMMITTEE ON THE JUDICIARY

                 JOHN CONYERS, Jr., Michigan, Chairman
HOWARD L. BERMAN, California         LAMAR SMITH, Texas
RICK BOUCHER, Virginia               F. JAMES SENSENBRENNER, Jr., 
JERROLD NADLER, New York                 Wisconsin
ROBERT C. (BOBBY) SCOTT, Virginia    HOWARD COBLE, North Carolina
MELVIN L. WATT, North Carolina       ELTON GALLEGLY, California
ZOE LOFGREN, California              BOB GOODLATTE, Virginia
SHEILA JACKSON LEE, Texas            STEVE CHABOT, Ohio
MAXINE WATERS, California            DANIEL E. LUNGREN, California
WILLIAM D. DELAHUNT, Massachusetts   CHRIS CANNON, Utah
ROBERT WEXLER, Florida               RIC KELLER, Florida
LINDA T. SANCHEZ, California         DARRELL ISSA, California
STEVE COHEN, Tennessee               MIKE PENCE, Indiana
HANK JOHNSON, Georgia                J. RANDY FORBES, Virginia
BETTY SUTTON, Ohio0                  STEVE KING, Iowa
LUIS V. GUTIERREZ, Illinois          TOM FEENEY, Florida
BRAD SHERMAN, California             TRENT FRANKS, Arizona
TAMMY BALDWIN, Wisconsin             LOUIE GOHMERT, Texas
ANTHONY D. WEINER, New York          JIM JORDAN, Ohio
ADAM B. SCHIFF, California
ARTUR DAVIS, Alabama
DEBBIE WASSERMAN SCHULTZ, Florida
KEITH ELLISON, Minnesota

            Perry Apelbaum, Staff Director and Chief Counsel
                 Joseph Gibson, Minority Chief Counsel
                                 ------                                

             Task Force on Antitrust and Competition Policy

                 JOHN CONYERS, Jr., Michigan, Chairman

HOWARD L. BERMAN, California         RIC KELLER, Florida
RICK BOUCHER, Virginia               STEVE CHABOT, Ohio
ZOE LOFGREN, California              BOB GOODLATTE, Virginia
SHEILA JACKSON LEE, Texas            DANIEL E. LUNGREN, California
MAXINE WATERS, California            CHRIS CANNON, Utah
STEVE COHEN, Tennessee               DARRELL ISSA, California
BETTY SUTTON, Ohio                   MIKE PENCE, Indiana
ANTHONY D. WEINER, New York          J. RANDY FORBES, Virginia
DEBBIE WASSERMAN SCHULTZ, Florida    LAMAR SMITH, Texas, Ex Officio


            Perry Apelbaum, Staff Director and Chief Counsel

                 Joseph Gibson, Minority Chief Counsel


                            C O N T E N T S

                              ----------                              

                            OCTOBER 18, 2007

                                                                   Page

                           OPENING STATEMENTS

The Honorable John Conyers, Jr., a Representative in Congress 
  from the State of Michigan, and Chairman, Task Force on 
  Antitrust and Competition Policy...............................     1
The Honorable Ric Keller, a Representative in Congress from the 
  State of Florida, and Ranking Member, Task Force on Antitrust 
  and Competition Policy.........................................     9
The Honorable Anthony D. Weiner, a Representative in Congress 
  from the State of New York, and Member, Task Force on Antitrust 
  and Competition Policy.........................................    10
The Honorable Steve Chabot, a Representative in Congress from the 
  State of Ohio, and Member, Task Force on Antitrust and 
  Competition Policy.............................................    12
The Honorable Darrell Issa, a Representative in Congress from the 
  State of California, and Member, Task Force on Antitrust and 
  Competition Policy.............................................    13

                               WITNESSES

Mr. Mike James, Vice President, Association of Community 
  Pharmacies Congressional Network, and Pharmacist/Owner, Person 
  Street Pharmacy, Raleigh, NC
  Oral Testimony.................................................    14
  Prepared Statement.............................................    16
Dr. Peter J. Rankin, Principal, CRA International
  Oral Testimony.................................................    18
  Prepared Statement.............................................    21
Mr. David Wales, Deputy Director, Bureau of Competition, Federal 
  Trade Commission
  Oral Testimony.................................................    53
  Prepared Statement.............................................    56
Mr. David A. Balto, Antitrust Attorney, on behalf of the National 
  Community Pharmacists Association
  Oral Testimony.................................................    77
  Prepared Statement.............................................    79
Mr. Robert Dozier, Executive Director, Mississippi Independent 
  Pharmacists Association
  Oral Testimony.................................................   115
  Prepared Statement.............................................   117

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

H.R. 971, the ``Community Pharmacy Fairness Act of 2007''........     2


IMPACT OF OUR ANTITRUST LAWS ON COMMUNITY PHARMACIES AND THEIR PATIENTS

                              ----------                              


                       THURSDAY, OCTOBER 18, 2007

              House of Representatives,    
                    Task Force on Antitrust
                             and Competition Policy
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Task Force met, pursuant to notice, at 9:40 a.m., in 
Room 2141, Rayburn House Office Building, the Honorable John 
Conyers (Chairman of the Task Force) presiding.
    Present: Representatives Conyers, Lofgren, Jackson Lee, 
Waters, Sutton, Sherman, Weiner, Chabot, Keller, Issa, and 
Feeney.
    Staff Present: Stacey Dansky, Majority; Stewart Jeffries, 
Minority Counsel; and Benjamin Staub, Professional Staff 
Member.
    Mr. Conyers. Good morning, ladies and gentlemen.
    The Committee has joined me here, the Antitrust Task Force 
hearing, to examine the impact of our antitrust laws on 
community pharmacies and their patients. I don't think anyone 
in the Congress has not been visited by their constituents on 
this matter.
    And today we delve into an aspect of the health care 
industry that is frequently overlooked but, in my mind, may be 
one of the most important parts of the whole system, because 
pharmacies serve as the interface between consumers and their 
medication, a vital link. And independent pharmacies provide 
necessary and important services to patients all over the 
country and in places where, without them, there might not be 
any service for those consumers that might need it.
    Now, there is a common agreement that the health care 
system is in trouble. It has become so expensive that almost 50 
million Americans don't have coverage of any kind, and some 20 
million or more that do aren't covered for the right thing that 
they unfortunately find out when they go into their doctor or 
hospital.
    According to the Institute of Medicine, some 18,000 people 
die in this country each year because of lack of health care. 
What I am saying really is they don't have the insurance that 
would allow them to be served by a doctor, clinic or a 
hospital. And we pay, in this country, on a per capita basis, 
more for health care, receive less from health care, and 
experience less satisfactory outcomes than many other countries 
in the world that have a universal health care system.
    Independent pharmacies are also suffering in today's health 
care marketplace. We are told, and we will hear here today, how 
they are being driven out of business because they can't 
compete with large retail pharmacies and cannot survive with 
the low reimbursement rates that are given to them now.
    So, given the importance of the human interaction between 
the patient, the doctor and the pharmacist, the ability to ask 
questions about drugs and get prescriptions filled immediately 
is a very important consideration. A substantial part of the 
crisis in our health care is the cost of prescription drugs and 
the prescription drug program currently in place.
    According to a report issued by the premiere Oversight 
Committee in the House, it said that privatizing the delivery 
of the drug benefit has enriched the drug companies and 
insurance industry at the expense of seniors and taxpayers. The 
report concluded that insurers participating in Medicare Part D 
do not cover prescription drugs as efficiently as other 
programs do, and that Medicare Part D beneficiaries and 
taxpayers could be saving billions of dollars per year if 
seniors got their Part D benefits directly from Medicare 
instead of through insurance companies.
    The report went on to conclude that administrative costs 
sometimes run six times higher in private health insurance 
companies than in Medicare's traditional fee-for-service 
program. Approximately $4.6 billion went into administrative 
costs and other expenses in fiscal year 2007, and a billion 
dollars of that amount was steered toward insurance company 
profits.
    The Chairman of the Oversight Committee, the gentleman from 
California, Henry Waxman, stated further that the program 
inflated administrative costs and meager drug rebates, and that 
that will cost taxpayers and seniors $15 billion in this year 
alone. So, based on that report, it seems clear that, because 
of Medicare Part D, small pharmacies have suffered because of 
higher administrative costs, approximately some $15 billion a 
year. And that has prevented the reimbursement of pharmacies at 
a higher rate than the traditional PBMs do now. A proposed 
solution is to allow independent pharmacies to collectively 
negotiate for a better reimbursement rate.
    One of the Members of this Committee, and present here 
today, Anthony Weiner of New York, has put forward a proposal 
to alleviate some of the problems facing independent pharmacies 
and has a measure, H.R. 971, which we will hear more about.
    [The bill, H.R. 971, follows:]

    
    
    
    
    
    
    
    
    
    
    
    
    Mr. Conyers. But such an arrangement would require a 
special exemption to our antitrust laws in that regard. And so, 
while I am generally disinclined toward exemptions to antitrust 
laws, there could be particular circumstances where a carefully 
crafted exemption could be warranted.
    And so, today, we hear from witnesses to discuss whether 
such an exemption in the case of independent pharmacies is 
warranted. And these are a few of the crucial questions that we 
have gathered here today to discuss with our friends in the 
pharmacy industry. They waited a long time for this hearing, 
and I am glad that we are here to oblige you in that request 
this morning.
    And I'd like now to ask Ric Keller, who is our acting 
Ranking minority Member, to begin his discussion of this matter 
before us. The gentleman from Florida is recognized.
    Mr. Keller. Thank you very much, Mr. Chairman. And I want 
to especially want to thank you for convening this hearing on 
the Task Force on Antitrust and Competition Policy.
    One thing I have to correct that you said that I have a 
little disagreement with, you referred to the Government Reform 
Committee as the premiere oversight Committee in Congress 
with----
    Mr. Issa. And rightfully so.
    Mr. Keller. With you at our leadership, we kind of think 
the Judiciary Committee is the premiere oversight Committee in 
Congress here. But that will probably earn me a subpoena from 
Mr. Waxman shortly.
    I want to thank all of you for being here today.
    Today's hearing on the impact of the antitrust laws on 
community pharmacists reflect a familiar theme in the Antitrust 
Task Force hearings, namely, how did the antitrust laws balance 
the needs of large companies on one hand with the needs of 
smaller companies on the other?
    In today's hearing, the smaller companies are the 
independent pharmacies. For many years, they felt that the 
actions of the large companies--in this case, the larger chain 
stores, the HMOs and now pharmacy benefit managers, or PBMs--
have been making it difficult for them to compete. They feel 
that the PBMs, which they claim cover almost 95 percent of all 
prescription drug purchases in this country, exercise market 
power of the independent pharmacies.
    They say that market power, in turn, allows the PBMs to 
dictate ``take it or leave it'' reimbursement contracts with 
the independent pharmacies, and that those low reimbursement 
rates are driving many of the independent pharmacies out of 
business. To combat this perceived market power, the 
independent pharmacies claim that they need an antitrust 
exception to allow them to negotiate effectively with the PBMs.
    In contrast, the PBMs feel that they are lowering prices 
for the American consumer. Specifically, they argue that volume 
discounts help seniors get lower prices for their prescription 
drugs. They claim that independent pharmacies can negotiate 
some terms of the reimbursement contracts already. And they, 
along with the Federal Trade Commission, have expressed concern 
that allowing independent pharmacies to have an antitrust 
exemption would allow the pharmacies to engage in price-fixing 
arrangements or boycotts that could hurt consumers.
    To that end, PBMs commissioned a study by Charles River 
Associates that shows that an antitrust exemption can cost 
consumers as much as $29.6 billion over 5 years. That number 
includes 6.4 billion under the Medicare Part D prescription 
drug plan.
    The Supreme Court has observed that the antitrust laws 
exist to protect competition, not competitors. It is therefore 
incumbent upon us to examine this issue to see whether a 
legislative fix is absolutely necessary. Certainly, Congress 
should be mindful of the role that small business plays in our 
communities and in our economy, and should do everything it can 
to promote those businesses. At the same time, Congress must 
also be aware of the cost of its actions on the American 
consumer and the critical need for senior to have access to 
low-cost prescription drugs.
    I look forward to hearing from all of our witnesses on this 
topic today. Let me just explain that I am personally very 
interested in what each and every one of you have to say and 
will read your statement. I have a markup at the exact same 
time, which I will have to go to and fro. And if I am not here, 
it is not that I am not interested, but just required to be 
elsewhere temporarily. But thank you very much for being here 
today.
    And, Mr. Chairman, I yield back the balance of my time.
    Mr. Conyers. Thank you, Mr. Ric Keller.
    The Chair is going to recognize Mr. Weiner, Mr. Darrell 
Issa and, just briefly, the gentleman from Ohio, Mr. Chabot. 
And we begin with the distinguished gentleman from New York.
    Mr. Weiner. Thank you, Mr. Chairman, and I appreciate your 
calling this hearing and, frankly, organizing the Committee as 
it is, that you, as the Chairman, will be looking seriously at 
antitrust issues, because I think there are myriad issues that 
we need to understand a lot better around here.
    You know, with all of the complicated things that are going 
on in health care and all of the debates that we're having--do 
we want larger government solutions or more private-sector 
solutions; do we want a business-based structure or a single-
payer system, like Mr. Conyers and I have proposed--of all of 
the things we have disagreement on, very rarely, if ever, does 
anyone ever stop any of us in our communities and say, ``Boy, 
you have got to do something to wipe out those neighborhood 
pharmacists.'' Very rarely do we hear people complain about 
that man or woman behind the counter in our neighborhood 
shopping strips, in our towns and villages, because, frankly, 
with more and more of the challenges facing consumers with 
health care, more and more of the responsibility that should be 
perhaps placed elsewhere is being laid on the counter of our 
neighborhood pharmacists. They are being asked to wrestle with 
Part C and now Part D.
    I would argue that when Medicare Part D was initiated and 
started to roll out that pharmacists should have been paid as 
if they were civil servants for all the questions that they had 
to answer, all the details they had to explain, all of the 
combinations and permutations. It was not uncommon for someone 
to call up my office, ask a question about Part D, still have a 
little bit of concern and say to one of my staffers, ``That's 
okay. I'll just ask my pharmacist the rest.''
    And so, we have to realize that it is imperative on the 
part of us in Congress to make sure that that element of our 
health care system survives. Not only are we failing at that, 
but we are making it, every single day, more and more difficult 
for community pharmacists. You know, the changes that we made 
in reimbursements, the changes that we made in regulations have 
made it more and more difficult for neighborhood pharmacists to 
survive.
    I did a study of New York City in 2003, and I looked at 
from 1990 to 2003--the data is a little bit dated by now--1990 
to 2003. And we found out that, of the 1,600 community 
pharmacists, we had a 30 percent drop in that period, from 1990 
to 2003, while the chain pharmacies had had a 263 percent 
increase. Now, what is happening is the chain pharmacies, as 
they grew stronger and stronger and their ability to compete 
was more and more consolidated, the neighborhood pharmacists 
disappeared.
    So what is it that can we do? Well, there are some things 
that we can do. We can obviously go back and revisit the 
reimbursement rates, and I think we are going to in the guise 
of another Committee. But one of the easiest things that we can 
do is allow our common sense, meaning common among Democrats 
and Republicans alike, that competition has a way of helping 
solve these problems in the benefit of the consumer.
    If we allow individual neighborhood pharmacies not just to 
operate as islands, but to be able to work together to 
negotiate with the big PBMs--and you can argue both ways that 
PBMs might save money, it might cost service, but that's the 
reality of the system that we have now, that the PBMs hold a 
lot of cards; the HMOs hold a lot of cards. And the chain 
stores do this every day. The chain stores, whether they're 
Rite Aid or Walgreens or Wal-Mart, they get together and they 
say to the PBMs, ``Look, because we have 200, 300, 400 stores, 
we're going to negotiate for lower prices.''
    What my legislation does--and it is sponsored by Democrats 
and Republicans, like Mr. Coble was a sponsor in the last 
Congress and in this one; the bipartisan Small Pharmacy 
Coalition that we formed here in the Congress supports it--what 
we're saying is, listen, let's let these neighborhood guys band 
together and do their best to compete.
    Now, are 20 or 30 in central Florida going to be able to 
band together and have the heft of a Wal-Mart? Probably not. 
But it would give them a little bit more advantage that they 
are not going and negotiating for prices for one person, they 
are going for five or six or seven.
    Now, I have seen a study--and Mr. Keller, who laid out the 
issues here quite well that we have to confront--that said, 
well, this might mean added costs. Well, if that is the 
argument, then you have got to tell me why we allow competition 
anywhere. Maybe we should just allow the benevolence of the 
PBMs to just look out for us all and hope that it's in our best 
interests.
    We are not seeing saying who should win or lose. What we 
are saying is that the playing field should do the best we can 
to allow people to compete.
    Now, where are those costs going to go? I don't know if 
there will be any higher costs. I think what will probably wind 
up happening is PBMs are going to have people driving a harder 
bargain on behalf of whom? The consumer. The consumer is 
ultimately who these neighborhood pharmacies represent. When 
they go back and say, ``I want a lower price for this drug'' to 
the PBM and I've got, now, 50 of my buddies with me, rather 
than just little old me, what winds up happening? Now, does the 
PBM say, ``Okay, we'll give you a $5 discount.''
    But that is what we are supposed to be trying to encourage 
here. There are a lot of deeply partisan issues about how you 
deal with health care. I think competition is the abiding thing 
that we all agree that, if we had, everyone would benefit from.
    So the chain stores, they already have this. We're not 
asking--they're not going to lose a single right. If you are 
someone who is advocating on behalf of letting the chains 
stores prosper, so be it; they don't lose a single right. H.R. 
971 doesn't not touch them one wit, unless you think that 
allowing a chain pharmacy to be able to better compete harms 
them. If you don't want competition, I don't think you should 
come here to the Judiciary Committee and say it.
    So this is a case that we can do something that has no cost 
to the Government, has little administrative costs, if any, to 
the Government, because it will be individuals who are going to 
be able to negotiate. And it allows us to do something now, 
quickly and immediately, to try to save the one last remaining 
noncontroversial element of our national health care system, 
and that is the neighborhood community pharmacist who is there 
every single day, answering questions large and small, dealing 
with a much more complicated, complex world of pharmaceuticals 
than we've ever had before.
    Before I yield back, think for a moment whether or not we 
would be better off or worse off if we continue this decline of 
community pharmacies closing. And I think you will realize, 
almost by any measure, we'd be worse off.
    And I thank you, Mr. Chairman, for holding this hearing.
    Mr. Conyers. Well, I appreciate that analysis.
    And I now turn to my friend from California, Darrell Issa, 
who has never been shy--I had to cross out some adjectives. 
``Shy,'' ``retiring'' and ``unassuming'' were never phrases 
used to describe the gentleman from California. And yet we 
recognize him now for 5 minutes.
    Mr. Issa. Well, thank you, Mr. Chairman. My wife often says 
``seldom mistaken, never in doubt,'' when describing me. 
Perhaps you could use that in the future. That sounds like a 
good one.
    Mr. Conyers. Would the gentleman----
    Mr. Issa. I would yield to the gentleman from Ohio.
    Mr. Chabot. I'll be very brief. I'm the Ranking Member of 
the Small Business Committee, and we have a markup at 10 
o'clock. So we are definitely going to review the testimony of 
all the folks.
    This is a very important issue. I want to thank the 
Chairman and the Ranking Member for holding this. Unfortunately 
a bunch of us have things at the same time.
    So I want to thank the gentleman for yielding. I intend to 
come back. Thank you.
    Mr. Conyers. I support the notion that the gentleman from 
Ohio has been working on this issue for quite a long time.
    And I thank the gentleman for allowing the interruption.
    Mr. Issa. Thank you, Chairman. And thank you for holding 
this important hearing.
    I think, sometimes in these hearings, there is a 
preconception that we have already made our mind up. Nothing 
could be further from the truth, because the nature of 
legislation that rebalances antitrust is a delicate one. I 
think we all understand that somewhere between ``antitrust'' 
meaning no monopolies and ``antitrust'' meaning you can't talk 
to your wife about what is happening in her part of the 
business versus yours is where is the balance we want to 
achieve.
    Having been a small-business man for many, many years in 
the electronics industry, I dealt with buying groups. I 
understand both, as a manufacturer, the negative that buying 
groups demand better, sharper prices, or, as they like to say, 
``sharpen your pencil.'' I also understand that you make one 
call, you negotiate one contract, and then you're able to sell 
in to a much larger network.
    I think here today that we're balancing the fact that 
individual, family-owned and nonpublic drugstores are, in fact, 
inefficient to deal with. We, in fact, realize that to call on 
one store and negotiate one contract is, by definition, more 
expensive than going down to Walgreens or CVS or Wal-Mart, if 
you can get to Arkansas with a couple of flights, and 
negotiating contracts. So there's a tradeoff.
    At the same time, we also understand that small businesses 
have been the innovators, small businesses have provided great 
service. And we want to make sure that they are allowed, under 
our antitrust law, to survive.
    So, as we look at Mr. Weiner's legislation, either in whole 
or in part, or as is or with changes, I believe that what we're 
going to find is a lot of the testimony here today serves an 
understanding of why you can have a buyer's group to buy drugs; 
what you can't do is have a group that agreed to be under a 
common contract that is, in fact, perhaps less competitive, 
less sharpened-pencil than CVS or Walgreens, and yet better for 
the companies who negotiate one contract for perhaps 200 or 300 
small businesses, where the tradeoff for them also is a common 
contract.
    In preparation for this, I discovered that there is no 
question that large companies, such as Wal-Mart and CVS--all of 
whom I applaud their ability to deliver good products at a good 
price--they also start off with a comparative blank sheet of 
paper when negotiating these contracts. If, in fact, what you 
have is one store on the corner near my home, you were sent a 
contract which you will sign or you will not participate. That 
cannot be allowed to continue.
    So when we're looking at balancing antitrust, Mr. Chairman, 
I believe what we're going to see is we're going to see that if 
you have 10 percent market share with Wal-Mart and 4 percent 
market share with another chain and 6 percent with another 
chain, that if, in fact, independents come together and have no 
greater market power than, let's say, either the average of the 
top three or certainly no greater than the greatest in an area, 
that, by definition, the rebalancing could do no harm to the 
intent of the antitrust laws, which is to ensure that there is 
competition.
    The fact is that the independents today represent perhaps 
too much of small and not enough to compete against big. And I 
look forward to hearing it in detail. I look forward to working 
with Mr. Weiner and this Committee on legislation that really 
could provide a narrow but meaningful exemption.
    And, with that, I yield back.
    Mr. Conyers. I thank the gentleman very much for his 
presentation.
    Mr. Weiner and myself, right now, so far, we are the 
witnesses and you are the Committee. Because you've heard some 
fascinating analysis that could be the basis of a discussion on 
these views alone.
    But now it's your turn. And what a wonderful set of five 
witnesses: Dr. Robert Dozier, attorney David Balto, David 
Wales, and Peter Rankin, and finally Mike James. What a great 
way to begin or, really, more accurately, continue this 
discussion that has been started.
    And so, I want to begin with Mike James, the vice president 
of government relations at the Association of Community 
Pharmacists Congressional Network. He is an owner of 
independent pharmacies in North Carolina and Florida. He has 
chaired the North Carolina Retail Merchants Association and was 
named North Carolina pharmacist of the year.
    We've got all your testimony; it will go into the record.
    And we invite you to begin, sir.

    TESTIMONY OF MIKE JAMES, VICE PRESIDENT, ASSOCIATION OF 
  COMMUNITY PHARMACIES CONGRESSIONAL NETWORK, AND PHARMACIST/
           OWNER, PERSON STREET PHARMACY, RALEIGH, NC

    Mr. James. Thank you very much, Mr. Chairman----
    Mr. Conyers. Try to press the button again.
    Mr. James. Is it working now?
    Mr. Conyers. It doesn't seem to be working now. We've been 
having a lot of technical difficulties in this hearing room, 
and I apologize for that.
    Mr. James. How about this one?
    Mr. Conyers. Excellent.
    Mr. James. Chairman Conyers, Ranking Member Keller, Members 
of Antitrust Task Force, good morning. And thank you for 
allowing me to testify this morning on behalf of the 
Association of Community Pharmacy Congressional Network and the 
independent hometown pharmacies they represent across the 
country. I would also like to thank you for holding this 
hearing to address a crucial problem in the health care system.
    My name is Mike James. I am vice president and director of 
government affairs for the Association of Community Pharmacy 
Congressional Network and a practicing pharmacist at an 
independent community pharmacy in Raleigh, North Carolina.
    As managed care became the norm in the health care 
industry, pharmacy benefit managers began to realize they could 
become a bigger player in the business of health care. Their 
business model was to manage prescription programs and promise 
huge savings, but these so-called savings came with a high 
price for consumers and pharmacies.
    Today, about 95 percent of all prescriptions filled in the 
United States are handled by PBMs. As a result of this power, 
the PBM industry now dictates, without negotiation, 
reimbursement rates and terms of contracts to independent 
pharmacies. In order to continue serving your patients, 
pharmacies are required to fill prescriptions under PBM 
arrangements at prices that do not cover cost. This has 
resulted in the closing of 1,152 independent hometown 
pharmacies in 2006.
    Every pharmacy owner I have spoken with who has closed 
indicated that their reason for closing was low third-party PBM 
reimbursements. The PBM strategy is working well, and I believe 
we will see a larger number of closings this year and next if 
nothing is done.
    The takeover by PBMs is also resulting in movement on a 
large scale of senior patients to mail-order prescription 
programs. They have no say in how their pharmacy benefits will 
be delivered and are afraid to complain in fear of losing their 
benefit. These patients are denied their traditional right to 
seek personal and confidential professional assistance from 
local hometown pharmacy professionals.
    Today the goal of PBM contracts is not to support critical 
pharmacy-patient relationship. Rather, the goal is to 
systematically undermine the solvency of independent pharmacies 
and force patients covered under these agreements into highly 
profitable proprietary mail-order programs. This is a conflict 
of interest. The PBMs run their own mail-order programs in 
direct competition with retail pharmacies. There is a distinct 
inequity by forcing patients to pay a higher co-pay in the 
pharmacy than they pay through mail-order. And it is putting 
patients at a disadvantage by not allowing a local retail 
pharmacy to fill a 90-day supply which is offered through mail-
order.
    You will be told that allowing negotiations will increase 
costs by $29 billion. This is strictly a decision of the PBM. 
PBMs have great flexibility in determining how much they shift 
over to patients and taxpayers.
    CMS handed over all power and authority to PBMs to run 
Medicare Part D, but rather than be good stewards of the 
payers' interests, the $29 billion indicates that Charles River 
Associates and the Congressional Budget Office understand well 
that PBMs will continue to put their profits above the interest 
of the patient. If the cost goes up, it will be because the PBM 
raised cost, not because the pharmacies were allowed to 
negotiate.
    You will also be told that surveys show a huge majority of 
Medicare Part D patients are happy with the program. I would 
contend this survey didn't include those patients who have 
entered no coverage zone or the donut hole, as it is called. I 
own a pharmacy, and I do surveys every day. And every day, I 
counsel patients who have hit the donut hole and have no idea 
how they're going to buy their medication.
    The patient is paying a monthly premium; the Federal 
Government is paying a monthly allowance to the PBM. The 
patient is paying the total cost of the medication and is 
trapped in the donut hole until the new year begins. All this 
time, the PBM is collecting money and paying nothing to help 
the patient receive their medication.
    I can assure you, these patients are not happy with the 
program.
    In many communities, pharmacies are the primary or only 
health care resource for American families. The human 
interaction with a patient is a vital part of the entire 
process of the delivery of care to the public. This is a 
fulcrum of the integration of standard of care for the patient.
    Independent pharmacies must have the right to negotiate to 
keep these PBMs from taking over the prescription-delivery 
system, but antitrust law prohibits this right. With pharmacies 
closing every day and patients being forced into the mail-order 
program, I believe Congress must act. I believe Congress must 
give independent hometown pharmacies a way to help the patient, 
a way for pharmacies to negotiate a fair contract, and a way 
for these local pharmacies to continue to serve their 
communities and keep America healthy.
    Mr. Chairman, this legislation is a cornerstone for the 
future of health care reform, because, without the independent 
pharmacy network, reform will not work. As you know, Mr. 
Chairman, this association, the Association of Community 
Pharmacy Congressional Network, has worked for months on this 
legislation. And I ask for you, the Committee, to move this 
legislation forward to markup to enable passage of this 
important bill.
    Thank you for your time, Mr. Chairman. I appreciate the 
opportunity to speak with you.
    [The prepared statement of Mr. James follows:]

                    Prepared Statement of Mike James

    Chairman Conyers, Ranking Members Smith and Keller, and Members of 
the Antitrust Taskforce, good morning and thank you for allowing me to 
testify this morning on behalf of the Association of Community 
Pharmacies Congressional Network and the independent pharmacies they 
represent across the country. I would also like to thank you for 
holding this hearing to address a crucial problem in the health care 
system.
    My name is Mike James; I am Vice President and Director of 
Government Affairs for the Association of Community Pharmacies 
Congressional Network, a practicing pharmacist and the owner of an 
independent, community pharmacy in Raleigh, North Carolina.
    Years ago, as managed care began to invade health care in this 
country, insurance companies began to hire Pharmacy Benefit 
Administrators (known as PBAs) to become electronic claims clearing 
houses between the insurance company and the pharmacies. This was done 
in an effort to centralize all claims from the thousands of pharmacies 
to a central switch, to then be routed to the correct insurance 
company. This is a transaction much like a credit card transaction--a 
central switch, an electronic transfer.
    But as managed care became the norm, these PBAs began to realize 
they could become a bigger player in the business of health care and 
convinced insurance companies, large corporations, and government 
entities that they were the experts in the prescription delivery 
process. These PBAs sold this idea as a cost-savings mechanism. The 
Pharmacy Benefit Administrators then became known as Pharmacy Benefit 
Managers (PBMs) and their business model was to manage the entire 
prescription program and promised as much as 30 to 40% off prescription 
prices to the insurance companies. But these so-called ``savings'' came 
at a high price for consumers and pharmacies.
    Back when the Pharmacy Benefit Administrators were used, they 
handled about 10% of the prescriptions filled in the US. By 2005, the 
number of prescriptions being handled by PBMs was over 60%. Today, 
after the implementation of Medicare Part D, about 95% of all 
prescriptions filled in the United States are handled by PBMs.
    As a result of this near-monopolistic power, the PBM industry now 
dictates, without negotiation, reimbursement rates and terms of 
contracts to independent pharmacies. In order to continue serving their 
patients, pharmacies are required to fill prescriptions under PBM 
agreements at prices that do not cover costs. This has resulted in the 
closing of 1,152 independent pharmacies in 2006. Every one of the 
pharmacy owners I have spoken with who has closed their pharmacy since 
January 2006 indicated that their reason for closing is low third-party 
PBM reimbursement. The PBM strategy of putting independent pharmacy out 
of business is working well and I believe we will see a larger number 
of closings in 2007 and 2008 if nothing is done.
    The take-over by PBMs is also resulting in movement on a large-
scale of senior patients--particularly those in rural areas--to mail-
order prescription programs. This has provided a perverse outcome for 
patients, who have no say in how their pharmacy benefits will be 
delivered, and are afraid to complain in fear of losing their benefit. 
These patients are denied their traditional right to seek personal and 
confidential professional assistance from local, hometown pharmacy 
professionals.
    Today, the goal of PBM contracts is not to support critical 
pharmacy-patient relationships. Rather, the goal of PBM contracts is to 
systematically undermine the solvency of independent pharmacies and 
force patients covered under the agreements into highly profitable 
proprietary mail-order programs. PBMs promote mail-order as a cheaper 
alternative to visiting your local pharmacy. However, this is a 
conflict of interest--the PBMs run their own mail-order programs in 
direct competition with retail pharmacies. The argument of cost-savings 
is completely false--mail order programs won't necessarily offer a less 
expensive generic alternative to a medication because the PBM has 
rebate agreements with the brand drug makers. And the mail-order 
programs can't possibly fill a script the day it is written--there must 
still be a local pharmacy to fill that script written for antibiotics 
to cure an infection or a painkiller after a broken bone is set. Can 
those patients mail off the prescription and wait another two weeks 
before it arrives in the mail?
    The mail-order programs run by PBMs are truly a conflict of 
interest. For example, there is a distinct inequity of forcing patients 
to pay a higher co-pay in the pharmacy for the same prescription than 
they pay through mail-order. And it is putting patients at a 
disadvantage by not allowing a local retail pharmacy to fill a 90-day 
supply when that same benefit is offered through mail-order. But the 
PBMs do this because they run the mail-order programs and these are 
effective methods of putting retail pharmacy out of business.
    You will be told that allowing negotiation will increase cost by 
$29 billion dollars. This is strictly a decision of the PBM. PBMs have 
great flexibility in determining how much they shift over to patients 
and taxpayers. CMS handed over all power and authority to PBMs to run 
Medicare Part D, but rather than be good stewards of the taxpayers' 
interest, the $29 billion indicates that Charles River Associates and 
the Congressional Budget Office understand well that PBMs will continue 
to put their profits above the interest of the taxpayer. If the cost 
goes up, it will be because the PBMs raised cost, not because the 
pharmacies were allowed to negotiate.
    You will also be told that surveys show a huge majority of Medicare 
Part D patients are happy with the program. I would contend this survey 
didn't include those patients who had entered the ``no coverage zone'' 
or ``doughnut hole'' as it is called. I own a pharmacy and I do surveys 
everyday and everyday I council patients who have hit the doughnut hole 
and have no idea how they are going to buy their medication. They are 
still paying a monthly premium, the Federal government is still paying 
their monthly allowance to the PMB for that patient and the patient is 
paying the total cost of the medication and will not escape the 
doughnut hole before the program begins again in January. All this 
time, the PBM is collecting money and paying nothing to help the 
patient receive their medication. I can assure you these patients are 
not happy with the program.
    Independent pharmacies provide invaluable health care services on a 
daily basis to millions of patients nationwide. They know their 
patients and their health care history. This is especially important 
for patients who have multiple doctors and prescriptions. The 
pharmacist is the only health care professional who knows all of the 
patient's medications, their interactions, and whether there are lower 
cost generics available to address the patient's needs.
    Hometown pharmacies are the only health care providers who do not 
require appointments and in many communities, pharmacists are the 
primary or only health care resource for American families. The role of 
the hometown pharmacist as part of the health care team cannot be 
duplicated through the PBM mail-order process. The human interaction 
with the patient is a vital part of the entire process of the delivery 
of care to the public--this is the fulcrum of the integration of 
standard of care for the patient. Patients can't ask their postman 
about their medication--not everyone can call a 1-800 number and 
navigate through a directory of options only to be put on hold or speak 
with an operator nor will everyone remember to order each of their 
prescriptions two weeks before they run out--many patients take 
multiple drugs, especially seniors and those who have serious 
illnesses. Shouldn't we be taking extra care with them rather than 
forcing them into faceless mail-order programs?
    There is only one way to combat the takeover of your constituents' 
health care by these huge companies whose only interest is the bottom 
line, not the health of patients. Independent pharmacies must have the 
right to negotiate to keep these PBMs from taking over the prescription 
delivery system. But antitrust law prohibits these small pharmacies 
from banding together to discuss terms of a contract. If Main Street 
Pharmacy talks to Elm Street Pharmacy about reimbursement rates or 
dispensing fees and agree to turn down the contract from a PBM unless 
they offer a reasonable contract, they are in violation of the law. 
Currently, these pharmacies tend to accept contracts that will put them 
at a loss because they lead with their hearts, not with their business 
sense. But with pharmacies shutting down every day, and the alternative 
being patients forced into mail order or going to the next town to get 
their prescription filled, I believe Congress must act. When Medicare 
Part D was signed into law, PBMs were given more power, more lives to 
control--now almost every American with prescription drug coverage is 
at the mercy of a PBM. I believe Congress must give independent 
pharmacies the right to negotiate, a way to help the patient, a way for 
pharmacies to negotiate a fair contract, a way for these local, 
hometown pharmacies to continue to serve their communities and keep 
America healthy.
    Mr. Chairman, this legislation is the cornerstone for the future of 
healthcare reform because without the independent pharmacy network, 
reform will not work. I ask you and this committee to move this 
legislation forward to mark-up to enable passage of this important 
bill.
    Thank you for this time.

    Mr. Conyers. Thank you, Mr. James. It has been a long time 
before you could get before the Committee to lay this problem 
out from your perspective and experience. I am so glad that we 
have your full statement to go through the position that you've 
outlined.
    We now turn to the senior associate at Charles River 
Associates, Peter Rankin. Dr. Rankin earned his Ph.D. In 
economics at Duke University. He's become a leading researcher 
in health care and pharmaceutical industries. His most recent 
research is focused on the influence of Medicare and managed 
care on the marketplace.
    I apologize for not having looked those articles up, so I 
don't know what you said, but they certainly are important and 
are not unrelated to what brings us here this morning.
    Welcome, Dr. Rankin.

           TESTIMONY OF PETER J. RANKIN, PRINCIPAL, 
                       CRA INTERNATIONAL

    Mr. Rankin. Thank you. Good morning, Chairman Conyers, 
Ranking Member Keller and Members of the Task Force. My name is 
Peter Rankin. I am a principal at CRA International, formerly 
known as Charles River Associates, an economics and management 
consulting firm.
    I testify today to raise concerns regarding the economic 
and potential unintended consequences of H.R. 971. The proposed 
legislation would provide antitrust exemptions to pharmacies 
not owned or operated by a publicly traded company. Supporters 
of this bill believe that these independent pharmacies need an 
antitrust exemption because they are at a competitive 
disadvantage in negotiating contracts with health insurers or 
pharmacy benefit managers.
    My analysis and research leads me to conclude that such a 
drastic policy change is not warranted. And I will focus on 
three points.
    First, patients and payers, including Medicare, would bear 
the burden of higher costs. A conservative estimate is that the 
bill would increase expenditures by nearly $30 billion over 5 
years, nearly a quarter of which would be higher spending on 
Medicare Part D.
    Second, antitrust waivers for independent pharmacies are 
not warranted.
    Third, in general, antitrust waivers are inefficient and 
threaten to raise additional competitive concerns.
    I would like to submit for the record in my written 
testimony CRA's report on this legislation.
    Mr. Conyers. Without objection, so ordered.
    Mr. Rankin. The first concern: Antitrust waivers are 
expensive. Antitrust waivers would allow independent pharmacies 
to collude on pricing and services in negotiations with health 
insurers and PBMs. Considering only the direct cost effects of 
increases and charges, independent pharmacy waivers will 
increase spending by up to $29.6 billion over 5 years, or an 
increase of up to 11.8 percent, with nearly one-quarter of that 
amount accruing to Medicare Part D plans.
    These costs are likely to be ultimately passed on to 
Medicare, health insurers, employers and patients. As costs 
increase, patients fill fewer prescriptions, and employers will 
likely scale back, reduce or even eliminate health care 
coverage for their employees. Including consideration of 
reduced or eliminated access to health care, the total costs of 
independent-pharmacy antitrust exemptions exceed the financial 
costs estimated by the CRA report.
    The second concern: Antitrust waivers for independent 
pharmacies are not warranted. There are examples of independent 
pharmacies with economic difficulties. However, antitrust laws 
are not designed to protect individual pharmacies that may be 
harmed by competition, but rather to insure that consumer 
welfare is maintained with access to pharmacies with reasonable 
prices and quality. Current antitrust laws provide legitimate 
mechanisms for pharmacies to negotiate with PBMs when such 
collaboration enhances the quality or efficiency of care to 
patients. And independent pharmacies already have organizations 
that can collectively represent their interests.
    The third concern: Antitrust waivers are not effective. The 
Federal Trade Commission and Department of Justice actively 
enforce the antitrust laws in the health care industry. The 
regulatory agencies and most economists have regularly 
dismissed the concept of combating perceived competitive 
imbalances in market power by creating countervailing market 
power. The appropriate response, instead, is to determine if 
there is a legitimate competitive imbalance and to address the 
economic factors creating that imbalance directly.
    Antitrust waivers legalize collusive behavior to create 
market power. Relying on waivers to address perceived 
competitive imbalances requires continuous adjustment and 
interference in economic markets and runs the risk of spreading 
competitive imbalance to related markets as the protected 
entities engage in other lines of business.
    In conclusion, antitrust exemptions are drastic and 
expensive tools to address a perceived competitive imbalance 
between independent pharmacies and PBMs. My analysis leads me 
to conclude that no such competitive imbalance exists in this 
area. To the extent that prices paid to pharmacies have been 
reduced, these price reductions have benefited consumers. 
Antitrust exemptions amount to a wealth transfer from payers 
and patients to independent pharmacies of up to $29.6 billion 
over 5 years.
    I thank you for the opportunity to share some of these 
concerns that I have with H.R. 971. Thank you.
    [The prepared statement of Mr. Rankin follows:]

                 Prepared Statement of Peter J. Rankin











                               ATTACHMENT






















































    Mr. Conyers. Thank you very much, Dr. Rankin.
    We really have some wide-ranging testimony here this 
morning.
    We have a third witness who has a great deal of background. 
Attorney David Wales is the Deputy Director of the Bureau of 
Competition at the Federal Trade Commission. He has also served 
as Counsel to the Assistant Attorney General in the Antitrust 
Division of the Department of Justice. And he has also 
privately practiced as an antitrust lawyer at Cadwalader, 
Wickersham & Taft and Shearman & Sterling. In other words, he 
has a long career in this area of antitrust.
    And we're very pleased that you could join us this morning. 
Welcome to the Committee.

     TESTIMONY OF DAVID WALES, DEPUTY DIRECTOR, BUREAU OF 
             COMPETITION, FEDERAL TRADE COMMISSION

    Mr. Wales. Thank you very much, Chairman. It's a pleasure 
to be here today.
    Chairman Conyers, Ranking Member Keller and Members of the 
Task Force, I am David Wales, deputy director of the Federal 
Trade Commission's Bureau of Competition. I appreciate the 
opportunity to appear today to present the Commission's views 
on H.R. 971, the Community Pharmacy Fairness Act of 2007.
    Let me first start by saying that my oral presentation and 
responses today are my own and do not necessarily reflect the 
views of the Commission or any commissioner.
    Health-care markets are complex and dynamic, and the market 
for pharmacy services is no exception. The Commission is 
mindful of the challenges and economic pressures faced by small 
drug stores brought on by changes in the health care sector. 
Caring pharmacists across the Nation work with dedication to 
serve the needs of patients, and we do not question the 
sincerity of those raising concerns about the quality of 
patient care. But the solution to the concerns raised by 
pharmacies is not to give them immunity from the antitrust 
rules that guide our economy.
    The Commission is charged with and takes very seriously its 
obligation to enforce the antitrust laws. And it acts to 
protect consumers by addressing anticompetitive action in each 
of the markets it reviews, including the markets for pharmacy 
and pharmacy benefit management services and other vital 
products and services in the health care industry.
    H.R. 971 would create an exemption from the antitrust laws 
to allow to allow pharmacies to engage in collective bargaining 
to secure higher fees and more favorable contract terms from 
health plans.
    Simply put, the Commission opposes legislation, because the 
exemption threatens to raise prices to consumers, including for 
seniors, for much-needed medicine. It also threatens to 
increase costs to both private and employers who provide health 
care insurance to employees, potentially reducing those 
benefits, and also to the Federal Government, which is 
projected to have paid over 30 percent of the cost of 
prescription drugs in 2006 alone. Importantly, the proposed 
bill threatens these harms without any assurance of higher-
quality care for consumers.
    At various times since the advent of active antitrust 
enforcement in health care in the 1970's, health care providers 
have sought an antitrust exemption. In 1998 and 1999, then-
Chairman Robert Pitofsky testified on behalf of the FTC, 
opposing similar bills that would have applied to all health 
care professionals. Although those bills and others seeking 
antitrust exemptions have differed in their scope or details, 
they all have sought some form of antitrust immunity for 
anticompetitive conduct that would tend to raise the prices of 
health care services.
    The Congressional Budget Office concluded, for example, 
that, if enacted, the 1999 exemption bill would significantly 
increase direct spending on pharmaceuticals both by private 
payers and under various Government programs.
    Just this year, the Antitrust Modernization Commission, the 
body enacted by Congress to evaluate the application of our 
antitrust laws, addressed the subject of antitrust exemptions. 
The AMC urged that Congress exercise caution, pointing out that 
antitrust exemptions typically create economic benefits that 
flow to a small, concentrated group of interested groups, while 
the costs of these exemptions are widely disbursed, usually 
passed on to a large population of consumers through higher 
prices, reduced output, lower quality and reduced innovation.
    Accordingly, the AMC recommended such statutory immunities 
be granted rarely and only where proponents have made a clear 
case that exempting otherwise unlawful conduct is necessary to 
satisfy a specific societal goal that trumps the benefit of 
free-market competition to consumers and the U.S. Economy in 
general.
    Is the proposed exemption for pharmacies in H.R. 971 one of 
those rare instances in which the societal benefits from 
dispensing with antitrust rules in the normal competitive 
process exceed the costs? In Federal Trade Commission's view, 
it is not. The bill would immunize price-fixing and boycotts to 
enforce fee and other contract demands, conduct that would 
otherwise amount to clear antitrust violations.
    Experience teaches that such conduct can be expected to 
increase health care costs both directly through higher fees 
paid to pharmacies and less directly by collective obstruction 
of cost-containment strategies of purchasers. These higher 
costs would fall on consumers, those employers who purchase 
pharmaceuticals and other products on behalf of their 
employees, and Government assistance programs. Importantly, 
making prescription drug coverage more costly means some 
Americans will actually have to do without important needed 
drugs.
    In addition, although H.R. 971 aims to ensure and foster 
continued patient safety and quality of care, there is no 
guarantee that the proposed exemption would further these 
goals. Antitrust immunity not only would grant competing stores 
a powerful weapon to obstruct innovative arrangements for the 
delivery and financing of pharmaceuticals, but it also dull 
competitive pressures that drive pharmacies to improve quality 
and efficiency in order to compete more effectively.
    Moreover, nothing in the bill requires that the collective 
bargaining it authorizes be directed to improving patient 
safety or quality, rather that merely increasing pharmacies' 
revenues from payers.
    If Congress concludes the difficulties facing small 
pharmacies require legislative solution, then one tailored to 
the specific problem is called for, not a sweeping antitrust 
exemption that may bring with it greater harm.
    Again, I appreciate the opportunity to testify before you 
today. And I'd be happy to answer questions. Thank you.
    [The prepared statement of Mr. Wales follows:]

                   Prepared Statement of David Wales











































    Mr. Conyers. Thank you very, very much, Mr. Wales. Is this 
your personal testimony or----
    Mr. Wales. The way I think it works is the written 
testimony was the testimony of the Commission itself. My 
remarks today, though, are my own.
    Mr. Conyers. Okay.
    Mr. Weiner. When we ask him questions, who is he speaking 
for?
    Mr. Conyers. Well, it would probably depend on the 
question.
    Mr. Wales. The questions and the answers I will give will 
be my own.
    Mr. Conyers. That's a little unusual arrangement, I just 
wanted to observe, because I didn't think I was hearing 
correctly. But your testimony is welcomed and appreciated.
    Now we have another antitrust attorney, David Balto, and he 
is testifying on behalf of the National Community Pharmacists 
Association. He has practiced antitrust law for quite a while, 
and he's spent a lot of time in the Department of Justice's 
Antitrust Division, as well as the Federal Trade Commission. 
And he currently chairs the American Bar Association's 
Antitrust Section on Health Care Committee.
    We have your testimony, and now we'd like to hear from you.

 TESTIMONY OF DAVID A. BALTO, ANTITRUST ATTORNEY, ON BEHALF OF 
         THE NATIONAL COMMUNITY PHARMACISTS ASSOCIATION

    Mr. Balto. Thank you, Chairman Conyers and Ranking Member 
Keller. It's a privilege today for me to come before you and 
testify on behalf of the independent pharmacists of the United 
States and the National Community Pharmacists Association.
    When you look at health care antitrust issues, you should 
ask two questions: Who represents the consumer? And who 
benefits?
    Who represents the consumer in the pharmaceutical 
distribution system? It's not the insurance companies. They're 
there to serve the interest of their stockholders. It's not the 
employers, for whom health care costs is just a line item. It's 
the pharmacist: the pharmacist who wakes up the 5 o'clock in 
the morning to go and deal with a claims problem; the 
pharmacist who answers a question at 10 o'clock at night; 
especially the community pharmacist, dedicated individuals, 
many of whom serve underserved areas in the United States, 
rural areas, low-income areas, which just simply aren't 
profitable for chain pharmacies.
    Who profits? Well, it's the PBMs and insurance companies 
that are profiting. While they're making record profits, 
they're doing it in part by squeezing independent pharmacists 
to their last ounce of survival, driving them from business.
    Now, you passed H.R. 1304, the Campbell-Conyers bill, back 
7 years ago, because you saw it was important for the health 
care provider to be able to voice for itself and for the 
consumer to have a voice in this process. Seven years later, 
that imbalance you sought to redress is far worse. Both the PBM 
and insurance industries have become vastly more concentrated. 
PBMs are a type of oligopoly of three firms that basically 
control the market. They're making record, astronomical 
profits.
    They're also make a record in something far less glorious: 
They're creating a record of consumer protection violations. 
The Justice Department and the Coalition of State Attorneys 
General have sued them over and over again to stop these 
anticonsumer practices. That's another reason why you want to 
give the independent pharmacists a voice at the bargaining 
table.
    But let's be clear about this. The independent pharmacist 
is gagged. It's gagged by sound economic policy; it's gagged by 
an antitrust rule, the per se rule against antitrust price 
fixing, which says that if Mr. Dozier and Mr. James dare go and 
voice things together, that conduct can be illegal under the 
per se rule.
    The PBMs are smart, and they have expensive lawyers, and 
they use that rule to threaten litigation against the 
pharmacists to prevent them from acting collectively. Will they 
win those cases? No. No sound court would find those as 
violations. But the cost of that litigation prevents the PBM 
pharmacies from actually being able to voice their concerns at 
the bargaining table.
    Is an exception warranted under the law? It's clearly 
warranted under the facts. You want those independent 
pharmacists to be able to speak for you. You want them to speak 
for themselves. The antitrust laws are not perfect, and we 
don't want the antitrust laws to become the enemy of the good. 
Basically, what the antitrust laws have done is create a sword 
of Damocles, so that if the independent pharmacist voices its 
concerns, they can be threatened by costly antitrust 
litigation.
    If you look at past precedents of the Congress, you'll see 
that they've acted to create exemptions when the antitrust law 
prevents this type of pro-competitive conduct or creates the 
need to create countervailing power, such as the Capper-
Volstead Act exemption.
    Let me close with one last point. Will this be harmful? Not 
on your life. Several months ago, the FTC investigated Rite 
Aid's acquisition of records, which gave it more than a 40 
percent market share in many metropolitan markets in upstate 
New York. They inquired, could Rite Aid use that 40 percent 
market power to get a better deal from PBMs? Could they extract 
super-competitive profits? The answer was no, they didn't do a 
thing in terms of protecting PBMs. Why? Because 40 percent 
didn't matter when you were dealing with PBMs.
    If Mr. James or Mr. Dozier or the 20 pharmacists in Florida 
that Mr. Weiner talks about want to get together, they deserve 
that opportunity to collaborate and innovate. They deserve to 
have this sword of Damocles taken away from them.
    Who speaks for the consumer, Mr. Chairman? The independent 
pharmacist speaks for the consumer. And the independent 
pharmacist needs this Committee and this Congress to come up 
and speak for them by enacting H.R. 971.
    Thank you.
    [The prepared statement of Mr. Balto follows:]

                  Prepared Statement of David A. Balto









































































    Mr. Conyers. Thank you so much.
    We now have a pharmacist, the executive director of the 
Mississippi Independent Pharmacies Association, Mr. Robert 
Dozier--Jackson, Mississippi. And he's become one of the 
State's leading advocates for independent pharmacists by 
ushering in legislation through his State, ensuring that 
pharmacies receive timely reimbursement.
    And we'd like to hear from you now, as our final witness. 
Welcome.

  TESTIMONY OF ROBERT DOZIER, EXECUTIVE DIRECTOR, MISSISSIPPI 
              INDEPENDENT PHARMACISTS ASSOCIATION

    Mr. Dozier. Good morning, Chairman Conyers, Ranking Member 
Keller and Members of the Committee. My name is Robert Dozier, 
and I am the Executive Director for the Mississippi Independent 
Pharmacies Association.
    The local community pharmacies I represent play a vital 
role in our health care delivery system, but they are being 
forced out every day by unfair business practices by the major 
pharmacy benefit managers and the Medicare Part D plans. This 
is the very reason why the Mississippi Independent Pharmacies 
Association was formed and why I am before you today at this 
hearing.
    Independent pharmacists are one of the most trusted 
professions of this country and are the only health care 
provider that gives free, no-appointment-necessary, trusted 
care. These pharmacists pride themselves on being able to serve 
their patients and communities with the highest service. Most 
independent pharmacies provide 24-hour emergency care, such as 
helping a mother with a sick child in the middle of the night. 
Nearly all independent pharmacies provide delivery services to 
their patients, despite rising fuel costs in today's markets.
    To give you an example about the service independent 
pharmacies provide to the community, Ms. Jane Paschall from 
Holly Springs, Mississippi, stated in February of 2006 that she 
was sick and could not drive to town to pick up her medication, 
so her local independent pharmacist, Bob Lomenick, delivered 
her medication free of charge, placed her trash out by the 
road, and when he arrived he even brought her a milkshake from 
his local pharmacy.
    Ms. Paschall stated later that she would've never received 
that kind of service from anybody but an independent 
pharmacist. I might add that Bob Lomenick performed all of 
these services in the middle of an ice storm that was passing 
through north Mississippi.
    In the aftermath of Hurricane Katrina, we saw what 
independent pharmacists were really made of, when the majority 
of health care institutions and facilities had been destroyed 
by the storm. The independent pharmacists of the Mississippi 
Gulf Coast who had survived the storm opened their pharmacies 
the day after the storm, despite having no electricity or 
modern conveniences, so they could provide for their patients 
and survivors of the worst natural disaster this Nation has 
ever witnessed.
    Independent pharmacist John McKinney in Moss Point, 
Mississippi, worked alongside with Dr. Sid Ross, who was 
working from the pharmacy because his office was destroyed, 
providing care and medication to the people of the Gulf Coast. 
Mr. McKinney made sure that anybody who could produce a 
medication list or bottles with proper ID received their 
medication, as long as the medication was not a controlled 
drug. Mr. McKinney and other community pharmacists on the Gulf 
Coast provided these survivors with their medication with 
little or no hope of being reimbursed for the products or their 
services. They provided these survivors with their medication 
not for the payment or low reimbursement that all independent 
pharmacists are seeing today, but they provided the medication 
because it was the right thing to do.
    If it were not for these independent pharmacists, the Gulf 
Coast and the rest of Mississippi might have seen a major 
health care disaster. When hospitals, local clinics, chain 
pharmacies and even Kessler Air Force Base were closed, these 
local pharmacists rose to the top to provide patient care and 
service in the time of need of their local communities.
    You simply cannot receive that kind of treatment and 
patient care from a mail-order company. I know this from 
personal experience, because my father had to evacuate his home 
in New Orleans due to the storm and he is a mail-order patient. 
My father is a mail-order patient not by choice, but because 
his insurance company's PBM has forced him to receive his 
diabetic medications through the mail. He is one of the many 
refugees from the storm that had problems receiving their 
medication, but Bill Mosby, a community pharmacist from Canton, 
Mississippi, helped my father get his medication when he was 
unable to get it from the mail-order company.
    It only strengthens my belief in the role of our country's 
independent pharmacists when I think of what could have 
happened to my father and other patients if they were not able 
to receive their medications.
    I want to point out that the small business of independent 
pharmacy is unique in that it has little control over the cost 
paid for a product or control over the price set to sell the 
product. Yet, when it comes to squeeze savings from the system 
in this escalating-cost environment, both State and Federal 
Government turn to pharmacy as if they had control over 
pricing.
    Almost all of the medications that pharmacies dispense are 
paid by third parties, thanks in part to Medicare Part D 
benefit that our Government approved a few years ago. But the 
small, independent pharmacists have no voice in the agreements 
for reimbursement for the Part D plans, and they are facing 
smaller margins, low to no profit, and greater debt.
    Members of Congress may believe pharmacies can absorb these 
losses and go on. Many people do not understand business 
operations or the term ``gross margin.'' It is very simple: If 
a pharmacist buys a medication for $100 and gets reimbursed 
$85, then has to wait 6 weeks to be paid, it is just a matter 
of time before he will have to close his pharmacy. There's no 
gross margin.
    The PBMs have reduced payments in a severe fashion. This is 
an inequity which needs your attention today. A small business 
of any type cannot continue to operate if the revenue coming in 
does not at least match the cost of the product being sold and 
the overhead needed to serve the consumer.
    [The prepared statement of Mr. Dozier follows:]

                  Prepared Statement of Robert Dozier

    Good morning Chairman Conyers, Ranking Member Keller, and Members 
of the Antitrust Taskforce. My name is Robert Dozier and I am the 
Executive Director for the Mississippi Independent Pharmacies 
Association. The local community pharmacies I represent play a vital 
role in our healthcare delivery system--but they are being forced out 
of business every day by unfair business practices by the major 
Pharmacy Benefits Managers and Medicare Part D Plans. This is the very 
reason why the Mississippi Independent Pharmacies Association was 
formed and why I am before you today at this hearing.
    Independent pharmacists are one of the most trusted professions of 
this country and are the only health care provider that gives free, no 
appointment necessary, trusted care. These pharmacists pride themselves 
on being able to serve their patients and communities with the highest 
service. Most independent pharmacies provide 24 hour emergency care, 
such as helping a mother with a sick child in the middle of the night. 
Nearly all independent pharmacies provide delivery services to their 
patients despite rising fuel cost in today's markets. To give you an 
example about the service the independent pharmacists provide to the 
community, Ms. Jane Paschall from Holly Springs, MS, stated that in 
February 2006 she was sick and could not drive to town to pick up her 
medication, so her local independent pharmacist Bob Lomenick delivered 
her medication free of charge, placed her trash out by the road when he 
arrived and even brought her a milkshake from his local pharmacy. Ms. 
Paschall stated later that she would have never received that kind of 
service from anybody but an independent pharmacist. I might add that 
Bob Lomenick preformed all of these services in the middle of an ice 
storm that was passing through North Mississippi.
    In the aftermath of Hurricane Katrina, we saw what independent 
pharmacists were really made of when the majority of the healthcare 
institutions and facilities had been destroyed by the storm. The 
independent pharmacists of the Mississippi Gulf Coast who had survived 
the storm opened their pharmacies the day after the storm despite 
having no electricity or modern conveniences so they could provide for 
their patients and the survivors of the worst natural disaster this 
nation has ever witnessed. Independent pharmacist John McKinney of 
Burnham-McKinney Pharmacy in Moss Point, MS, worked along side with Dr. 
Sid Ross, who was working from the pharmacy because his office was 
destroyed, provided care and medication to many of the people on the 
Gulf Coast. Mr. McKinney made sure that anybody who could produce a 
medication list or bottles with proper ID received their medication as 
long as that medication was not a controlled drug. Mr. McKinney and 
other community pharmacists on the Gulf Coast provided these survivors 
with their medication with little or no hope of being reimbursed for 
the products or their services. They provided these survivors with 
their medication not for the payment or the low reimbursement that all 
independent pharmacists are seeing today, but they provided the 
medication because it was the right thing to do.
    If it were not for these independent pharmacists, the Gulf Coast 
and the rest of Mississippi might have seen a major healthcare 
disaster. When the hospitals, local clinics, chain pharmacies, and even 
Kessler Air Force Base were closed, these local pharmacists rose to the 
top to provide patient care and service in the time of need for their 
communities.
    You simply can not receive that kind of treatment and patient care 
from a mail-order company. I know this from personal experience because 
my father had to evacuate his home in New Orleans due to the storm and 
he is a mail-order patient. My father is a mail-order patient not by 
choice but because his insurance company's PBM has forced him to 
receive his diabetic medications through the mail. He was one of the 
many refugees from the storm that had problems receiving his 
medications, but Bill Mosby, a community pharmacist from Canton, MS, 
helped my father get his medication when he was unable to get it from 
the mail-order company. It only strengthens my belief in the role of 
our country's independent pharmacists when I think of what could have 
happened to my father and other patients if they were not able to 
receive their medications.
    I want to point out that the small business of independent pharmacy 
is unique in that it has little control over the cost paid for a 
product or control over the price set to sell the product. Yet, when it 
comes time to squeeze savings from the system in this escalating cost 
environment, both State and Federal government turn to pharmacy as if 
they had full control over pricing. Almost all of the medications that 
pharmacies dispense are paid by third parties--thanks in part to the 
Medicare Part D benefit that our government approved a few years ago. 
But the small, independent pharmacies have no voice in the agreements 
for reimbursement for the Part D plans, and they are facing smaller 
margins, low to no profits, and greater debt.
    Members of Congress may believe pharmacies can absorb these losses 
and go on. Many people do not understand business operations and or the 
term ``gross margin.'' It is very simple: if a pharmacist buys a 
medication for $100 and gets reimbursed $85, then has to wait 6 weeks 
to be paid, it is just a matter of time before he will have to close 
his pharmacy. There is no gross margin. The PBMs have reduced payments, 
in a severe fashion. This is an inequity which needs your attention 
today. A small business of any type cannot continue to operate if the 
revenue coming in does not at least match the cost of the product being 
sold and the overhead needed to serve the consumer.
    This is a blow to small business, but devastating to those patients 
served by these small businesses. Pharmacists across the nation are 
agonizing over the thought of not being able to serve their patients. 
And those patients will be distraught over the thought of losing their 
pharmacies. Members of Congress may not believe access is a problem 
because they see multiple pharmacies at the same intersection in larger 
cities. Mississippi is a prime example of rural America, a state that 
has eleven counties with only one pharmacy and one county that has NO 
pharmacy at all. These patients understand what it will mean to their 
health care if that pharmacy disappears--they could easily be 30-40 
miles away form the next closest pharmacy.
    Independent pharmacies across the state of Mississippi and the 
United States are a key component of the healthcare delivery system, 
but they are facing extinction due to the unfair business practices of 
the major Pharmacy Benefit Managers and Medicare Part D Plans. You can 
see from my earlier statements how important these small businesses are 
to our communities. Without the ability to truly negotiate with the 
PBMs, independent pharmacy will become a thing of the past and our 
healthcare system in this country will truly be broken beyond the point 
of fixing. We will never be able to replace the face-to-face patient 
counseling that community pharmacists provide on a daily basis to all 
of their patients. There will not be the same care from a mail-order 
company that we see from an Independent Pharmacist.
    Once again, I would like to thank you for your time and I urge that 
the committee schedule a markup of HR 971 and bring the bill to the 
floor in order to keep this key component of our health care system in 
place.

    Mr. Conyers. I thank you, Mr. Dozier.
    And I thank all of the witnesses. This has been 
fascinating.
    I've got to go back and find out what happened to Campbell-
Conyers over a half-dozen years ago.
    Mr. Dozier, you've put a huge burden on my local 
pharmacist, because I don't get that kind of service. And I'm 
going to tell everybody, all the local guys in the Detroit 
area, you know, what may be pretty extraordinary service here.
    But, you know, you five have listened to myself, Mr. 
Keller, Mr. Weiner, Darrell Issa. And each of you listened to 
four other witnesses.
    So I want to just ask you, if we were sitting around 
whatever it would be in Mississippi, maybe the Cracker Barrel--
we're just talking about this now. Forget the fact that you're 
in a Federal situation where your testimony is reviewed for its 
accuracy.
    But let me ask you, Mr. Dozier, of all the things you heard 
here this morning from all the rest of us, what is on your 
mind? What are you thinking about, in terms of the great 
variety and scope of analysis that's happened here this morning 
already on this subject?
    Mr. Dozier. Well, my personal feeling is, listening to 
everybody's testimony and some questions from you all, that 
there is an urgency that we need to save independent pharmacy 
in this country of ours.
    The gentleman earlier testified that this would run the 
program up; it would cost $29.6 billion. Personally, myself, I 
have a hard time believing that. If we do not save independent 
pharmacy, it will probably cost us $29 billion, because we will 
see a problem with pharmacy provider access, and therefore you 
will see hospitalization rates increase because the pharmacist 
was not there to take care of those patients in those 
communities.
    For example, there have been already 18 to 20 pharmacies, 
independent pharmacies, to close in the State of Mississippi, 
from January 1st to the end of August, and that came from the 
State Board of Pharmacy. There are 11 counties in the State of 
Mississippi which only have one pharmacy, and that happens to 
be an independent pharmacy. In the State of Mississippi, if 
pharmacies continue to close, you will see a major health care 
disaster because the accessibility to the pharmacy will not be 
there.
    And as we're going out of business, the PBMs and the 
Medicare Part D plans are making huge profits, obscene profits. 
And, ladies and gentlemen, Mr. Chairman, we have to remember 
this: It's about the care of patient.
    And the pharmacists are the ones who take care of the 
patients. The PBMs and the Medicare Part D plans are only 
concerned about one thing and one thing only: profit, profit 
and profit.
    Mr. Conyers. Thank you very much.
    Dr. Rankin, could I ask you for your impression of the 
various positions that have been put forward that you hear 
among the members of the panel and your fellow witnesses?
    Mr. Rankin. Certainly, Chairman.
    I think it's certainly true that there is a remarkable 
tension among the different testimony you've heard. And I think 
one of the commonalities that you hear or at least one issue 
that, perhaps, is not disputed is that there is a role, and 
there is a value to independent pharmacies. The frustration is 
that there are some pharmacies that are closing, and yet, the 
economic factors or at least the cause for this points to, 
according to advocates for the bill, to PBMs.
    And so, on the other side of the tension, you have the 
economic analysis of the PBM industry, which repeatedly shows 
that it is considered to be a highly competitive industry. When 
PBMs interact with plan sponsors--those are health insurers and 
employer groups--there is quite an intricate bidding system 
that has, over time, become incredibly efficient and has 
allowed plan sponsors to define the terms and get very good 
deals, at least in terms of the sharpened-pencil point, in 
structuring deals with PBMs.
    And so the tension, to me, seems really to be one of, if 
having the services provided by independent pharmacies is one 
of value and is one that Congress wants to value not 
necessarily on economic grounds but because it values the 
services offered by independent pharmacies, there is no role 
for antitrust exemptions. The PBMs are competitive and have 
repeatedly demonstrated to be so. And I worry, frankly, about 
the after-effects of granting exemptions to independent 
pharmacies.
    Mr. Conyers. Thank you very much.
    Mr. Mike James, in sorting out all of these varied opinions 
and pronouncements, what is the major thing that is impressing 
you this morning?
    Mr. James. Mr. Chairman, as you and I have talked before, 
as a pharmacist, my main concern in all of this is the health 
care of the patient. We've always said that the personal 
relationship of the independent pharmacist is the best cost-
containment program there is, because that pharmacist knows 
what's going on with the patient. They know what their process 
is, they know their health care, they know their history.
    The problem that I have with what I'm seeing today is that 
the health care, which is what we are here before the Judiciary 
Committee today about, is the fact that we're seeing less and 
less health care being administered to that patient.
    I mean, I think about that patient who would walks into my 
pharmacy who is on Medicare Part D. She has fallen into the 
donut hole, and she has no way to buy her insulin. It is a true 
fact. I can give you the lady's name. This is not a 
hypothetical case.
    The process we have here is a program that, when it was 
first announced, seniors said, ``Oh, what a great program this 
is going to be.'' They just, unfortunately, didn't know the 
details of the program. They surely found those out as they 
found themselves within the program.
    The problem we have today is there are so many dollars 
being taken out of this program that could be retained in the 
program and eliminate the donut hole. There are ways to do 
that. You know, I believe there are programs out there, there 
are plans out there that we can put together to do that very 
thing.
    It's easy for us to sit in this room today and talk about 
the patients who can't pay for their medication. I can assure 
you, as you stand in your pharmacy and that patient is in front 
of you trying to figure out how they are going to get their 
medication, it is a whole different emotional level of what's 
going on. And we face that as pharmacists every day, and we 
work every day to try to help those patients find a way to get 
their medications.
    It is a very difficult situation. It's a situation that 
exists that shouldn't exist, and that is what we are talking 
about this morning.
    Mr. Conyers. Thank you very much.
    Mr. Wales, what impresses you most about the wide variety 
of opinions you heard this morning?
    Mr. Wales. I would be happy to answer that.
    Let me start off by saying that I think we are sympathetic 
to some of the issues that have been pointed out, in terms of 
some of the shortcomings with respect to our health care policy 
in the U.S.
    I, personally, grew up in a pretty small community in 
upstate New York. In fact, I've seen some of the challenges 
that are faced by communities in terms of not only pharmacy 
services but doctor services. And so I think--let me start by 
saying that I think we realize that there are some real 
challenges there.
    I think the problem is that we really don't think a broad, 
you know, kind of antitrust exemption that would apply across 
markets and apply in different circumstances is the right 
answer to some of those problems.
    There are certain things we do know. We have seen 
collective bargaining by health care professionals that has 
really had a negative impact on American consumers. It has 
driven the prices up of health care services. We've seen 
pharmacists who, I think--you know, I really do think we do 
appreciate them. There are a lot of great pharmacists out 
there. Unfortunately, there are some bad apples who have been 
out there, you know, with the goal of increasing compensation, 
really, untied to quality-of-care issues. And so I think the 
problem is that we really do believe in the benefits of 
competition in those markets, and we have seen some of the real 
downsides to consumers when that competition is taken away.
    In essence, I think there are some, really, more narrow 
quality-of-care issues that are raised by this panel. And I 
think, you know, hopefully, the challenge is trying to focus on 
those without a broader antitrust immunity that goes into areas 
that we think have unintended consequences and will actually 
harm consumers.
    Mr. Conyers. Thank you.
    Attorney Balto, your view?
    Mr. Balto. Thank you, Mr. Chairman.
    You know, let me start off with H.R. 1304.
    By the way, last night, I got to talk to Congressman 
Campbell, and he sends you and the Committee his regards. He is 
having fun running the Haas School of Business.
    He wanted me to say, look, the Congress had enacted the 
Sherman Act. You know, go back to that sword of Damocles. They 
saw the antitrust laws not as a sword for the PBMs to use, for 
the big insurance companies, for the big intermediaries to use 
to bully small producers, but, rather, as a shield to protect 
those small producers from the anticompetitive activity of 
those large intermediaries.
    That's why you've acted prudently to pass exemptions, for 
example, the Standards Development Organization Act or other 
exemptions that have been passed that are mentioned in my 
testimony, to go and clarify the law and protect small 
producers.
    Let's go back to H.R. 1304. There are people who said H.R. 
1304 shouldn't be enacted. They said, ``Wait. Let the antitrust 
laws work. If the problem is that the insurers and PBMs are too 
big, we will go and stop them from becoming bigger.'' Well, 
what's happened in the last 7 years, and with due deference to 
my good friend Mr. Wales, the FTC and the Justice Department 
haven't stepped up to the plate. They haven't challenged any 
PBM mergers. They didn't issue a second request in the CVS-
Caremark merger. They only did a quick, brief look at the 
Caremark-Advance PCS merger.
    By the way, based on that, they issued a statement saying 
the market is competitive. If you take just a quick look at 
things, I don't think you can really assess whether or not it's 
competitive. The result is there are three dominant PBMs, and 
they use ``take it or leave it'' offers. You know, they just 
basically impose ``take it or leave it'' offers.
    It's important for you to realize when you consider these 
issues, when Mr. Rankin mentions economic grounds or Mr. Wales 
mentions economic grounds, we're not talking about the 
production of ice cream, we're not talking about the production 
of tires; we're talking about health care.
    It is in the interest of somebody who has monopsony power 
to underbuy, to undersupply the market. When you have that 
power, you want to drive production down. And what that means 
is that, when I, as an individual, want to go and have my 
prescription filled, Mr. Dozier's out of business. There is no 
place for me to go. It means that I can only get my service 
under mail-order, and that's a cumbersome and often bad 
process.
    Now, we've spoken a lot about the profits of the PBM 
industry, and I don't deny anybody the ability to secure 
profits, but what do the profits tell you? They tell you the 
same thing, Mr. Chairman, that they told you when you had the 
oil companies in here. Those astronomical profits mean those 
firms have market power. These independent pharmacists, they 
don't have market power. Rite Aid is acquiring Eckerd's. They 
don't have market power. But if somebody is making those 
astronomical profits, that suggests they have market power.
    And how do they use that market power? They use it to harm 
consumers. They engage in a tremendous number of exploitative 
practices, which my testimony has an appendix of all of the 
cases that have been brought against the PBMs. They have had to 
pay, so far, over $300 million in damages.
    Let me stop with one final comment about mail-order. And I 
do not want to get into a debate over here, but I spend 60 
percent of my time representing consumer groups--Consumers 
Union, Families USA and USPIRG--and they do not like mail-
order. We don't like mail-order. It may appear to save the 
employer money. It may be a rich source of profits for PBMs. 
But ultimately, it leads to worse patient care. Ultimately, it 
leads to worse health outcomes.
    The better system, the preferable system, is empowering the 
community pharmacists, allowing them to do 90-day scripts, 
allowing them to provide the high-quality service that 
consumers need. Otherwise, you will wake up 5 years from now, 
Mr. Chairman, having to fill a prescription, and you're going 
to have to pick up a phone and call some pharmacist in 
Thailand, who works for a PBM, who will be trying to answer 
your questions about--you know, instead of being able to go to 
your neighborhood community pharmacist. That's why this 
legislation is necessary.
    Mr. Conyers. Well, thank you for your measured predictions 
of what is going to happen in the future.
    I now turn to the author of the legislation which has 
brought us together, the gentleman from New York, Mr. Anthony 
Weiner.
    Mr. Weiner. Thank you, Mr. Chairman.
    And I thank the panel. It has been enlightening.
    Mr. Rankin, who paid CRA International for this study?
    Mr. Rankin. This study was commissioned by PCMA.
    Mr. Weiner. What is PCMA?
    Mr. Rankin. It is the trade organization representing PBMs.
    Mr. Weiner. In your estimate of the cost of this $29.6 
billion, according to your models, how much of that would be 
absorbed by a PBM's bottom line?
    Mr. Rankin. The model does not predict an exact number. If 
you read the report, what it says is $29.6 billion over 5 
years. And based upon the recognition of competition in the PBM 
industry, the expectation is that most of that would be passed 
through to plan sponsors.
    Mr. Weiner. Well, I see cost-simulation scenarios that go 
into great questions about elasticity, where it would lie, the 
total incremental gross margin increases for TPP prescriptions. 
Nowhere could you--no modeling could calculate, given that 
there is a limit on how much is going to PBMs by the 
Government--so you should be able to recognize that some of it 
would be absorbed in different points along the consumer 
stream. You can't in any way estimate how much of that would be 
absorbed by PBMs?
    Mr. Rankin. The estimate that you are looking for really 
depends on how plan sponsors interact with their PBMs.
    Mr. Weiner. I would agree with that.
    Could it be that $29.6 billion in your study, since you 
don't model it to see where that will be distributed--to 
taxpayers in the form of Medicare payments, to pharmaceutical 
companies themselves, or to consumers--could it be that PBMs 
would absorb all of it?
    Mr. Rankin. No.
    Mr. Weiner. Tell me why.
    Mr. Rankin. Because PBMs compete vigorously for services 
provided to plan sponsors.
    Mr. Weiner. PBMs, in their creation, were created in order 
to take the amount of money that Government was allocating for 
the drugs and to process all of the various people trying to 
get the drugs, in a way, to save money.
    Now, if we create this and there is increased competition 
and PBMs are going to have to pay out or they're going to have 
to pay more to pharmacists, why could it not just be, since 
PBMs can't go to Government and say, ``Give us more money,'' 
that PBMs will have to absorb it?
    Mr. Rankin. There's nothing to absorb, is the point. When 
plan sponsors interact with PBMs, they provide very detailed 
RFPs. These are specific categories of services that need to be 
provided by the PBMs. They engage, typically, in at least two 
rounds of bidding, in which PBMs provide full documentation. 
And during this process, plan sponsors usually retain benefit 
consultants who serve this role over a number of negotiations 
and develop a familiarity with both the tools and the methods 
employed by PBMs----
    Mr. Weiner. Let me just interrupt you for a second. You 
have calculated, under your contract with PBMs to do research, 
you have calculated a number that is exquisite in its 
precision, $29.6 billion. A classic tool of consultants, to 
make it seem like it is a precise estimate. You make it $29.6 
billion rather than $30 billion.
    Hey, well, that gives it a certain intellectual heft, I 
guess, but I have asked you whether you modeled to figure out 
where in the consumer stream that you broadly say that it can 
go to--consumers or it can be returned to Medicare. And nowhere 
is there anywhere in the modeling as to what percentage of it 
that just the PBMs will have to take since they're now facing 
another organized group, competing together to negotiate for 
lower prices, just like Rite Aid or Eckerd's or anyone else. 
Nowhere is it characterized in here how much the PBMs would 
absorb.
    And I think the reason that it's not characterized that way 
is because there's a chance that it can be $1 of it. I mean, 
you say none of it. I find that hard to believe. It could be $1 
of it.
    Theoretically, let us assume for a moment independent 
pharmacies are able to organize. By your own definition, they 
are getting $29.6 billion of additional reimbursements for the 
drugs that they're selling. Well, that cost could, absent any 
other information to the contrary in your study, be absorbed by 
PBMs.
    Mr. Wales--certainly, go ahead, Mr. Rankin.
    Mr. Rankin. Everything you say is contrary to economic 
theory, to the statements of the FTC and to the economic 
research we have done.
    Mr. Weiner. Well, we're going to get to the FTC in a 
moment. Mr. Rankin, you had an opportunity----
    Mr. Rankin. Yes.
    Mr. Weiner [continuing]. To model this. For example, if I 
asked you now--assume for a moment that the Federal Government 
wanted to model it so that all of it, all of the additional 
costs, would be absorbed by the PBMs.
    I can think not--you know, being a Member of the Energy and 
Commerce Committee, I would probably take about 25 minutes to 
how I would write that bill. I would say that the PBMs are 
going to get X number of dollars for a drug. That is going to 
be our reimbursement rate to the PBM. You then have to go out 
and negotiate your prices with your Rite Aids, your Eckerds and 
these independent pharmacies, and whatever price you get, if it 
is not $10 like it was yesterday and if it turns out to be $9 
because of tougher competition, it is $1 out of your employer's 
hide.
    So I can say 100 percent of it comes from the PBMs, 
couldn't I?
    Thank you, Mr. Rankin.
    Mr. Wales, let me ask you a question on your testimony. You 
are correct to point to the AMC, the Antitrust Modernization 
Act. And you point to, I guess, the salient line, that 
``Exemptions should be necessary''--this is quoting from your 
testimony, which is from the Act--``necessary to satisfy a 
specific societal goal that trumps the benefit of a free market 
to consumers and the U.S. economy in general.''
    And that is not only the statement of Congress, but it's 
intuitive that you want to be able to make sure that a goal is 
advanced. Obviously, the uncontested goal here--I don't see 
anyone arguing that having fewer community pharmacists is a 
societal goal. You want more competition by just about any 
model. No matter who is paying the bills, you want to have 
competition, you want to have employers and people to have a 
choice. Your hometown does not benefit by having less 
competition. It benefits by having more. So it's intuitive that 
what we're trying to do here is to have more competition, which 
is the societal goal we're trying to pursue.
    The thing that the FTC doesn't realize--and, frankly, it 
weaves in and out of this fact in its various actions--this is 
not a free market, is it? I mean, for 90 percent of seniors, 
they do not have the opportunity to go out and say, for 
example, ``I do not want to get Lipitor. I don't like that--I 
don't like that drug. My blood pressure is--I'm going to go to 
something else. I'm going to go out, and instead of getting 
Lipitor, I am going to go out and shop for five or six or seven 
other drugs. I'm going to go compare notes, and I'm going to 
decide for myself.''
    This is not a classic free market because consumers don't 
have the expertise, the experience or the choices. Elsewhere in 
this Committee, we have decided that a pharmaceutical company 
is going to have an uncontested right to sell that drug and 
only that drug for a certain period of time. So this is not a 
free market. We're not going in and deciding which car you're 
going to buy. We're going in and taking a marketplace that is 
hyperregulated and hypercontrolled--and extraordinary powers 
are vested with the person who controls that drug, whether it 
controls it at the manufacturer or it controls it at the PBM. 
We consumers aren't going in and taking a free market and 
making it an unfree market. We're taking a very, very 
hyperregulated market and trying to broaden choice for people.
    So you have to, in your analysis, look at the idea that 
you're not looking at a classic free market, and you're 
certainly not looking at a market as it relates to Medicare 
Part D. With Medicare Part D, neither the PBMs nor anyone else 
can go and say to the Government, ``We are going to say 
whatever we want for this price.'' They agree that if you're 
going to be in the program, that you're going to have to pay 
for it.
    And I would just point out one other thing. In your 
testimony, you expressed concern that if my legislation is 
passed that it takes away the incentive for greater service. 
Well, I would say to you, my friend, even with the advantage of 
being able to join together, the only way a neighborhood 
pharmacist can compete against the Rite Aids is based on 
service. And I think the record will show today--and you may 
even want to stipulate to this--that neighborhood pharmacies 
today survive based on the service of Mr. Dozier. You know, 
that's the only edge that they have, is they've got to hustle 
and hustle and hustle. But you can hustle all you want; if 
you're paying $50 for a drug and the Eckerd down the street is 
paying $25 for a drug, you aren't reaching that place.
    And so, sometimes the antitrust laws are used, or the 
ability for people to negotiate as a group is a way to do so in 
a minimally invasive way, rather than going and manipulating 
the economy. It's a minimally invasive way to say, ``Let's 
figure out a way to try to let these different sides compete.''
    I see no scenario where allowing this to happen reduces the 
numbers of players in the marketplace. I just can't figure that 
out. There's no way a handful of guys in Mississippi are going 
to drive Wal-Mart out of business. I don't see any real way 
that a bunch of guys in New York are going to drive Rite Aid 
out of business.
    So, if you game this out, you are going to have a 
furtherance of the societal goal, more community pharmacists 
surviving, a furtherance of the societal goal of having more 
competition based on service--because nothing is going to make 
Rite Aid improve their service if they're not going to have the 
neighborhood community pharmacist to compete with--you'd have 
more competition in this controlled marketplace, so you don't 
have this pure free-market thing; you have more people that are 
going to be competing.
    And let me just say, finally--because I'm giving you a lot, 
and I do want you to respond because you're not on any PBM's 
payroll, so I am interested in your viewpoint as an economic 
theorist in this case. In no way is it clear who it's going to 
drive up the cost to. In my exchange with Mr. Rankin, he says, 
absolutely, it's going to drive it up to everyone but to my 
bosses. You know, you might have a different view. Tell me.
    If I wanted to craft this and you said it should be limited 
and we should try to figure out a way to craft it--if I wanted 
to try to craft this in a way that the PBMs had to absorb the 
cost, how would you recommend I do it?
    Mr. Wales. Let me figure where to start.
    Mr. Weiner. Go ahead. I have asked a lot of questions here. 
Take your time.
    Mr. Wales. I'll do my best, and I'm sure there will be ones 
that I miss that you'll hopefully bring me back to.
    Just to kind of start at the fundamental concept, I think 
that, certainly, no one is going to argue that these markets 
are operating in a perfectly competitive manner. I think there 
are very few markets in the U.S. that do that.
    I think there is also no question that there are some 
legitimate concerns, in terms of some of the issues that some 
of the independent pharmacies are facing in the market. 
Certainly, all things being equal, more competition is better, 
and certainly, more competition from independents is better.
    I think this bill does something very different, in the 
sense that it takes what we think is very important, in terms 
of the competition that is existing--and it may not be perfect, 
but there is no doubt, I think, that there is competition going 
on between the independents, between the chains--CVS and Wal-
Mart and Walgreen's are all competing--and that consumers 
benefit from that competition.
    I think the issue we have with the bill is that it goes and 
takes these issues, which, I think, are more narrow issues, and 
it applies it across the board in situations where, you know, 
there may not be inequities in bargaining power. Certainly, 
there are examples where there are inequities.
    I think the problem is that this bill applies across the 
board in areas where doctors and pharmacists may have more 
leverage, and there may be communities right now where 
pharmacists really do have a lot of bargaining power against 
the payers and the PBMs, because they are the only game in 
town. Certainly, that is a possibility. You know, maybe that is 
a minority of the markets, but certainly that is a 
complication. I think it is a concern that this bill does not 
take into consideration and, across the board, removes 
competition, which we think is vitally important in terms of 
protecting consumer interests and advancing the things----
    Mr. Weiner. If I can stop you, explain to me that part. 
Where would it remove competition? Tell me how. Can you just 
kind of game it out for me?
    Let's assume you have a community that has one community 
pharmacist and no Eckerd's anywhere, and that guy forms into a 
consortium. You're saying there, in that case, if it doesn't 
end competition, you're still going to have--I mean, I 
understand there is still competition that exists----
    Mr. Wales. Maybe let me go through, and jump in, I guess, 
if I'm not hitting the point.
    I think the way you would look at it is that, when you 
remove the protections of the antitrust laws, that allows 
people to price, that allows them to collectively bargain 
against PBMs and against the payers. I think what we find is 
that, ultimately--and maybe that is the goal of the 
legislation, is it raises the reimbursement rates for 
pharmacists.
    What happens is--and this gets into, kind of, what happens 
after that point--what then happens is that, since this is such 
a large input into the PBMs' product that they offer to their 
customers and then that the payers offer to employers--and I 
think we kind of agree with the idea that basic economics 
suggests--and this came up in the 1998 and 1999 test by 
Chairman Pitofsky--inevitably, you typically do see an increase 
in the downstream product, and so people are going to pay more 
for their medicines and for their drugs here. I think that's 
the fundamental issue that we see here.
    Beyond that, I mean, it's not like we're talking about a 
theoretical exercise here. We have specific enforcement actions 
we've taken where the exact same scenario that this bill is 
going to create has happened, where people have violated the 
law and have gotten together and have colluded in ways and have 
price-fixed and have boycotted PBMs and payers. That has had a 
really negative impact, increasing reimbursements by 22 percent 
and up to 60 percent.
    Mr. Weiner. Right. Maybe this will help us perfect the 
bill. If the bill said, we will suspend antitrust only for the 
purposes of forming into associations for the purpose of 
negotiating with PBMs, that that is the sole purpose, would you 
be satisfied that it would make it impossible to--that you 
could not price-fix and that you'd still have to get the PBM to 
agree? You're still a tiny--and I'm sure you know this from the 
testimony--you're still a tiny percentage of the overall 
marketplace, compared to the bigger chain stores.
    If it were limited just for those purposes, just for the 
purposes of negotiating deals on pharmaceutical drugs, would 
that help allay some of your concerns?
    Mr. Wales. I don't think it would. The problem is--and I 
think for the bill, really, to have an impact--I mean, I think 
that this is really not open to debate, that the plan of the 
bill is to allow pharmacists to get larger reimbursements. So, 
if you're getting together and collectively negotiating, you 
have to have some market power to do that.
    You know, Mr. Balto had suggested that there are a lot of 
instances where independent pharmacists don't have that market 
power. But if that's the case, then what does this bill do for 
you? If you can't negotiate and have some leverage with the 
PBMs, they can go to somebody else, right?
    Mr. Weiner. Mr. Wales, you've asked an excellent question. 
We sometimes have the tendency here, when we debate bills, to 
wildly overstate and wildly understate the effect of the bill. 
You know, it could well be that the influence might be more in 
some places and less in some places. It might be nothing. PBMs 
are so extraordinarily powerful in this, they might take a 
group in Mississippi and say, ``Hey, guys, we're not going to 
talk to you. You are now coming to us in association. We are 
refusing to deal with you. Goodbye.'' Oxford Insurance, in my 
district in New York, said to whole hospitals, ``You don't like 
it? Tough. Take a hike.''
    So it could well be that the PBMs will continue to act in 
the way that PBMs have acted. And I would refer you to the 
testimony of Mr. Balto's and to a list as long as my arm of 
lawsuits brought by consumers against PBMs and by States like 
my own against PBMs. So it could well be that this might not 
have a great impact.
    You see, this is the problem that I have. We can't say that 
this is going to have this seismic shift when we know 
intuitively these are still tiny players. Just to give them one 
additional arrow in their quiver, this notion that they're 
going to transcend from being David into Goliath overnight 
because of this bill, I think, is overstating the case.
    Mr. Balto, do you want to respond since Mr. Wales mentioned 
your testimony?
    Mr. Balto. Yes. You know, we're ready to--all three of us 
are ready to give you an economic seminar, but let me explain. 
Pharmacies are being reimbursed at a suboptimal level. What 
they're trying to do is get it up to what it should be. What 
we're all saying is they--well, what all of us are saying is 
there is no chance these guys can have market power. They might 
get power enough to get it up to something like the level where 
it should be, but they're not going to be able to charge super-
competitive prices.
    Again, the FTC's decision not to protect the poor, weak 
PBMs of New York against Rite Aid's 40-percent-plus market 
share in several metropolitan markets in New York City shows 
you that getting independent pharmacies together is not going 
to harm the PBMs. Ultimately, consumers aren't going to be 
harmed.
    You know, what we're talking about is a legal rule that you 
have decided doesn't work in certain circumstances, and you've 
enacted exemptions that prevent PBMs from going and doing 
everything that a chain pharmacy does. That's all. And if the 
chain pharmacies do it, nobody cares. But if the independent 
pharmacists try to do it, they're saying that a sword of 
Damocles should befall them.
    Mr. Weiner. Let me pivot off of that, because I was 
thinking the same thing when I was listening to Mr. Rankin's 
testimony and Mr. Wales' as well.
    By the logical extension of your argument, taxpayers, PBMs, 
the Government and consumers would benefit a great deal if Rite 
Aid had to negotiate as an individual store, right, that they 
could not join together?
    Mr. Rankin, do you want to take a stab at that?
    Mr. Rankin. I am sorry. The question?
    Mr. Weiner. By the logical extension, if this would have 
such pernicious effects by allowing a small group to band 
together, it seems to me that the inverse is true, that if we 
said to Rite Aid tomorrow, ``Rite Aid on Avenue U,'' in my 
district, ``and Rite Aid on Kings Highway, you can't band 
together as one company and negotiate; you've got to do it as 
individuals,'' that would reduce the cost to consumers, 
wouldn't it?
    Mr. Rankin. I guess I disagree with the premise of your 
question. And I think one thing that we're losing track of here 
is the fact that there are access requirements that provide 
protection right now, and it is those same access requirements 
that give market share when there is not necessarily 40 or 50 
percent.
    All you need, frankly, is a handful of independent 
pharmacies that happen to be, say, the only pharmacy within 15 
miles of a rural residence. The inclusion of that pharmacy is 
absolutely necessary to comply with Federal access guidelines.
    Mr. Weiner. Right, I understand.
    If you can, just return to my question. You've made the 
argument that allowing this small group of hardy souls to band 
together is going to increase costs to consumers, increase 
costs to taxpayers, increase costs, period.
    Isn't the inverse true, that, if we were to say tomorrow, 
``Rite Aid,'' which has hundreds of stores, ``you can't 
negotiate your 600 stores together; you've got to go to the 
PBMs as individual stores,'' which is the situation that 
independents are in now, that that would, by definition, or by 
your rationale, reduce costs to consumers? Because they 
wouldn't have the bargaining power and the heft to join 
together, would they not?
    Mr. Rankin. I don't think that's true.
    Mr. Weiner. Oh, okay.
    Mr. Rankin. I think there's at least one aggregation issue 
that you're overlooking, which is the simple fact that, when 
PBMs or health plans approach pharmacies to construct a 
network, pharmacies can say, ``No.'' When you secure Rite Aid, 
you secure a certain number of pharmacies.
    Mr. Weiner. Well, that's preposterous.
    Mr. Dozier, explain to him why that's preposterous.
    Mr. Dozier. When a PBM approaches a pharmacy, it's a ``take 
it or leave it'' contract, plain and simple.
    If I were going to enter into a business deal with you, Mr. 
Weiner, there'd be some type of negotiating. When a PBM comes 
to a pharmacy, there's no type of negotiating, none whatsoever. 
The PBM says, ``Here is the contract. This is the 
reimbursement. These are the terms. You either accept it or you 
can't be a provider in this network.'' And if that pharmacist 
doesn't accept that contract, they're not allowed to serve 
their patient that they might have been serving for the past 20 
or 30 years. That patient is going to have to go down the 
street to another pharmacy that they don't want to.
    Mr. Weiner. Mr. Dozier, thank you.
    Mr. Balto, would you explain--because I'm not sure my 
question put it right. The argument by Mr. Rankin and by Mr. 
Wales is, if you allow these independent pharmacies of a 
relatively tiny number to band together, it would raise prices. 
I asked Mr. Rankin, does that not mean if you take the inverse, 
that if we had Rite Aid disband and they could only negotiate 
as individual Rite Aids, it would reduce prices as well, would 
it not? I mean, by the logical extension, I'm not,you know----
    Mr. Balto. Sure. You know, in the idyllic world of economic 
theory, it might appear to be good to create unlimited 
monopsony power. That would be great, you know, if we had 
agricultural processors with monopsony power. That would mean 
that we'd have, probably, relatively few farmers, and we would 
go extraordinarily hungry, because the goal of a monopsonist is 
to drive output down and to buy as little as possible. And 
we're not talking about corn here; we're talking about health 
care.
    But let me--you know, the PBMs--by the way, I should say, 
for full disclosure, I do, actually, do work for pharmaceutical 
benefit managers. I appreciate both sides of the story here.
    The PBMs are suggesting that they're competing on behalf of 
the plan sponsors. If they were competing on behalf of the plan 
sponsors, in that index of consumer protection and fraud cases 
that I have appended to my testimony, you would not see so many 
cases brought by plan sponsors against the PBMs. Why? Because 
the PBMs refuse to disclose information to the plan sponsors so 
that they can really assure a competitive market, so that, when 
they undercharge the community pharmacist, they know the value 
of that deal and they get the best price possible.
    I want to be sure that I have a chance to respond to the 
PCMA estimates. Could I have 2 minutes for that?
    I really look forward to going and providing a critique of 
the PCMA estimates, but, you know, these estimates are only as 
good as the assumptions they make. And the assumptions they 
make are terribly flawed.
    They suggest that, basically, Mr. James is going to turn 
the tables on the PBMs, he is going to gag and chain them at 
the negotiating table. He's going to say, ``You know that cash 
price I get? You have to give me that cash price.'' We're not 
talking about 10 or 15 percent. We're talking about something 
really substantially higher. They use this estimate from North 
Dakota. Well, the bid that was submitted by the North Dakota 
group was rejected, and they got far less than that.
    Finally, you know, the question, to me, about the 
additional costs I think are answered by the Rite Aid 
nonenforcement action by the FTC. If there is a real threat of 
market power here by your 20 independent pharmacies in Florida 
getting together, I guarantee you the FTC would never have let 
Rite Aid acquire Eckerd's.
    Mr. Conyers. Thank you very much.
    I am going to ask Mr. Weiner to allow the gentlelady from 
California, Maxine Waters, a distinguished Member of the 
Judiciary Committee and who is under some time pressures--we 
would like to yield to her for any comments or opening 
statement that she would like to make at this time.
    Ms. Waters. Thank you very much, Mr. Chairman, for your 
generosity.
    I do have to get back to my office, but I wanted to stop 
by, number one, because I am on the Antitrust Task Force, 
appointed by you, and I do want to pay attention to these 
issues. And, of course, I am extremely interested in the 
subject that is before us today. This Task Force on Antitrust 
and Competition Policy hearing that you're holding interests me 
simply because, as a consumer that is involved with having to 
purchase prescriptions, I had no idea that there was an 
intermediary that managed all of this. I thought, when I went 
to my pharmacist, that I was purchasing my medicine from 
someone who bought it from the manufacturer and that there was 
a cost, certainly, involved that was negotiated with the 
manufacturer. I just had no idea that it was all this involved.
    Let me just say, Mr. Weiner, that I don't know whether or 
not your prescription for making it fair to the local 
pharmacists is the right one, but I'm interested in hearing if, 
in fact, an exemption, antitrust exemption, would allow them to 
be able to negotiate with the intermediary--what is it, the 
PBMs?--that I'm interested in that, because I don't like the 
idea of moving toward more mail-order prescriptions. I like the 
idea that I can talk with the pharmacist and ask him more 
questions about how I should use the medicine and what my 
experience has been. And I even like the idea of simply having 
to check off--that they offer to talk to me if I want to talk, 
because I am just an old-fashioned person who likes the local 
pharmacist, the local bank, the local everything. I'm sick and 
tired of being thrown into these systems where I have less and 
less control.
    So we've got to have a remedy. I don't know whether this is 
it or not, but it sounds good to me, and I am going to pay 
attention to it.
    Thank you.
    Mr. Weiner. Would the gentlelady yield?
    Ms. Waters. Yes.
    Mr. Weiner. This is a scenario where you have the Goliath 
of PBMs, the Goliath of mail-order, the really big Goliath of 
the Federal Government, and then the tiny, little, individual 
people with their tiny, little, individual pharmacists. This 
might not be the sum and substance, because, at some point, we 
have to figure out a way to deal with this mail-order 
explosion, as to whether it is good or bad for health care, but 
this gives one additional little arrow in the quiver of the 
community pharmacist to be able to try to deal with things on 
behalf of their neighbors and their constituents.
    So I thank you for keeping an open mind on it, but I think, 
at the end of the day, we're going to have big health care 
things we're going to have to do, but this is one way to help 
community pharmacists survive. So, by the time we get there and 
Mrs. Clinton is sworn in as President and she starts putting 
her plans in place, that she has a community pharmacy 
foundation of providers out there that are still around, 
because they are precipitously dropping off.
    I thank you.
    Ms. Waters. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. Conyers. Well, you see, this hearing has been excellent 
because it raises some larger considerations in the delivery of 
health care in the United States, and this Committee is poised 
to make further inquiries.
    I just want to congratulate everybody for being here and 
for being patient. We know that a lot of our colleagues have 
conflicts, and they will be studying the record carefully.
    The gentleman from California, Brad Sherman, has come into 
the room, and I would yield to him if he wanted to welcome 
anybody or to make any comments.
    Mr. Sherman. Thanks for coming here.
    I've got a pain here. If you've got some good drugs, that 
would be helpful. [Laughter.]
    I apologize for not being here for the entire meeting, and 
I'll look forward to studying this issue.
    I join with everyone else here on the panel in thinking 
that Americans need access to a local pharmacist that they can 
actually talk to.
    Thank you.
    Mr. Conyers. And on that note, the Task Force on Antitrust 
is adjourned. And I thank, again, all of the witnesses for 
their excellent presentations.
    [Whereupon, at 11:23 a.m., the Task Force was adjourned.]

                                 
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