[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
THE ROLE OF
PHARMACY BENEFIT MANAGERS
IN PRESCRIPTION DRUG MARKETS
PART I: SELF-INTEREST OR HEALTHCARE?
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HEARING
BEFORE THE
COMMITTEE ON
OVERSIGHT AND ACCOUNTABILITY
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION
__________
MAY 23, 2023
__________
Serial No. 118-36
__________
Printed for the use of the Committee on Oversight and Accountability
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available on: govinfo.gov,
oversight.house.gov or
docs.house.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
52-527 PDF WASHINGTON : 2023
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COMMITTEE ON OVERSIGHT AND ACCOUNTABILITY
JAMES COMER, Kentucky, Chairman
Jim Jordan, Ohio Jamie Raskin, Maryland, Ranking
Mike Turner, Ohio Minority Member
Paul Gosar, Arizona Eleanor Holmes Norton, District of
Virginia Foxx, North Carolina Columbia
Glenn Grothman, Wisconsin Stephen F. Lynch, Massachusetts
Gary Palmer, Alabama Gerald E. Connolly, Virginia
Clay Higgins, Louisiana Raja Krishnamoorthi, Illinois
Pete Sessions, Texas Ro Khanna, California
Andy Biggs, Arizona Kweisi Mfume, Maryland
Nancy Mace, South Carolina Alexandria Ocasio-Cortez, New York
Jake LaTurner, Kansas Katie Porter, California
Pat Fallon, Texas Cori Bush, Missouri
Byron Donalds, Florida Jimmy Gomez, California
Kelly Armstrong, North Dakota Shontel Brown, Ohio
Scott Perry, Pennsylvania Melanie Stansbury, New Mexico
William Timmons, South Carolina Robert Garcia, California
Tim Burchett, Tennessee Maxwell Frost, Florida
Marjorie Taylor Greene, Georgia Becca Balint, Vermont
Lisa McClain, Michigan Summer Lee, Pennsylvania
Lauren Boebert, Colorado Greg Casar, Texas
Russell Fry, South Carolina Jasmine Crockett, Texas
Anna Paulina Luna, Florida Dan Goldman, New York
Chuck Edwards, North Carolina Jared Moskowitz, Florida
Nick Langworthy, New York
Eric Burlison, Missouri
Mark Marin, Staff Director
Jessica Donlon, Deputy Staff Director and General Counsel
Dan Ashworth, Deputy Chief Counsel for Oversight
Catherine Potter, Counsel
Sarah Feeney, Professional Staff Member
Mallory Cogar, Chief Clerk
Contact Number: 202-225-5074
Julie Tagen, Minority Staff Director
Contact Number: 202-225-5051
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C O N T E N T S
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Page
Hearing held on May 23, 2023..................................... 1
WITNESSES
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Dr. Miriam J. Atkins, Oncologist, Augusta Oncology Associate
Oral Statement............................................... 5
Mr. Greg Baker, CEO, AffirmedRx, PBC
Oral Statement............................................... 7
Mr. Kevin J. Duane, Owner, Panama Pharmacy, Jacksonville, Florida
Oral Statement............................................... 8
Mr. Frederick Isasi (Minority Witness), Executive Director,
Families USA
Oral Statement............................................... 10
Opening statements and the prepared statements for the witnesses
are available in the U.S. House of Representatives Repository
at: docs.house.gov.
INDEX OF DOCUMENTS
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* Rep. Connolly's Statement for the Record; submitted by Rep.
Connolly.
* Report, ``Pulling Back the Curtain on PBMs''; submitted by
Reps. Biggs and Fry.
* Report, ``The Pharmaceutical Supply Chain''; submitted by
Rep. Carter.
* Letter, May 1, 2023, from various employers; submitted by
Chairman Comer.
* Statement for the Record, American Economic Liberties Project
(AELP); submitted by Chairman Comer.
* Statement for the Record, Patients for Affordable Drugs Now;
submitted by Chairman Comer.
* Statement for the Record, Pharmaceutical Care Management
Association (PCMA); submitted by Chairman Comer.
* Report, Committee Democrats' Comprehensive 2021 Drug Pricing
Investigative Staff Report; submitted by Rep. Raskin.
* Statement, Patients for Affordable Drugs Now; submitted by
Rep. Raskin.
* Report, ``2022 Report of the Prescription Drug Affordability
Community''; submitted by Rep. Mfume.
* Report, Democratic Oversight Committee staff, ``Barriers to
Birth Control: An Analysis of Contraceptive Coverage and Costs
for Patients with Private Insurance''; submitted by Rep.
Goldman.
* Record data analysis conducted by the Oversight Committee
Democrats; submitted by Rep. Gomez.
* Questions for the Record: to Dr. Atkins; submitted by Rep.
Gosar.
* Questions for the Record: to Dr. Atkins; submitted by Rep.
Higgins.
* Questions for the Record: to Mr. Baker; submitted by Rep.
Gosar.
* Questions for the Record: to Mr. Baker; submitted by Rep.
Higgins.
* Questions for the Record: to Dr. Duane; submitted by Rep.
Gosar.
* Questions for the Record: to Dr. Duane; submitted by Rep.
Higgins.
* Questions for the Record: to Mr. Frederick Isasi; submitted
by Rep. Gosar.
* Questions for the Record: to Mr. Frederick Isasi; submitted
by Rep. Higgins.
The documents listed are available at: docs.house.gov.
THE ROLE OF
PHARMACY BENEFIT MANAGERS
IN PRESCRIPTION DRUG MARKETS
PART I: SELF-INTEREST OR HEALTHCARE?
----------
Tuesday, May 23, 2023
House of Representatives,
Committee on Oversight and Accountability,
Washington, D.C.
The Committee met, pursuant to notice, at 10:02 a.m., in
room 2154, Rayburn House Office Building, Hon. James Comer
[Chairman of the Committee] presiding.
Present: Representatives Comer, Gosar, Foxx, Grothman,
Palmer, Higgins, Sessions, Biggs, LaTurner, Fallon, Donalds,
Armstrong, Timmons, Burchett, Greene, McClain, Boebert, Fry,
Luna, Edwards, Langworthy, Burlison, Raskin, Norton, Lynch,
Connolly, Krishnamoorthi, Mfume, Ocasio-Cortez, Porter, Bush,
Gomez, Brown, Stansbury, Garcia, Frost, Balint, Lee, Casar,
Crockett, Goldman, and Moskowitz.
Also present: Diana Harshbarger (R-TN), Buddy Carter (R-
GA), and Jake Auchincloss (D-MA).
Chairman Comer. The Committee on Oversight and
Accountability will come to order. I want to welcome everyone
here today.
Without objection, the Chair may declare a recess at any
time.
I recognize myself for the purpose of making an opening
statement.
Welcome to today's hearing on the role of pharmacy benefit
managers in pharmaceutical markets. Today, healthcare premiums
have increased faster than inflation. List prices for
prescription drugs have gone through the roof even though net
prices have declined, and despite this increase in healthcare
cost, life expectancy has remained stagnant. That means someone
is benefiting, and it is not patients. Look no further than
PBMs, or pharmacy benefit managers.
Today, we will have our first opportunity to examine how
the middlemen in the pharmaceutical supply chain impact the
cost of prescription drugs for patients. Today is the first
public hearing this Committee has held to examine the behind-
the-scenes tactics that PBMs use to prevent payers, including
government payers like Medicare, Medicaid, TRICARE, and the
Federal Employee Health Benefits Program, from understanding
how PBMs are making billions at the expense of patients and
taxpayers.
When PBMs were first created, they were beneficial to the
entire healthcare system. There were more than a dozen large
PBMs across the country, all competing with each other to
provide clear details about costs, fees, and rebates to
pharmacies and patients. They were able to quickly tell
pharmacists across the country whether insurance would cover a
patient's medication and what the patient's co-pay would be.
They were able to negotiate reduced cost of prescription drugs,
pitting competing manufacturers against one another. They were
able to drive down premiums for patients by encouraging greater
adoption of lower cost medication.
But today, they have largely outgrown this role. Now
instead of fierce competition, three large PBMs--CVS Caremark,
Express Scripts, and OptumRx--collectively control 80 percent
of the market. Today, every major PBM is owned by a major
health insurer and owns or is owned by a specialty mail order
or retail pharmacy, or all three. This means that when PBMs
negotiate with a pharmacy or a health insurer, they are either
negotiating with themselves or one of their direct competitors.
Today, PBMs engage in self-benefiting practices that boost
their bottom line without a benefit to patients. In the
Medicare program, PBMs often claw back billions of dollars in
reimbursements paid to competing pharmacies. PBMs also steer
patients to certain pharmacies and certain medications. By
doing this, they can increase patients' co-pays and force
manufacturers to increase list prices in order to meet the
PBMs' higher rebate demands.
The big three PBMs have created group purchasing
organizations, some incorporated abroad, to better hide the
rebates and fees they receive. It is hard to see how these
tactics actually benefit patients. State attorneys general in
Ohio, Oklahoma, Utah, Texas, and others have filed lawsuits and
opened investigations into the anti-competitive practices of
PBMs. State legislatures across the country have passed
legislation preventing some of their anti-competitive practices
and requiring transparency in pricing and contracts. The
Federal Trade Commission has opened an investigation into PBMs'
anti-competitive actions.
Congress must act also. Last Congress, Oversight
Republicans conducted a review of PBMs. What we found was
deeply concerning and raised many questions about PBMs' role in
the healthcare industry. That is why the Committee is making
examining PBMs a priority this Congress. We hope to answer
these questions. How are PBMs using their position at the
center of prescription drug markets to undermine patient
health, why and how are PBMs using a system of hidden rebates
and fees, and how are PBMs harming community pharmacies?
From what we have seen, many PBMs are acting without
consequence to the detriment of patients and their pocketbooks
because PBMs have been allowed to hide in the shadows. It is
time to bring them into the light.
I now yield to the Ranking Member for his opening
statement.
Mr. Raskin. Thank you very much, Mr. Chairman. Good morning
to all, and thank you for coming to testify today.
The dangerously high price of prescription drugs is a
serious social problem that we have long sought to address. In
the last two congresses, Democrats on this Committee held five
hearings on how to make medication more affordable and
accessible to Americans. The average American spends more on
prescription drugs each year than people living anywhere else
in the world. In 2022, more than a quarter of U.S. grownups
reported they did not take their prescription medication at
some point in the last year because they could not afford it,
so we are in an affordability crisis. No American should be
forced to choose between living expenses, like groceries, rent
or transportation, and affording their lifesaving medication.
In the wealthiest country on earth, every person should be able
to access the care and medication they need.
The Committee's focus on the problem of the PBMs is an
important bipartisan step forward in addressing the overall
crisis of healthcare in the country. But this crisis begins
with the outrageous pricing of pharmaceutical drugs by the Big
Pharma companies. Under former Chairman, Elijah Cummings, and
former Chair, Carolyn Maloney, this Committee spent 3 years
investigating the ways some pharmaceutical companies use
unjustified and unfair pricing practices to enrich themselves
at the expense of patients across the country. Former Chairman
Cummings observed how ``For years, drug companies have been
aggressively increasing prices on existing drugs and setting
higher launch prices for new drugs while recording windfall
profits.''
The Oversight Committee's investigation found drug
companies engage in anti-competitive practices to keep drug
prices high and exploited the fact that Medicare was not
allowed to directly negotiate drug prices with them. Acting in
response to these abuses, Democrats moved and passed historic
legislation, the Inflation Reduction Act, to reduce drug
prices. Thanks to the IRA, Medicare will be permitted to
negotiate prices of dozens of the costliest drugs directly with
Big Pharma manufacturers. This will help prevent drug companies
from taking advantage of the ways that the Medicare program
differs from similar programs in other countries to enrich
themselves at the expense of older Americans and American
taxpayers.
The IRA will also cap the price of insulin at $35 a month
for people covered by Medicare. Seniors who take insulin for
diabetes will no longer be forced to ration their lifesaving
medication as drug companies rake in record profits. And the
IRA caps out-of-pocket costs under Medicare Part D to $2,000 a
year, indexed to inflation, bringing much needed relief to
seniors, like in my district, who are spending thousands of
dollars--$5,000, $10,000, $15,000--just to cover the cost of
their medication on a fixed monthly income.
But the fight for affordable medication will not stop with
the Inflation Reduction Act or the Medicare program. President
Biden has put forth bold proposals to expand these cost savings
to all Americans, including by capping the price of insulin at
$35 per month for all diabetics in America, not just those in
the Medicare program. We are also investigating the role of the
pharmacy benefit managers, PBMs, in the prescription drug
affordability crisis as intermediaries between insurers, drug
companies, and pharmacies. PBMs wield tremendous influence over
how much a patient pays at the pharmacy counter for medication
prescribed by their doctor and whether a patient can even
afford to obtain their medication at all.
If the U.S. healthcare system worked as intended, PBMs
should be negotiating lower drug prices on behalf of insurance
companies, who would then pass the savings on to their
patients, but that is not what is happening. As we will hear
today, some PBM practices appear to be increasing the cost of
medicine, actively preventing patients from accessing the drugs
that their doctors have determined are appropriate for them,
playing outrageous hide-and-go-seek games with people's
medicine, and hurting independent and community pharmacies.
The House Oversight Committee has been working to expose
PBMs and how they are undermining patient care. That is why
former Chair Maloney launched an investigation last year into
whether the practices of the PBMs and health insurers in the
country create financial barriers for patients trying to access
birth control. Under the Affordable Care Act and related
guidance, contraceptive products that a patient's healthcare
provider deems medically appropriate should be made available
to that patient at no cost. The Committee's analysis found that
certain products, including newer ones, were less likely to be
made available by PBMs and insurers at no cost to patients.
Patients or providers have to know to ask insurers and PBMs for
an exception to receive these products for free, and the
Committee found that PBMs and insurers denied an average of 40
percent of those requests each year, which is outrageous.
Today's hearing is an opportunity to build on this
important work. I look forward to hearing from each of our
witnesses about the ways that PBM practices may deny or delay
the patients' receipt of their affordable medications, but PBMs
are just one piece of the puzzle. Drug companies are ultimately
responsible for setting high prices, and, in fact, they pour
millions of dollars into TV and social media ads as well as
lobbying to deflect attention away from their own role in
setting high drug prices by shining the spotlight on the PBMs.
So, I would ask all of our colleagues to join with the
Democrats in taking decisive action to lower prescription drug
prices and engage in comprehensive oversight of the entire
healthcare system, not just this part of it. I hope today's
hearing is just one of many dedicated to building upon this
Committee's longstanding work to improve access to affordable
medicine for all. Thank you, Mr. Chairman. I yield back.
Chairman Comer. I ask unanimous consent for Representative
Carter of Georgia, Representative Harshbarger of Tennessee, and
Representative Auchincloss of Massachusetts to waive on to this
Committee for the purpose of asking questions during this
hearing.
Without objection, so ordered.
I am pleased to introduce our four witnesses today. Dr.
Miriam Atkins is a medical oncologist, physician owner, and
partner with AO Multispecialty Clinic in Augusta, Georgia. She
is also the president of the Community Oncology Alliance, a
national nonprofit that advocates for physician-owned community
oncology practices and their patients. Greg Baker is a clinical
pharmacist and CEO of AffirmedRx, a PBM that works to bring
transparency, integrity, and patient-centered focus to pharmacy
benefit management. Dr. Kevin Duane is a pharmacist and owner
of Panama Pharmacy in Jacksonville, Florida, and has previously
testified about PBMs before the Florida state legislature. Mr.
Frederick Isasi is Executive Director of Families USA, a
nonprofit dedicated to ensuring healthcare is accessible and
affordable to all. I want to welcome all of you to the
Committee. I look forward to hearing from you about your
experiences with PBMs.
Pursuant to Committee Rule 9[g], the witnesses will please
stand and raise their right hands.
Do you solemnly swear or affirm that the testimony you are
about to give is the truth, the whole truth, and nothing but
the truth, so help you God?
[A chorus of ayes.]
Chairman Comer. Let the record show that the witnesses all
answered in the affirmative. Please be seated.
We appreciate you all being here today and look forward to
your testimony. Let me remind the witnesses that we have read
your written statements, and they will appear in full in the
hearing record. Please limit your oral statements to 5 minutes.
As a reminder, please press the button on the microphone in
front of you so that it is on, and the Members can hear you.
When you begin to speak, the light in front of you will turn
green. After 4 minutes, the light will turn yellow. When the
red light comes on, your 5 minutes has expired, and we would
ask that you please wrap up.
I recognize Dr. Atkins to begin with her opening statement.
STATEMENT OF MIRIAM ATKINS, M.D., FACP
AO MULTISPECIALTY CLINIC, AUGUSTA ONCOLOGY, P.C.
PRESIDENT, COMMUNITY ONCOLOGY ALLIANCE
Dr. Atkins. Good morning, Chairman Comer, Ranking Member
Raskin, and Members of the House Committee on Oversight and
Accountability. Thank you for the opportunity to appear before
the Committee to talk about my experiences on the front lines
of medical care dealing with the PBMs and their policies that
hinder patient care and harm my patients.
I am a medical oncologist with AO Multispecialty Clinic in
Augusta, Georgia. I have been treating cancer patients in
private practice for 30 years, and I have served in the United
States Army Medical Corps and currently serve as President of
the Community Oncology Alliance. During my time treating
cancer, I have seen many great advancements such that cancer is
no longer a death sentence. Many Americans with cancer are now
cured or at least living normal, productive lives with the
disease.
When I first started treating cancer patients, I was able
to be their physician and focus on caring for them while
relying on the knowledge and skills honed during my extensive
training. I did not have to spend countless hours fighting with
faceless corporations to justify my patients' treatment plans.
However, virtually every day, I have to fight insurance
companies and their pharmacy benefit miss-managers to get my
patients evidence-based, lifesaving treatment they need. PBMs
and their corporate insurers want to control what treatments I
give and how and where they are given. In essence, PBMs are
practicing medicine without a license or regard for my
patients. It is simply all about their profits and not my
patients.
While new oral cancer drugs offer patients the convenience
of not having to come to the clinic for treatment, they often
create more obstacles for patients when it comes to insurance
coverage at the hands of PBMs. Upwards of 35 percent of drugs
we use to treat cancer are orals and are very expensive. PBMs
have found a very lucrative and profitable market in
controlling these medications. Our practice has a drug
dispensary onsite where these oral cancer drugs are available.
This allows us to fully integrate and closely coordinate
patient care onsite in our practice. Our medical team can
educate patients on the importance of taking these drugs as
indicated, how to deal with the side effects.
However, PBMs often are mandating that patients get their
medications not from our integrated clinic dispensary at the
site of care, but from remote mail order pharmacies that the
PBMs own or operate. They essentially rip a critical component
of the patient's treatment out of our hands simply so they can
profit. And as any oncologist will tell you, forcing patients
to use PBM mail order pharmacies for potentially lifesaving
cancer drugs is often unreliable, unsafe, and wasteful.
PBMs also often dictate use of their preferred drug, which
can greatly hinder my patients' care. After all, who knows best
to treat my patients, me or some faceless profit-seeking
corporation? Unfortunately, the PBM preferred drug is often not
the best route for a patient but the most profitable drug for
the PBM.
In my written testimony, I cite several examples of PBM
abuses. You can read about my 69-year-old multiple myeloma
patient, whose treatment was delayed 8 weeks at the hands of a
PBM, or the 61-year-old woman with metastatic breast cancer who
first had to fail on an inferior drug, which did not negate me
from giving her the treatment she should have received in the
first place; or the 63-year-old woman with metastatic
gastrointestinal stromal cell cancer required to pay a $1,500 a
month insurance co-pay to her PBM, but my practice pharmacy
provided the drug for $128 per month. Treatment delays,
denials, and fueling drug costs, this is the PBM hell my
patients and I live in every day.
In addition to the seven volumes of PBM horror stories I
submitted with my written testimony, I would like to submit for
the record another volume that the Community Oncology Alliance
just released this morning. PBMs claim they save money. The
reality is they hinder care and cost everyone involved,
including patients, more money. Integrated with the largest
insurers, the top PBMs have such leverage that they do what
they want. They are not only driving independent pharmacies out
of business, but also physicians who are weary from the endless
daily fights with PBMs.
I applaud this Committee and other congressional committees
that are exploring PBM abuses. I implore Congress to pass
serious legislation this year that reins in the horrors that
PBMs inflict on patients and providers and that stops PBM
abuses that drive up drug costs.
I appreciate the opportunity to provide this testimony and
welcome any questions.
Chairman Comer. Thank you, Dr. Atkins. Mr. Baker.
STATEMENT OF GREG BAKER
B.S. PHARM
CEO OF AFFIRMED RX
Mr. BAKER. Chairman Comer, Ranking Member Raskin, and
distinguished Members of the House Committee, I would like to
thank you for the invitation to speak to you on the necessity
of PBM reform in the United States.
My name is Greg Baker. I am first and foremost a
pharmacist. I am also CEO of AffirmedRx, which is a transparent
PBM I founded and is headquartered in Louisville, Kentucky. I
began my career 30 years ago as a pharmacy technician at an
independent pharmacy in Fort Wayne, Indiana, that, not
surprisingly, is no longer in business for many of the reasons
we will touch upon today. Beyond that, I have 11 years'
experience working directly with jumbo self-funded employers to
help define and develop pharmacy programs. Our goal at
AffirmedRx is to partner with self-funded employers to deliver
patient-centric pharmacy benefits with a mission to improve
healthcare outcomes by bringing clarity, integrity, and trust
to pharmacy benefit managers.
Currently, a handful of large PBMs control up to 80 percent
of the market in the USA. This is problematic for every
employer in the country. These PBMs are not constrained by any
obligation to be transparent on their pricing or methodology,
and this is causing extreme escalation of costs to all
employers using a traditional PBM. This problem is also costing
taxpayers significantly since some of the biggest health plans
in the country are run by local, state, and Federal Government
entities.
Medicare and Medicaid programs throughout the country are
also deeply affected by practices of traditional PBMs. And
perhaps most importantly, it is also incredibly frustrating for
practicing pharmacists who have a professional duty and a moral
obligation to their patients to provide the best care possible.
Patients themselves who can no longer afford their medications,
which they need to live and have productive lives, also do not
have good access to their medications.
In August 2022, the American Bar Association published an
article explaining trends and developments in price gouging.
They define price gouging as the practice of raising prices of
essential goods, services, or commodities to an unreasonable,
unfair, or excessive level, typically during a declared state
of emergency. Most of these laws are also triggered by an
abnormal market or economic disruption. I contend, based on the
current PBM practices and the state of the pharmacy industry in
America, we are in the middle of an emergency, and we need to
focus on price gouging occurring in this industry.
Additionally, there has been much discussion about rebates
and the relationship between pharmaceutical manufacturers and
PBMs. I am not here to defend or hold manufacturers harmless
when they are talking about why we have a drug affordability
problem in our country. They are by no means innocent, but the
PBMs bear significantly larger responsibility to the problem.
There are hundreds of brand manufacturers and only three
main rebate aggregators. These three aggregators are all owned
by the big three PBMs. They not only negotiate rebates for
traditional PBMs, but they also provide these rebate services
to almost every other PBM in this industry. These aggregators
are Ascent, which was created in Switzerland by Express Scripts
in 2019, now owned by Cigna; Zinc which was created by CVS in
2020; and Emisar which was started in Ireland in 2022. Ascent
and Zinc each contract for over 100 million American lives, and
Emisar contracts for 65 million. They use their scale to create
competition between the manufacturers.
There are numerous reasons why costs go up, but the PBMs
are at the heart of many of them by creating abnormal market
and economic disruption at a time of national crisis when
people can no longer afford their medications. If every
American could afford their medication and had convenient
access to community pharmacy, I believe we would remove
hundreds of billions of waste from what is currently a $1.4
trillion healthcare system.
The practices being engaged by these PBMs are inherently
harmful to pharmacies throughout the country, especially
independent pharmacies, for several reasons. The first example
is steering patients away from their local pharmacy to large
mail order organizations owned by these traditional PBMs
themselves. Even when these independent pharmacies are included
in PBM networks, they are often reimbursement at less than
their acquisition cost. In the end, this harms patients and
their care.
In closing, I would like to point to William Deming, the
foremost thought leader in total quality management. He states,
``Every system is perfectly designed to get the results that it
gets.'' The system is not broken. It is working perfectly. The
problem is we have the wrong system. We need to take time to
build the system that works best for Americans, American
taxpayers, and independent pharmacists. I commit to you that
AffirmedRx will continue to work with employers, state and
Federal health plans, and pharmacies throughout the country to
find solutions to the challenges faced by every American,
ensuring that they have access to drugs they need while keeping
down unnecessary costs.
Thank you, Members of the Committee, and I look forward to
speaking with you today and your questions.
Chairman Comer. Thank you. Dr. Duane.
STATEMENT OF KEVIN J. DUANE
PHARM D
OWNER
PANAMA PHARMACY
Mr. Duane. Thank you, Chairman Comer, Ranking Member
Raskin, and members of the community. I appreciate this
opportunity today to speak to you regarding my experience as a
pharmacist and pharmacy owner, and how the current marketplace
distortions from pharmacy benefit managers, or PBMs, have
negatively impacted my ability to care for my community.
My name is Kevin Duane, and I am a pharmacist and the owner
of Panama Pharmacy in Jacksonville, Florida. Panama Pharmacy is
one of the oldest community pharmacies in Jacksonville, having
served patients in our area for over 100 years. Our patient
base is largely from a poor and underserved community with over
70 percent of patients on a government-funded health plan. I am
a first-generation pharmacist, I am actually the first in my
family to attend college. I have always considered small
business ownership to be that kind of American Dream that you
hear about in life, but my experience in this field could
better be described as a nightmare, and the monster in my dream
is a PBM.
The outsized role PBMs take in the pharmacy space has
caused many problems for our patients and our practice. Since
the three largest PBMs control 80 percent of the marketplace,
patients are forced to use a certain pharmacy because their PBM
mandates it, or they may be forced to get their drugs through
the mail, even though they want a pharmacist face-to-face in
their community. Patients and their doctors have virtually no
say in what drugs are used since the PBM essentially forces
which drugs can be used, and not because a drug is better or
worse, but because the PBM just can make more money off of it.
Our service members and families covered by TRICARE can no
longer get most brand name medications at regular pharmacies.
Instead, they are being forced by their PBM into using the mail
order or the on-base pharmacy. In Jacksonville, this leads to
days-long waits and delays in treatments of sometimes weeks or
more. The Naval Air Station in Jacksonville base is attempting
to service more than three times the current patient load that
they are staffed and equipped to serve. People are being
harmed, and it is because of PBM greed.
The PBMs also wreak havoc on our store's financial health.
We cannot negotiate any aspect of our contracts with them in
any meaningful type of fashion. It is just take it or leave it.
Some of the most basic, yet most life-sustaining medications,
like drugs to prevent heart attacks or blood clots or to
prevent rejection of a transplanted organ, for example, are
commonly underpaid compared to the true cost in the market. I
could shop 50 different wholesalers of medications and not find
one that I could buy from that would break me even on what the
PBM is providing for payment, and that does not even cover the
actual cost to dispense the medicine.
You know, the Centers for Medicare & Medicaid Services says
that in Florida, it costs about $12 to dispense any given
medication. But it is not unusual in my pharmacy to get maybe a
nickel from the PBMs as our cost-to-dispense fee. Some PBMs do
not even pay a single cent for it. There is no other industry
where the service that you provide can mean the difference
between life and death for the person that you are providing it
for. While the payment for that same service is a total of less
than $1 and sometimes pennies compared to our brake-even, it is
just madness. And meanwhile, PBMs pay themselves more for
prescriptions at their own retail and mail order pharmacies
with some of the newer drugs, sometimes paying out hundreds or
thousands of dollars to the PBM per prescription that they
fulfill.
There was a recent report out from the Medicare Payment
Advisory Commission, the MedPAC, as well as studies from other
states that we have seen that have all found that when PBMs are
vertically integrated, they appear to be reimbursing the
pharmacies that they are affiliated with more than they
reimburse pharmacies that they compete or are non-affiliated
with.
And I mentioned TRICARE earlier. Last year, we had to make
the difficult decision to opt out of participation in the
network. Jacksonville is a really proud military town with two
large Navy bases, so this decision was a really tough one for
us. I have family who have served in the Navy, and many of our
friends and our neighbors have as well. Dropping out of the
network to no longer care for those people was especially
tough, but the contract was just unsustainable. We would have
lost tens of thousands of dollars per year to continue in the
TRICARE network.
Small businesses should not be asked to subsidize any plan,
let alone a taxpayer-funded program, yet we are time and time
again, and all the while, three of the largest PBMs are in the
top 12 of Fortune's 500 richest companies. When companies are
forced to compete, the consumer wins, but the problem is, in
our industry, free and fair markets do not exist. There is no
competition because the game is rigged. The PBMs' own health
insurers, drugstores, they are buying doctors' offices now. A
small business like mine cannot hope to compete when the deck
is stacked against us like it is, so I think that any pharmacy
that wants to participate in the network should be able to
participate in that network.
And patients are not made of money, so these games where a
drug is priced very high and then a kickback is paid to the PBM
in the form of a rebate needs to be done away with. Community
pharmacies, and especially small business pharmacy like mine,
represents the forefront of healthcare, and I think that urgent
legislative action is needed.
Thank you for the important work in this critical matter,
and I am happy to answer any questions that you all may have.
Chairman Comer. Thank you. Mr. Isasi.
STATEMENT OF FREDERICK ISASI, J.D., M.P.H.
EXECUTIVE DIRECTOR, FAMILIES USA
Mr. Isasi. Thank you. Perfect. Thank you. Thank you for the
opportunity to testify today. I am Frederick Isasi, the
executive director of Families USA, a nonpartisan nonprofit
that for over 40 years has been the leading national voices for
healthcare consumers. And thank you very much for holding this
hearing on lowering drug costs and pharmacy benefit managers.
As you have heard, millions of Americans live with the fear
of not being able to afford their prescriptions, and one-third
of Americans are not taking their prescriptions because they
are too expensive. Year after year, prescription drug companies
launch drugs here in the U.S. and charge three or four times
more than in other countries. And then in their greed, they
raise these outrageous prices much faster than our paychecks
and inflation, and the American people need relief.
The drug industry makes a lot of false arguments, and, at
its core, the problem of out-of-control drug prices is very
simple. Congress created a system that provides a government-
granted monopoly of drug makers and many within the industry
are abusing these Federal laws. Let me explain what I mean.
Over time, so much of the industry's focus has shifted from
creating innovative drugs that can save lives to doubling down
on high-powered lawyers to help find loopholes, sue
competitors, and generally abuse the spirit in which Federal
prescription drug laws were created. That adds up to a crisis
for families and hundreds of billions of dollars in waste.
Let me tell you about one person, perhaps, who can study
your resolve take on Big Pharma's abuses. Her name is Maureen.
She is 80 years old and living in a small house in the
mountains of North Georgia. Maureen depends on Medicare for
health insurance and Social Security for her income. Like so
many retirees, she lives check to check. She is taking care of
herself and is healthy, but unfortunately, Maureen developed
blood clots in her leg and lungs that threaten her life.
Maureen was prescribed anti-blood clotting medication which she
will have to take for the rest of her life and is required to
pay $400 every 3 months just in cost sharing for this
treatment, and Maureen simply cannot make ends meet.
Drug companies have caught Maureen in a terrible bind. She
either pays for the drugs or she could lose her life. So, in
the end, Maureen has given up all of her non-essentials. She
has given up almost all driving to save on gas and maintenance
costs. She cannot afford to go to the dentist. But that still
is not enough, and so Maureen has made the incredibly heart-
wrenching decision to cut back on food. Maureen is limiting
herself to eating one meal a day. And when hunger sets in, she
says she drinks water because it fills her up. These are the
impossible tradeoffs people are making as a result of our
broken system. An 80-year-old woman has made the decision to
give up food to pay for her prescriptions, and it is
unconscionable. Maureen is a survivor, and she is resigned, but
in her own words, ``Funding Big Pharma was not in my Social
Security budget plan, yet here I am.''
We at Families USA are very supportive of the Inflation
Reduction Act, which finally allows the Federal Government to
negotiate a fair price for some of the highest-spend drugs in
Medicare. The law takes the savings generated by getting a fair
price and invests in finally capping annual out-of-pocket costs
for seniors, supports free vaccinations, and a host of
important reforms.
Today's hearing is focused on PBM abuses, and this is an
important issue, but let us not be confused. Drug corporations
pocket most of the profits from drugs, and the central problem
is these drug corporations are price gouging off the backs of
our Nation's families. While PBM reforms are worth doing, drug
corporations are using this issue to detract from their own
abuses and weaken PBMs, which, after all, are responsible for
negotiating with drug companies for lower prices.
The most important reforms to PBMs should be to increase
transparency between the PBMs and the private sector employers
paying for their services so that we can better track the
actual price being paid for pharmaceuticals, including the
rebates, and to ensure that consumers will benefit directly and
at point of sale for discounts. But even more important would
be to extend the reach of the Inflation Reduction Act and the
ability of the government to negotiate a fair price for all
consumers, not just Medicare, and stop price gouging by Big
Pharma. Congress created the problem of out-of-control drug
prices, and time for action is now.
Thank you for holding the hearing and thank you for giving
Families USA a chance to be here. I look forward to taking your
questions.
Chairman Comer. We will now begin our questioning. I will
begin.
Mr. Duane, I will start with you. You mentioned in your
testimony that Jacksonville, Florida is a military town with
two large Navy bases, so lots of Jacksonville residents have
TRICARE insurance. And you explained in your testimony that you
stopped covering TRICARE because of the reimbursement rates.
Did the PBM push the TRICARE recipients to a pharmacy that they
owned?
Mr. Duane. Yes, sir. I mean, I think one of the largest
things that Express Scripts did when they began or continued
this issue with the TRICARE network is a lot of the patients
that used to go, not just to my pharmacy, but to the thousands
of other pharmacies that were left out of the network, they use
their own mail order pharmacy, and they own their own pharmacy,
so they can easily push people to that pharmacy. So yes, sir,
they did.
Chairman Comer. What was their difference in the prices
through their mail order pharmacy and the prices that you
charge the patient?
Mr. Duane. Yes. It is my understanding that, like, before
we lost the contract, whenever an insured beneficiary would
come to our pharmacy that they would have to pay a co-pay. They
did pay co-pays on their drugs, but it is my understanding that
in the mail order pharmacy, they were not required to pay a
cost share.
Chairman Comer. That is right. So, what are the effects of
no longer accepting TRICARE, not just for your pharmacy, but
with the Jacksonville residents?
Mr. Duane. Well, I mean, it has been tough. Not everyone
wants to use the mail order pharmacy. Not everyone has the
wherewithal or the health literacy to use an online or mail
order pharmacy. So, then they are forced to either pay large
amounts of money out of pocket and not use the benefits that
they fought hard in order to earn, but two, if they have to go
to the base, I mentioned in my comments that the base is
overwhelmed right now with patients. So, I mean, I think they
are serving somewhere between like three and four times the
amount of people.
Chairman Comer. Absolutely. Mr. Baker, I want to turn to
you. You are the CEO of AffirmedRx, a PBM that works to promote
transparency. AffirmedRx is the PBM for Mark Cuban's company,
Cost Plus Drugs. I want to show the comparison between how much
a drug would cost a patient if they bought it at Cost Plus
Drugs versus if they got it at CVS.
[Chart]
Chairman Comer. This poster shows imatinib, a generic
chemotherapy drug used to treat leukemia, can cost the patient
at CVS more than $17,000 for a 30-day supply. An identical
prescription, a 30-day supply of imatinib would only cost $72
at Cost Plus Drugs. That is a massive difference. Mr. Baker, do
you attribute the difference in cost to PBMs?
Mr. Baker. I do. Yes, sir.
Chairman Comer. Obviously, imatinib does not cost $17,000
if Cost Plus Drugs can sell it for $72, so where does the extra
money go?
Mr. Baker. That is a great question, Chairman Comer. At the
end of the day, Mark Cuban started his pharmacy about 18 months
ago. And what we do really love and appreciate about the brand
and generic drugs that Mark Cuban in his pharmacy is selling is
they list their invoices online so you can see exactly what
they are paying for all of the drugs they procure. They mark
them up 15 percent, and then they sell them with a small labor
cost and shipping cost, so it really gives us a good
comparator.
Chairman Comer. What a noble concept in healthcare, right?
Mr. Baker. Exactly.
Chairman Comer. That could be in everything in healthcare,
but we are talking about PBMs, so.
Mr. Baker. Yes, and we appreciate working with Mark and his
pharmacy. Their tagline is they are selling trust, and I think
that is so important in the conversation here today because
that is lacking in a lot of areas. But the reality is, Mark
Cuban's pharmacy buys thousands of times less drugs than the
big traditional PBMs do, and acquisition cost is usually based
off volume. So, the contention probably is the large
traditional PBMs are getting imatinib at a lower cost than Mark
Cuban does. And so, when we can compare what he has actually
been selling those drugs for with a very healthy 15-percent
mark-up in general to some of the other prices we see and state
and other public organizations, it paints a very bad picture.
Chairman Comer. Dr. Atkins, as an oncologist, do you think
a patient is more likely to be able to take the drug to treat
their cancer if it is $72 or $17,000?
Dr. Atkins. Seventy-two dollars for sure.
Chairman Comer. So, would you agree that insane prices on
vital medications like this are killing people because they
cannot afford it?
Dr. Atkins. Yes, because some patients that cannot afford
it, they will not take the medication.
Chairman Comer. You have a lot of stories and examples of
this. Can you think of another example of a cancer patient that
obviously, when they determine they have cancer, like my mom
found she had stage 4 cancer. It is of the utmost importance to
start treating that. What are average delays for getting people
medication when they have to go through the PBMs? How much time
is that?
Dr. Atkins. Well, I will elaborate on the patient I
mentioned in my testimony. I wrote his prescription on October
14, and when I saw him 2 weeks later, I said, ``How are you
doing? How is the medicine?'' He said, ``I do not know. I do
not have it.'' So, I investigated with my own pharmacy, and
they told me, well, his insurance told us to send it someplace
else. And then that pharmacy took it to CVS Caremark, and the
patient went back and forth, back and forth. He finally got his
medication on December 1. And when I spoke to that patient a
few weeks ago to see how he was doing, he is actually doing
well on the medication. Unfortunately, he told me he has to go
through these hoops every single month to get his medication
refilled.
Chairman Comer. Unacceptable when time is of the essence.
Dr. Atkins. Yes, it is.
Chairman Comer. Thank you. I want to thank our witnesses,
again, for being here today, and I now yield to Ranking Member
Raskin for his questions.
Mr. Raskin. Thank you kindly, Mr. Chairman. Mr. Isasi,
there are a lot of complexities in the healthcare system, as we
have just heard from the witnesses, so I want to try to get
some clarity on the basic points. Who ultimately sets the price
for prescription drugs?
Mr. Isasi. No question, the drug manufacturer.
Mr. Raskin. OK. Mr. Chairman, I want to ask unanimous
consent to submit to the hearing a record, Committee Democrats'
Comprehensive 2021 Drug Pricing Investigative Staff Report,
which makes this case.
Chairman Comer. Without objection, so ordered.
Mr. Raskin. The investigation found that drug companies
aggressively raise prices to meet revenue targets, that drug
companies targeted the U.S. market for higher prices than are
set in other countries, and that drug companies were engaged in
anti-competitive practices to keep prices high. And at the same
time, it appears that PBMs, the pharmacy benefit managers, are
also to blame for a number of problems. Three of them dominate
80 percent of the market, giving them enormous leverage over
drug prices, patient choice, and independent pharmacies. The
three major PBMs have also each been vertically integrated into
the large health insurance corporations, which also own their
own pharmacies, and this presents a serious structural conflict
of interest and incentivizes practices that may make it more
difficult to get timely access to affordable medication.
Dr. Atkins, how do PBMs take the practice of medicine out
of the hands of doctors, as you say, and prevent patients from
receiving the treatments that were specifically prescribed for
them?
Dr. Atkins. I can give several examples. One would be the
antiemetic therapy for patients getting chemotherapy. When
someone has cancer, they are, No. 1, afraid of dying, two,
afraid of being in pain, and three, they are afraid of being
sick. So many times, it is a drug we use because we have
certain guidelines for how we treat cancer patients, and we
want to use one drug for nausea, and the pharmacy benefit
manager will say, no, you cannot use that. Once the patient
gets really sick and they failed it, then we can use the
medication we want to use. And it has an effect on the patient,
because once someone gets very sick like that, sometimes you
really have to convince them to try the medication again so
they can keep getting the treatment for their cancer.
Another example would be, as I mentioned in my statement, I
had a patient. I wanted her to get one drug for her metastatic
breast cancer, it is something called a CDK4 inhibitor. So,
what I wanted to give the patient, her PBM said, no, she has to
fail another one first. Well, if you look at the national
guidelines for cancer treatment, if a patient fails one CDK4/6
inhibitor, you do not give them another one behind that because
it is the same type of drug. This happens every day.
Mr. Raskin. Well, as a cancer patient recently declared in
remission--I rang my bell 3 weeks ago--thank you much, Dr.
Atkins.
[Applause.]
Mr. Raskin. I have got to say, what you are telling me is
just horrifying. The idea that you, as the oncologist, would
prescribe a specific drug for your patient and then be forced
to use a different drug, that does not work when obviously you
are an expert in the field and you have someone presumably who
is a non-doctor overriding your judgment and forcing the use of
this other drug. Can you explain why that is happening? How is
that in any way to the financial benefit of the PBM or the
insurance company to do that?
Dr. Atkins. Well, a lot of times, insurance companies will
make a decision based on what drug is less expensive for them
and not what is the best for the patient. So, I would assume
that the drug they wanted me to give this patient was less
expensive for them and not the other drug.
Mr. Raskin. OK. Mr. Baker, following up on this, how do
PBMs actually make their money? What are their incentives that
cause them to appear, based on Dr. Atkin's inventory of really
horrible examples of people getting the runaround? What are the
incentives that the PBMs have to keep people from getting their
medicine?
Mr. Baker. Yes, thank you for the question. I am not sure
how much time we have here today if we want to go into all of
the different ways PBMs make money, but I can start with just a
few. At the end of the day, what the PBMs are consistently
trying to do, in our opinion, is figure out how they get around
the different mechanisms by which people can see transparently
what they are doing, the rules that they are making, and then
how they are charging, I would say, the American taxpayer, the
American government, and self-funded employers everywhere for
medications. As the poster behind, you know, Chairman Comer
shows, one way is they drive to their own pharmacies. They
decide what they pay themselves, and bad things can occur when
a PBM can decide what they ultimately pays itself. They keep a
percentage of manufacturer revenue.
Two of the big three GPOs, as we have talked about today,
are not based here in the United States--one is in Switzerland
and one is in Ireland--for what is mostly an American issue of
paying rebates back to put formulary-placed drugs out. And so
it is that rebate and the formulary placement that I think also
drives some of the decisions that PBMs make that then
oncologists everywhere have to abide by.
So, my contention is it is not always driving to a lower
cost. It is more frequently driving to a higher cost because
when you, as a for-profit company, make a percentage of
revenue, would you want to make seven percent off a $50,000
drug or seven percent off of $50 drug? And that is the conflict
that exists when these large organizations are trying to come
up with formulary decisions and tell physicians how they are
supposed to prescribe.
Mr. Raskin. Well, thank you very much, Mr. Chairman. I am
going to yield back, and I just hope we can figure out some
bipartisan reforms that change the incentive structure here.
Chairman Comer. One hundred percent in agreement with you
on that, and I hope that we can do that. That is the objective
and look forward to doing that. The Chair recognizes Dr. Gosar
from Arizona for 5 minutes.
Mr. Gosar. Thank you, Chairman. James Madison once said
monopolies are sacrifices of the many to the few. Thomas
Jefferson wanted to include an anti-monopoly provision to the
Bill of Rights. The author of the Declaration even thought that
all patents should expire after a certain amount of years in
order to protect against monopoly. George Mason refused to sign
the Constitution due to the lack of prohibition of monopolies.
Even though an explicit anti-monopoly provision never made it
into the final text of the Constitution, all the founders
shared a fear that monopoly power would result in the rich few
setting unjust prices all at the expense of the common man.
Whether it is Big Tech, Big Banks, or airline industry,
Americans lose when monopolies form and thrive. Censored
conservative Americans had almost nowhere to turn to voice
their views thanks to Big Tech. Community banks are
disappearing as the Treasury Secretary publicly promises to
bail out big banks, but let the smaller ones fail. There is
clearly something wrong, not right, with the healthcare
industry. There are very few, but gigantic entities among
health insurers, drug companies, pharmaceutical industries,
and, of course, pharmacy benefit managers.
I actually had the opportunity to spearhead the passing of
a bill in early 2021 that ended a special privilege afforded to
health insurance companies that allowed them to ignore
important antitrust protections. I commend Chairman Comer for
his willingness to shine the light again on this questionable
business practices of these PBMs.
Dr. Atkins, do you believe these three companies accounting
for 80 percent of an entire market with revenues of over $453
billion dollars is healthy?
Dr. Atkins. No, I do not.
Mr. Gosar. Do you consider it a monopoly?
Dr. Atkins. I would consider it a monopoly.
Mr. Gosar. Mr. Baker, do you feel the same way?
Mr. Baker. I would consider it an oligopoly which is very
similar to a monopoly, but yes, sir.
Mr. Gosar. And Dr. Duane?
Mr. Duane. Absolutely, yes.
Mr. Gosar. Do you think it is important for the American
Government to protect against monopoly power in an industry
where 82 percent of the Americans participate? Dr. Atkins?
Dr. Atkins. Yes, I do.
Mr. Gosar. Mr. Baker?
Mr. Baker. Yes, sir, I would agree.
Mr. Gosar. Dr. Duane.
Mr. Duane. I do agree.
Mr. Gosar. Now, Dr. Gaurav Gupta, founder of the Ascendant
BioCapital, testified in the House Energy and Commerce Health
Subcommittee hearing in 2021 that 47 percent of the price of
the drug that a patient pays goes for the middlemen, mostly
PBMs. Does that stat inspire confidence that America's
consumers are engaging in a healthy drug market? Dr. Atkins?
Dr. Atkins. No, it does not.
Mr. Gosar. Mr. Baker?
Mr. Baker. I would say if there is transparency and we knew
exactly where that 47 percent was going, and it was being used
to make drugs more affordable, yes. But, in this point in time,
where there is no transparency, no.
Mr. Gosar. Dr. Duane.
Mr. Duane. I cannot think of another market where the
person in the middle gets nearly half of the entire dollar, so
no.
Mr. Gosar. Does not make sense. Now President Trump's
Center for Medicare and Medicaid Services released a proposed
rule in February 2019 and a final rule in November 2020, that
the PBM lobby was able to stop in courts. Are any of you
familiar with that rule and able to point to any of its
positives or shortcomings? Dr. Atkins?
Dr. Atkins. I cannot comment specifically, but I know that
PBMs take money from patients and make it harder to treat
patients. And I think when you have monopolies, patients have
fewer choices, and it is not just PBMs, it is hospital
corporations, et cetera.
Mr. Gosar. Yes. Mr. Baker?
Mr. Baker. If you are referring to the rebate rule, as I
think it was called, yes, we know that rule. It was, of course,
I think, as we sit here today, it has been delayed until 2032,
so I think there is a lot of conversation that can still be had
on that. I think in general, PBMs can do a good job of making
drugs more affordable in the United States. I think if we
understand where and how they are making the decisions they are
making, they can help keep pharmaceutical manufacturers in
check so they do not price gouge on the American public. But
again, at the end of the day, those things are not occurring as
we sit here today, and those are problems I think we need to
solve.
Mr. Gosar. So, Dr. Duane, can you think of any
administrative changes that will be beneficial to this ruling
to actually make it more applicable?
Mr. Duane. I mean, my opinion, it should be applicable
immediately. I mean, the sooner you get rid of rebates, the
sooner you can see drugs completely transparently in their
cost, and the sooner that pharma can compete on the merits of a
drug itself and not just based on who is willing to pay more to
a kickback.
Mr. Gosar. Mr. Baker, you brought up the point that two of
these beasts are not in the United States, but they do business
in the United States so we can actually dictate to them, can we
not?
Mr. Baker. I would hope that is the case. Yes, sir.
Mr. Gosar. Dr. Atkins, do you see anything that from your
vantage point as a prescriber, a doctor, things that we could
do administratively to make this thing work better.
Dr. Atkins. More transparency and more choices for
patients.
Mr. Gosar. Thank you very much. I yield back.
Chairman Comer. The gentleman yields back. The Chair
recognizes Ms. Norton from Washington, DC.
Ms. Norton. Thank you, Mr. Chairman. Mr. Isasi, you offered
an example of a woman called Maureen who had to give up food in
order to pay for prescriptions. Actually, half of all Americans
insured by Medicare lived on an income below $30,000 in 2019.
That translates to 30 million seniors and people with
disabilities who are living on $30,000 or less per year, and
about 15 million of those Americans live on less than $17,000
per year. Out-of-pocket health costs can be particularly
difficult for seniors who often live on fixed income. I am
proud that Democrats passed the Inflation Reduction Act last
year, which will cap out-of-pocket costs for seniors covered by
Medicare Part D at $2,000 per year, along with other steps to
make healthcare more affordable.
Mr. Isasi, how will provisions in the Inflation Reduction
Act, like the expansion of low-income subsidies and a cap on
out-of-pocket costs, help seniors with less income?
Mr. Isasi. You bet. I mean, it is so important to say, and
to your question, the way that those improvements, capping out-
of-pocket costs, providing immunizations for free, right, these
really important provisions, capping the cost of insulin, they
were paid for by finally letting the government to get in and
negotiate a fair price. So, it is a perfect example when we
stop Big Pharma greed, we can actually do really important
things for our seniors and our disabled families.
Ms. Norton. Well, in our 3-year long investigation into
drug pricing, Oversight Committee Democrats found that
pharmaceutical companies' practices often inflate drug prices.
The Inflation Reduction Act responded to these findings by
requiring for most drugs in Medicare Part D that drug companies
pay the government any price increase above inflation. So, Mr.
Isasi, how will this rebate requirement help lower drug prices
for people covered by Medicare Part D?
Mr. Isasi. It is so important. So, the two main elements
for Big Pharma in terms of their play on price gouging is
launching a price absurdly high, and then year after year after
year raising them faster than our paychecks and inflation. And
so, the Inflation Reduction Act actually stops that and says
once your drug is coming to market, you cannot increase it
faster than inflation, and if you do, you have to pay us that
money back. It is very important and it has already kicked in,
and it is holding drug costs down.
Ms. Norton. Well, Committee Democrats and the Biden-Harris
Administration are making sure that seniors see some relief
from high drug prices. I will continue to work to hold the
industry accountable, so healthcare is more affordable and more
accessible to all seniors and Americans, and I yield back.
Chairman Comer. The Chair recognizes Dr. Foxx from North
Carolina.
Ms. Foxx. Thank you very much, Mr. Chairman, and I thank
our witnesses for being here.
Dr. Atkins, I would like to say from the start that I
support capitalism and for-profit companies, along with the
amazing innovation they provide our Nation. However, I have
serious concerns over the PBM industry promotion of fail first
policies, also known as step therapy, that can prevent or delay
patients from accessing the medicines they need. A recent study
found that a significant share of commercially insured patients
taking medicines face step therapy restrictions.
Dr. Atkins, in your role as an oncologist, you have
patients that are required to fail first on a medication and
what can you do when a patient has to fail first?
Dr. Atkins. Yes. We deal with fail first almost every day.
Usually it is more common with the antiemetic medications but
also with iron products that we use. And also, I mentioned in
my written testimony about another patient who had to use a
different drug than what I wanted to use. We try to talk to the
insurance company, talk to the PBM. Sometimes that works,
sometimes it does not. Unfortunately, in my practice, we have
to deal with this every day. We have 10 oncologists and 8
people in charge of dealing with PBMs and insurance. Every day
is more than a full-time job, so we try to jump through
whatever hoops we need to get the patient treated. So, my whole
goal is to get my patient treated.
Ms. Foxx. Well, a little follow-up on that then. Can you
explain a little bit more the dangers of requiring a patient
with a life-threatening illness to fail first on a drug they
were not originally prescribed? And do you believe the
insurance industry should be telling patients what medicines
they can take, or should that be a decision left to you and the
patient?
Dr. Atkins. What drug the patient should take should be
left up to the physician because we are trained to take care of
patients and know what the best drug is for the patient. Some
of the dangers are treatment delays. As I mentioned earlier, if
a patient gets really sick with a medication because I am
forced to give them a different antiemetic than what I want to
use, it is really hard to convince the patient to try another
cycle of the medication. Some patients would just say, I am not
going to do the treatment anymore, which could shorten their
life. We deal with this every day.
Ms. Foxx. Again, Dr. Atkins, in 2021, the FDA approved 93
first generic drugs which provide more affordable options for
patients. In fact, generic drug prices can be up to 95 percent
less expensive when compared to brand drug prices. Are you
aware of instances where PBMs block patient access to lower-
cost generic drugs in favor of higher price brand drugs, and if
so, why would this be the case?
Dr. Atkins. When I treat a patient, I am looking at the
drug itself. I do not think about if it is generic or not, so I
cannot really give a specific information about whether they
blocked it in favor of a more expensive drug. I just know that
every day the PBMs get in the way of treating my cancer
patients, and my whole goal is to take care of the patient.
Ms. Foxx. Thank you. Mr. Baker, we know that PBMs create
formularies or lists of prescription drugs that will be covered
by certain insurance plans. Does AffirmedRx create formularies,
and how does your company decide which prescription drugs will
be covered?
Mr. Baker. Thank you, Dr. Foxx, and first, I absolutely
agree with your comments about capitalism. We think that
everybody should be able to make a fair amount of money, but
everybody knows what you pay for a gallon of milk. Nobody knows
what they pay for their prescription drugs, and I think that is
a big part of the problem. So, when we really look at our
formularies, we have partnered with the Cleveland Clinic.
Twelve years ago, they brought all of their own pharmacy
benefits into their own world, and they have their own
pharmacists and technicians who manage this. So, we really
wanted to say let us partner with a world-class organization
who understands the clinical nature of pharmacies, and they
also help guide us to make sure that we are making the right
decisions on behalf of our clients and their members.
Ms. Foxx. And what happens if a patient is prescribed a
drug that is not on the formulary?
Mr. Baker. They always have a path to coverage, Dr. Foxx.
So, we would always work with the providers that want the
patient to have that medication and make sure that if there is
a good sound clinical reason for them to be on it, that we can
get that approved for them.
Ms. Foxx. Thank you. I want to just make a short statement,
Mr. Chairman, about what Mr. Baker just said. We need
transparency. That is the whole issue in all of our medical
field. We need transparency on pricing. We passed our surprise
billing bill out of the Education and Workforce Committee. We
still do not have the transparency that we need from hospitals.
We have to have transparency in the cost of medical care. We
have the best medical care in the world. It is also the most
expensive. Thank you, Mr. Chairman. I yield back.
Chairman Comer. The gentlelady yields back. The Chair
recognizes Mr. Lynch from Massachusetts for 5 minutes.
Mr. Lynch. Thank you, Mr. Chairman. I want to thank you and
the Ranking Member for holding this really important hearing.
Years ago, when I was Chairman of the Subcommittee on the
Federal Workforce, we actually conducted an extensive
investigation into the role of PBMs, pharmacy benefit managers
with respect to the Federal Employee Health Benefit Plan,
FEHBP, so we were just focusing on what Federal employees were
paying for their pharmaceuticals. The FEHBP, the Federal
Employees Health Benefit Plan, is the largest employer-
sponsored group health insurance program in the world. It has
got 8 million Federal employee members, retirees, former
employees, and also their families. What our previous
investigation found was that the Federal employees who were
part of this health benefit plan were paying up to 45 percent
more for their prescription drugs than other Federal programs,
including those administered by the VA and Department of
Defense. And we found that the one singular reason for the
inflated costs of prescription drugs in that program was that
the program relied upon pharmacy benefit managers to negotiate
prescription drug benefits and maintain affordable prices.
In fact, one of the aspects of our investigation involved a
report issued by Change to Win, which was a Federal coalition
of big labor unions that were trying to use their bargaining
power to lower the prices of the drugs they were paying for.
And the report demonstrated the need for greater transparency
in pharmacy benefit management contracting. In particular, and
this is what really got me, we found that CVS Caremark, which
is a drugstore and PBM combination, we found that they were
treating people walking in off the street better than members
of this health benefit plan that the PBMs were covering.
So, here you have members who have insurance. They are part
of an 8 million member health benefit plan. They have
insurance. They walk into the drugstore, and they pay more than
someone walking in with no insurance just off the street. The
PBMs were offering less coverage than someone with no
insurance, and remember, we are talking about the bargaining
power of 8 million employees completely wiped out because of
the greed of these PBMs.
In fact, as the Federal Government, we could not find out
what the profit margin was for these different drugs. That was
several years ago. Has that changed at all? Can we find out
what the PBMs are paying for their drugs and how much they are
marking them up? Dr. Atkins, Mr. Baker, Dr. Duane, or Mr.
Isasi.
Dr. Atkins. I think one main problem is the lack of
transparency.
Mr. Lynch. Right.
Dr. Atkins. You do not know what they are paying for the
drug. Also, when I write a prescription for a patient, they are
asking me how much is this drug? I tell them I do not know
because their co-pay is different based on their insurance and
where they get the drug prescription filled.
Mr. Lynch. Yes.
Mr. Isasi. So, we do not know in this example, and this is
so important to point out. It is a large employer arrangement,
right, where the PBM is negotiating. In Medicare we do know.
Medicare receives all of that information, and the PBMS have to
true up and explain exactly what the net price was, and this is
a good example of two very important points. One, we have to
change the law to make sure that the employer who is using the
PBM knows what is the net price that is actually being
generated here. And the second piece is, this idea that when
rebates become the driver, right, you can have someone walk in
and spend more in their cost-sharing, like, for example, with
the Federal employees health benefits card, than if they just
went to that same CVS and said pretend I am uninsured, you
know.
Mr. Lynch. Yes.
Mr. Isasi. And that is a crazy outcome. So, at the point of
sale, no one should ever have to pay more in cost-sharing. The
cost-sharing should be based off of the net price and not the
list price, and that is a fundamental problem.
Mr. Lynch. Mr. Chairman, my time is running out, but I just
want to say this is an area where I think we have bipartisan
cooperation. I know that Congress is not known for its speed,
but we need to do something about this pretty quick. I actually
had a bill. It was the FEHBP Prescription Drug Oversight and
Cost Savings Act. I know you want to do something more broadly,
but maybe we might use that as a reference point to try to get
some work done. But again, I congratulate you on focusing on
this problem. I think we can make a difference if we get
together on this. Thank you. I yield back.
Chairman Comer. You know, I appreciate that, and I look
forward to cooperation between Republicans and Democrats on
this Committee and our staffs to try to solve this problem. The
Chair now recognizes Mr. Higgins for 5 minutes from Louisiana.
Mr. Higgins. Thank you, Mr. Chairman. Mr. Chairman, the
topic of this hearing is rather difficult to grasp due to the
complexities that converge here. As Americans from sea to
shining sea watching this thing, and we do not understand how
this stuff works, man, but we understand this as sort of a
comparison, and Americans, you know what we want? We want
somebody put in jail over this. That is what we want.
This is the kind of thing that we run into, like, family to
family, and it is such a wall of impossible complexities that
we face through the prism of medical fear. My wife has MS, and
twice a year, she has rather complex treatments, and all year
long just to go through evaluations and testing to determine if
her treatment is working well. And thank God it is working
well, but let me tell you, it has been quite a journey because
the medications change and the doctors are determined to
prescribe the best medication. And then it becomes like this
quest of hope that you can potentially get insurance coverage
for the pharmaceutical that is required for the treatment.
I do not gamble. It has never been something that has
attracted me. I have been to Vegas many times on business, but
I do not gamble. You know, I do not bet on football or anything
else. But twice a year it is very much like my wife and I are
forced to engage in some kind of a lottery for her medicine
that she needs. And this is the kind of thing that I do not
have an answer for, but I can tell you we are going to find it.
We are going to seek a legislative solution to this. And you
PBMs out there, hey, get your retirement in order because the
end of your era of pushing Americans around like this is
closing. There is no excuse for this.
I have a question that has been given to me by a very
experienced doctor, that is a dear friend, in preparation for
this hearing. I am not sure who would address this question. I
am thinking Mr. Baker, but I do not pretend to be an expert in
this. So, the four of you listen to this question and the best
one answer, please. Why cannot pharmacy manufacturers contract
directly with pharmacies? Do you understand that question? And
you are nodding your head, Mr. Isasi.
Mr. Isasi. Yes.
Mr. Higgins. That gives you the green light, brother.
Please answer the question.
Mr. Isasi. Well, I think what is important to say here is--
remember that underneath what you are describing, and I think
everyone is in agreement, this cannot happen; it is not fair to
the American public--the vast majority of money that is flowing
through the system is landing in the pockets of Big Pharma, and
we have got to say that. And the reason that we have got PBMs
is because they are negotiating a better rate, so the reason
that we have these conglomerates is because the government
cannot negotiate a fair price. That is what the problem is. So,
all of this is about one simple fact: Big Pharma is charging
way too much money for their drugs, and we are trying to get a
better price. And now what has happened is that PBMs, which are
just a middleman----
Mr. Higgins. But let me just ask because, again, it is not
my area of expertise.
Mr. Isasi. Yes.
Mr. Higgins. A regular American says, well, if Big Pharma
sets the price, how can it be this low on the left and this
high on the right?
Mr. Isasi. Well, in part, this is a generic. They make most
of their money for name brand drugs, and they get 12 times more
in profit, Big Pharma does, than the PBM. PBM gets two percent.
Big Pharma gets 12 percent. I am sorry. It gets 24 percent. So,
at the end of the day, we cannot hide the fact that underneath
all of this it is because Big Pharma is price gouging us, and
we are trying to come up with some mechanism like a PBM to
negotiate a fair price. But at the end of the day, it is
because the government is not negotiating price. In the rest of
the world, they do. In the rest of the world, they are paying
two or three times less at launch. That is what this is really
all about.
Mr. Higgins. Thank you for your answer. Mr. Chairman, my
time has expired, but I am going to advise all the panelists
that my office is going to submit questions in writing to each
of you. These will be questions that we will use to help us
develop a legislative response to this nightmare Americans
face. Thank you, Mr. Chairman.
Chairman Comer. I want to thank the gentleman from
Louisiana, and I think the witnesses can see and everyone who
is watching this hearing can see, there is a sincere desire
among this Committee to work together to try to solve this
problem. And I think that is a very positive development, and I
am really excited about the future.
With that, I recognize Mr. Krishnamoorthi from Illinois for
5 minutes.
Mr. Krishnamoorthi. Thank you, Mr. Chair, and thank you to
the witnesses. Thank you to the audience for paying attention
to this very important issue.
Dr. Duane, since 2010, independent community pharmacies
have been disappearing from the landscape. In fact, more than
one in seven have disappeared. That is about 15 percent of
independent pharmacies. And one reason for the dramatic decline
is because of something called DIR fees, direct and indirect
remuneration fees, that PBMs charge pharmacies. You are
familiar with these fees, right, Dr. Duane?
Mr. Duane. Indeed, I am, yes.
Mr. Krishnamoorthi. For those who are not familiar with
these fees, these are unpredictable fees PBMs retroactively
charge pharmacies months after they dispense prescriptions and
after PBMs have reimbursed the pharmacies for doing so.
Sometimes these DIR fees amount to retroactive clawbacks of the
entire amount of the reimbursements that they provided to the
pharmacies, and shockingly, sometimes they are more than the
reimbursements they provided the pharmacies. So, instead of
making money on these prescriptions, these pharmacies end up
losing money on these prescriptions because of the DIR fees,
right, Dr. Duane?
Mr. Duane. Yes, that is right. That is absolutely right.
There can be two ways to incentivize someone. You could use a
carrot or you could use a stick, and the DIR fees that these
PBMs have used are quite a big stick.
[Slide]
Mr. Krishnamoorthi. Well, let me jump in. According to the
government, these DIR fees increased by 107,400 percent from
2010 to 2020. This is not a typo. This is not a typo. This is a
travesty. And you know what PBMs really stand for, Dr. Duane?
It stands for Pretty Big Markups. That is what PBMs stand for,
and we have got to stop this. Let me turn to another slide that
I have talking about another aspect of what PBMs do.
[Slide]
Mr. Krishnamoorthi. PBMs make a lot of money, and one way
they make money is through rebates, which you talked about
earlier, I believe. Mr. Baker, originally these PBMs were
supposed to help third-party payers like insurance companies,
employers, help negotiate the lowest price of prescription
drugs, right?
Mr. Baker. Correct.
Mr. Krishnamoorthi. But what they did was they maintained
these lists of medications called drug formularies, which
listed the drugs and the drug makers that made the best deals
with the PBMs on behalf of their clients. Here is where the
problems began. The PBM started extracting ``rebate payments,''
as you described earlier, from drug makers to be listed on the
formularies, even though the PBMs did not pass along the rebate
payments to the payers and the consumers. So, what ended up
happening is that these rebate payments looked like kickbacks,
not like rebates or discounts. Isn't that right?
Mr. Baker. I would agree with that statement.
Mr. Krishnamoorthi. And look at what has happened. It has
fattened the bottom line of PBMs. PBMs have seen their profits
rise from 2010 to 2020 by 97 percent, so almost doubling in 10
years. That is three times what the stock market has yielded.
So, you know, let me just ask you, Mr. Baker, is it any
surprise that PBMs have caused such great concern among
consumers?
A recent poll by Morning Consult showed in March 2023, so
this year, that 85 percent of Americans are ``concerned,''
including almost 70 percent very concerned that PBMs are
``overcharging'' for prescription medicines and pocketing the
differences profit. And in that survey, 88 percent of Democrats
and 88 percent of Republicans shared that concern. Can you
think of a single issue where almost 90 percent of Democrats
and Republicans agree on anything, Mr. Baker?
Mr. Baker. No, but that is encouraging to see.
Mr. Krishnamoorthi. I think, Mr. Chairman, we have a
mandate on the part of the American people. When 90 percent of
Americans are concerned about an issue like PBMs, we must
investigate. I am glad the FTC and the Biden Administration are
doing so right now. I look forward to the results and on taking
corrective measures. We cannot be complacent on this issue.
Thank you, and I yield back.
Chairman Comer. Thank you. The Chair recognizes Mr. Biggs
from Arizona for 5 minutes.
Mr. Biggs. Thank you, Mr. Chairman, and thank you for
holding this important hearing, and I appreciate our witnesses
being with us today. Thank you so much. Mr. Chairman, I think
Buddy Carter of Georgia has done a little work in this area,
and I request unanimous consent to submit into the record his
report entitled, ``Pulling Back the Curtain on PBMs.''
Mr. Chairman. Without objection, so ordered.
Mr. Biggs. Thank you. I have serious concerns about the
impact of concentration and apparent self-dealing activities in
the pharmacy benefit manager market, which seems to be driving
up costs for consumers. The largest three PBMs control about 80
percent of the market: CVS Caremark has 34 percent; Express
Scripts, 25 percent; and OptumRx with 21 percent.
Mr. Baker, thank you for being here today. Can you talk
with us about the role of PBMs, how that role has changed over
time, how it went from where it started out and how we got to
where we are today, please?
Mr. Baker. Yes, thank you for the opportunity. And as I
said in my opening statement, I think PBMs are critical to the
American healthcare system, but as with many things in
healthcare, there are a lot of blind spots where people cannot
see what is happening. Additionally, I think we have created a
PBM industry where, in the general mantras and chaos, there is
profit. So, as we have talked about extensively today, this is
a very complex, chaotic world, and I think a lot of that is by
design, and we do not feel it needs to be that way.
We feel that PBMs do a very good job in general trying to
keep down prices when they want to. But unfortunately, as you
brought up, in the intervening years since they started their
mission of coordinating care for people and making sure that
there is payment mechanisms for independent pharmacists to
quickly get paid, these for-profit companies have created
numerous pockets of money that they can hide and make sure that
they are investing back in shareholder value, which is driving
up cost for the American public, and that is probably not fair.
Mr. Biggs. So, the largest PBMs are vertically integrated.
Do you think that is a practice that has increased or decreased
prices?
Mr. Baker. Increased prices.
Mr. Biggs. How about transparency for consumers? Has it
increased transparency or decreased it?
Mr. Baker. Decreased.
Mr. Biggs. Do you believe that this structure increases or
decreases opportunities for self-dealing or conflicts of
interest?
Mr. Baker. I think it increases those opportunities.
Mr. Biggs. Has this structure lead to delays for patients
seeking medication?
Mr. Baker. It hurts patients.
Mr. Biggs. Dr. Duane, have PBMs made it more difficult for
veterans and service members in your community to access
prescription drugs in a timely manner?
Mr. Duane. Absolutely.
Mr. Biggs. How so, please?
Mr. Duane. I mean, when they offer a contract to a pharmacy
like us, it is completely unsustainable and would drive us out
of business. It reduces the number of options that our
servicemen and women have in order to obtain their drugs. So,
by definition, you know, a decrease in access would increase
difficulty.
Mr. Biggs. Beginning in 2019, many of the largest PBMs
began forming group purchasing organizations based in
Switzerland and Ireland. These decisions were framed as steps
to increase their bargaining power to negotiate lower drug
prices. Mr. Baker, have consumers seen any reductions in
prescription drug costs since these decisions were made?
Mr. Baker. By all metrics I am aware of, no.
Mr. Biggs. Have they produced increased transparency
either?
Mr. Baker. Not at all.
Mr. Biggs. How does your PBM differ from large PBMs, and
what has your experience been competing with larger players?
Mr. Baker. It is a very interesting role trying to compete
with the largest PBMs. I think in general there is a misnomer
that the industry likes to push that the bigger guys get the
best deal and pass those deals on. And I think as we have seen
through some of the illustrations here today, that is generally
incorrect.
We have made it a point that we will never make money on a
drug, so any money we get from a pharmaceutical manufacturer we
believe should be pushed to the client to benefit them and
their members. We will not create spread on independent
pharmacists, so we want to pay them a fair wage for the job
that they do and pass that exact cost along to the client as
well with full transparency.
Mr. Biggs. So, Mr. Chairman, some of the things I have
heard is we are in a milieu of chaos, and that that facilitates
hiding pockets of money, reducing transparency, reducing
options for patients. I am grateful that you are holding this
hearing today. I think this is something that we need to
continue to work on, look at. And with that, Mr. Chairman, I
yield back.
Chairman Comer. Thank you very much. The Chair recognizes
Mr. Mfume from Maryland for 5 minutes.
Mr. Mfume. Mr. Chairman, thank you very much. I
particularly just want to add to all the others who have spoken
here about our thanks to you and the Ranking Member for holding
this hearing. It is so, so vital. And I am sure that people who
are watching this after a while are scratching their heads and
wondering how do these so-called PBMs, who are really pharmacy
benefit mis-managers, sleeping at night? This is a damn shame.
That is the only way that I can describe it. This is a damn
shame that Americans have to be ripped off in this manner and
for it to continue over and over and over again.
Dr. Atkins, I was particularly moved by your testimony
about your patients in Georgia. It is heart wrenching, and your
bottom line was that drugs do not work if people cannot afford
them, and there are so many people that cannot afford them.
Household spending on healthcare has increased in the past
three decades, increasingly with detrimental impacts, as we all
know, on our Nation's seniors, on people with disabilities, on
other patients who are treated by Medicare. And we are at a
crossroads right now, I think, in this Nation, which is why
there is this demonstration of bipartisan support, but also
bipartisan anger, at what is, for lack of a better term, a real
rip-off. People are dying while companies are profiting.
In my own state, the Maryland Prescription Drug Price
Affordability Board documented more than 1,200 prescription
drugs with prices that outpaced the rate of inflation
throughout just last year alone. That translates into real
people facing real crises. Case in point: Kyle, whose last name
will remain anonymous for this hearing, his wife is from
Baltimore City. She has lupus as well as a degenerative disc
disease and is currently on multiple medications. The cost of
her prescriptions amount to $1,200 every 3 months, and her
doctor's visit adds another $1,000 to that. A college retiree,
he had to return to work because he had no other choice to try
to find a way to qualify for benefits to support his wife's
medical expenses, but most of all, to keep his wife alive. John
from Baltimore County was diagnosed with multiple myeloma and
recently finished bone marrow treatment. John now takes 21
doses of Revlimid, and each pill costs $990. He needs the drug
to keep his cancer under control and has been left with no
other choice but to beg for the generosity of drug
manufacturers and these pharmaceuticals.
So those, unfortunately, are just a few stories of the
many, many millions of stories that represent the realities for
people. Some of them are our families, some of them are our
friends, they are our neighbors, and they are looking to us in
this practice, to end this kind of foolishness.
Mr. Chairman, I would like to ask unanimous consent to
submit to the record the report last year of the Prescription
Drug Affordability Community Forums that happened throughout
the state of Maryland taking testimony from persons of all
walks of life.
Chairman Comer. Without objection, so ordered.
Mr. Mfume. I just want to say a couple of other things. I
do not like getting angry like this, but when you hear
something that is hurting people in this way, it cries out for
solutions. I do not like the fail first policy and practice,
which is absolutely ridiculous. I do not like the fact that the
preferred drug offered up is oftentimes the most expensive
drug. We all are ticked off of at this notion of ongoing price
gouging, the lack of transparency, and the fact that no one
seems to regulate the PBMs.
But the PBMs, they are having a field day out there,
getting rich over and over and over again. They are practicing
medicine without a license, ladies and gentlemen. They are
making determinations that oftentimes end the lives of people
who cannot fight back for themselves. And so, I hope and pray
that out of this Committee and out of this very important
hearing comes bipartisan legislation to create a solution to
end this once and for all. It is a sin, it is an abomination,
and it is an affront to everything that we hold moral and right
in this country. Thank you again, Mr. Chair, to you, and the
Ranking Member, and I would yield back.
Chairman Comer. Thank you, and we look forward to working
with you, Mr. Mfume. The Chair now recognizes Mr. LaTurner from
Kansas for 5 minutes.
Mr. LaTurner. Thank you, Mr. Chairman, and welcome to all
of those on the panel today. Mr. Baker, there have been many
allegations of PBMs participating in spread pricing where they
pay pharmacies less for generic drugs than they are charging
insurance providers, and then they pocket the difference. In my
home state of Kansas, accusations of this practice were
recently settled for $26.7 million. Can you explain more about
how the spread pricing model works and why it is controversial?
Mr. Baker. Yes. Thank you, sir. So, again, at the end of
the day, spread pricing is as simple as the pharmacy middlemen
has all the rules, they have all the data, and they do not
share a lot of that, so people do not really know what is going
on. So unfortunately, independent pharmacists are getting paid
a low amount for the prescriptions that they are dispensing to
help communities live better, healthier lives. And then self-
funded employers have a separate contract with these pharmacy
benefit managers. And then the PBM can sit in the middle and
say, hey, so here is $10 for the prescription that you
dispensed and the hard work that the independent pharmacist
did. Self-funded employer, I am going to charge you $20 then
for that same prescription because you really do not know what
I paid the pharmacy over here. And it creates a lot of opacity
and a lot of opportunities for profiteering.
Mr. LaTurner. Thank you. Dr. Duane, I am interested in
knowing more about your contracts with PBMs. Pharmacies
contract with PBMs in order for the pharmacy to participate in
the PBMs' network, correct?
Mr. Duane. Yes.
Mr. LaTurner. What does it mean to be in a PBM's network?
Mr. Duane. Well, for our practice, it means everything.
Sometimes when people think they hear ``networks,'' they may
think of, like, the idea of a preferred network or a non-
preferred network like we might have in Medicare. I mean, to be
in a PBM's network means that I can bill a PBM and receive
payment for services. If I am not in their network, it means
that I cannot take a single cent from them and that the patient
would be forced to pay the full out-of-pocket cost.
Mr. LaTurner. How do pharmacies join these networks?
Mr. Duane. I mean, there are several different ways that we
can join. In some of them, I simply ask, you know. In others,
we have administrative organizations that can help us join on
our behalf.
Mr. LaTurner. Is it difficult for an independent pharmacy
to participate in a PBM's network?
Mr. Duane. It is very difficult. It is twofold, the
question is. No. 1, it is difficult sometimes to even get a
contract offered to you, but second, it can be difficult to get
a contract that makes you whole or even to participate. So,
even though you get a contract, it may not be one that makes
sense for you to be able to participate in.
Mr. LaTurner. Independent pharmacies across the country
have been shut out due to PBM anti-competitiveness practices,
correct?
Mr. Duane. Absolutely we have, yes.
Mr. LaTurner. PBMs sometimes pay competing pharmacies, that
is, pharmacies they do not control, lower amounts than they pay
the pharmacies that they do control. A lack of transparency,
however, sometimes allows them to claim they paid competing
pharmacies higher reimbursements than they actually did. There
have been a number of lawsuits to recoup such overpayments. For
example, Ohio Medicaid was overcharged $223.7 million, and
Kentucky Medicaid was overcharged $123.5 million. What should
Congress be doing to prevent this practice in the future?
Mr. Duane. Thank you for that question. That is a great
question. I think it is very simple. I think it is twofold. No.
1, I think you have to get rid of the rebates. I have heard a
lot about how Big Pharma is the one who is making the prices.
Big Pharma is the one that keeps pushing it up, and please make
no mistake, I am not carrying any water for Big Pharma. But I
think that the problem is that these rebates really obscure
what the true price is. And you hear this concept of gross to
net bubble, and you can say that, well, the gross list price of
a drug goes up, but after the rebates, the price actually
decreased over time. So, I mean, you have to be able to get rid
of those in order to make sure that we are playing with a full
deck of cards.
The second thing that you need to do is, I think, that we
need to look at what the Medicaid program in some states does,
and that is they reimburse based on a fair, evidence-based,
reference-based price for the drug, and then they reimburse on
a fair, referenced-based, evidence-based price for our
services. And I think that there is some legislation looking at
that in the Medicaid space federally right now, and the CBO
scored it is saving a billion dollars over 10 years.
So, I mean, that is a no-brainer to me. And I think it
makes sense because, you know, Metformin, it is a common drug
for diabetes. It is very, very, very inexpensive. It is one of
the most lifesaving drugs that you can prescribe for a
diabetic, and it is very, very inexpensive. We make almost no
money on it at all. But there are other drugs that are, you
know, vanity drugs or lifestyle drugs or something like that,
that we make quite a bit more money on, and it does not make
sense because the labor is the same.
So, by anchoring the price to a reference-based price in
ingredient cost and a reference-based price in service fee, you
ensure that everyone is getting the best deal, but that
competition can still exist.
Mr. LaTurner. I appreciate your time. Mr. Chairman, I yield
back.
Chairman Comer. The Chair now recognizes Ms. Ocasio-Cortez
from New York for 5 minutes.
Ms. Ocasio-Cortez. Thank you for this hearing, Mr. Chair. I
think it is incredibly important that we tackle these issues
substantively. And I have been very surprised to hear some of
the commentary across the other side of the aisle. I heard
earlier Republicans saying someone should go to jail for how
expensive some drugs are in this country, and I thought I saw a
pig flying across the ceiling of this Committee room. But where
there is common ground, I think we should pursue it, and we
should pursue it aggressively.
Now, I want to take a step back here and really make sure
that we are illustrating this issue in a way that the public
can understand because if we do that, then I think we can all
get on the same page about developing energy toward a solution.
So, if I am just an everyday person and I am getting a
prescription from my doctor and I get that prescription, I take
it to my pharmacist, and then all of a sudden, I get a bill and
I realize that my insurance co-pay, whether it is for any
condition, diabetes, cancer, whatever it may be, it could be a
thousand dollars. And before you know it, you are paying your
rent check on a medication that you need to save your life.
And we need to take a step back and figure out how did we
get here, especially on drugs like insulin, where there is a
public patent and there really is no reason for it to be that
expensive. So, we see that there is a drug. Between the drug
and you receiving that at a pharmacy, there are several steps.
You have your drug manufacturer, which folks call Big Pharma.
Then you have your insurer. Those are the areas that I think
people understand. Someone makes the drug. Someone insures that
drug that I can buy it, but then there is someone in the
middle, and that is known as a PBM or a pharmacy benefit
manager. Isn't that correct, Mr. Isasi?
Mr. Isasi. Yes.
Ms. Ocasio-Cortez. And so, what we see is that the drug
manufacturer very often does not sell their medication directly
to the pharmacy or does not sell their medication directly to
the insurer, but there is this middle person known as a PBM.
The manufacturer will set a price very high, and then the PBM
will say, let us make a deal, and they say if you give me a
rebate, then I can make the formulary for the insurance, and I
can make sure that your drug gets covered by this insurance.
You can sell a lot of your drug, and then, you know, all is
well in the world. And that is the general concept, the pitch
from the PBM. Isn't that right? Do I have that correct?
Mr. Isasi. Yes. There are a few more middlemen, but that is
exactly it in a nutshell.
Ms. Ocasio-Cortez. And each step along the way, someone is
taking a cut.
Mr. Isasi. Yes.
Ms. Ocasio-Cortez. You have got the manufacturers charging,
you have got the PBMs charging, you have insurers. And then
before you know it, you are paying a rent check on insulin,
which should cost virtually nothing.
Now, my question here is that we have to figure out a
solution. We have a vicious cycle with the PBMs because they
say if you give me a rebate, I will pass it on to the insurers.
So, the drug manufacturer says, great, I will make my price
even higher. So, I will say that my list price for a drug is
$5,000, so then I can charge you $1,000 or even more, and I
will make you seem like you are getting a deal so that you will
put me on a higher level on the formulary. And all about this
process is focused on who is making how much money instead of
what people are getting the treatment that they need.
Now, I am very curious, genuinely, to hear from the other
side of the aisle and some of our witnesses here today--
everyone OK over there--from the other side of the aisle and
some of our witnesses here today about solutions. I will be
candid about mine. I believe that the profit-seeking motive in
the pharmaceutical industry is out of control, and I think that
it is what is hurting people. I personally believe that if you
have a public entity that does not have a profit motive, like
Medicare, negotiate these prices with the manufacturers,
including the transparency that we see, along with other
entities like TRICARE, Medicaid, et cetera, then we can get an
actual fair price for these medications that includes their
manufacturing and R&D costs, but will not finance stock
buybacks and other types of predatory behavior. And then I
believe that Medicare should expand its eligibility so that
people can buy into at-cost public insurance.
Now, I understand that not everyone in this room agrees
with that assessment. I am very curious to hear about any other
proposals because I think at the core of what we are talking
about is an extreme out-of-control profit motive that has
virtually no guardrails and that Congress does not impose
guardrails on for a whole bunch of other dark money reasons.
And so, I am interested to hear from Dr. Atkins, Mr. Isasi,
Dr. Duane, and Mr. Baker. In addition, you know, we have heard
about things like eliminating rebates. We have heard about
things about increasing transparency. I think those are very
important steps. I am curious about what other solutions,
whether broadly systemic or more tailored, that you all would
propose to this Committee that we consider in order to help
actually solve this problem and go beyond talking about it.
Mr. Isasi. I just wanted to say really quickly, you put
your finger right on it, right on it. At the end of the day,
the only reason PBMs exist is because we do not have the
ability to fairly negotiate with Big Pharma, so we came up with
PBMs. And I wanted to be really clear: this idea of repealing
the rebate, this was under the Trump Administration. The CBO
scored that at $170 billion in costs because PBMs are actually
saving us money, right? But the fundamental problem, first of
all, as we have heard about, one, is in Medicare, PBMs have to
operate under what is called the medical loss ratio where we
limit the amount of money they can make in profits. That does
not exist in other areas, right?
So first of all, let us put them on some guardrails and
say, look, at the end of the day, this is not going to be about
you putting money in your coffers. It is about getting a good
price for the American family, right? Two, to the same end, we
got to create a lot more transparency, particularly for, like,
the Federal Employees Health Benefit Program we heard about or
other large employers, right, that they can actually see what
is the fundamental, the net price I am paying, so that they can
actually track and hold them accountable.
But let us not forget, at the end of the day when you look
at all the money flowing through the system, the manufacturers
are getting 12 times more profit than everyone else. So, this
is all about one major problem: drug makers are extorting
obscene prices from the American public and it needs to end.
Chairman Comer. The Chair recognizes Mr. Palmer from
Alabama for 5 minutes.
Mr. Palmer. Thank you, Mr. Chairman. I am going to ask Mr.
Baker some questions about when your firm develops your
formularies, does the high-priced drugs, which you get higher
rebates from, does that factor into the decision about what
drugs you will cover?
Mr. Baker. No, sir. We always look at the clinical criteria
first and then drive to lowest net cost second.
Mr. Palmer. All right. I have got several things I want to
cover following up on the gentlelady from New York. She raised
some good points. So, the PBMs act as middlemen between the
drug manufacturers and payers, like health insurance, for
discounts on the drugs in the form of rebates, and she made
that point. What I want to know is where is that money going?
Mr. Baker. That is definitely the big question, and I do
not think we have transparency to completely understand.
Mr. Palmer. But is it possible that the PBMs are pocketing
the difference because it is not getting back to the patient?
Mr. Baker. That would be my contention as well.
Mr. Palmer. They have indicated that the PBMs have
increased required fees while reducing the rebates in order to
avoid passing these discounts on the patients. Do you think
that is the case?
Mr. Baker. I believe so. Yes, sir.
Mr. Palmer. Are you familiar with rebate aggregators?
Mr. Baker. Yes, sir.
Mr. Palmer. Could you explain what they are?
Mr. Baker. Yes. And if you look at the end of the day,
there has been, I know, a lot of talk about the fact that
manufacturers today make 12 times as much as everybody else,
and I do want to point out manufacturers are actually making
lifesaving drugs for everybody. These GPOs were established,
two of the three, overseas. If you go online and you look on
LinkedIn, I have never been able to find more than 30 people
associated with these big three GPOs, and they are bringing in
close to $200 billion a year in revenue for three entities.
So, where the money goes, I think, is anybody's best guess,
but they do have numerous fees that they charge. They keep
those fees inside of their own organization for profit purposes
and to drive shareholder value. And then what actually trickles
out the other end, I do not think anybody really understands
what went in the top versus what went in the bottom and how
much is kept in the middle.
Mr. Palmer. You made a point just now that I think needs to
be followed up on. That is, that these aggregators are
sometimes located in foreign countries, is that correct, like
Switzerland, Ireland?
Mr. Baker. That is correct.
Mr. Palmer. What drives that business to those countries?
Mr. Baker. That is a very good question. I think we can
only speculate.
Mr. Palmer. Could it be that we are so overregulated on our
end? I mean, I think there is a problem on both ends of this,
that our regulatory regime has created an environment that
forces things overseas. I know in 1996, President Clinton
signed a bill repealing Section 936 of the IRS Code that
devastated the pharmaceutical industry, manufacturing industry
in Puerto Rico, literally put Puerto Rico in depression, but we
also had an issue with taxes.
I know of one Chicago-based pharmaceutical company bought
an Irish pharmaceutical company, said that a higher enough
percentage of the company would be located in Ireland. They
could avoid the U.S. tax rates. It was 12.5 percent in Ireland.
Is that part of the problem?
Mr. Baker. That would be my guess, but I do not have facts
to state otherwise.
Mr. Palmer. Part of my concern is, is when they have these
aggregators overseas, it is a form of tax evasion, isn't it?
Mr. Baker. I will rely on your expertise on the IRS Code.
Mr. Palmer. I am asking you. This is not an IRS Code. This
is a business question issue. Are they making business
decisions to avoid paying higher taxes by locating $200 billion
in profits overseas?
Mr. Baker. I was not there when they made those decisions,
but, again, I think it definitely looks like that is what was
occurring.
Mr. Palmer. Are you familiar with PBM practice of spread
pricing, and can you explain why there is a controversy around
that?
Mr. Baker. Yes, sir. I think depending on what happens with
the money that is actually spread, so some people contend that
when that spread occurs, the moneys go back and help drive down
plan costs. And if that is the case and we have transparency
around it, it might not be a bad thing. My general contention
is the opposite, that I think, more often than not, spread
pricing is just used in a world where nobody sees what is
occurring to drive profits back to these large organizations,
and that is a bad thing.
Mr. Palmer. So, you could be directing patients to use
certain medications to receive the larger rebates, and I guess
we do not have the transparency. We really cannot track it. Is
that what you are saying?
Mr. Baker. That is a very accurate statement.
Mr. Palmer. Mr. Chairman, I think this is an extremely
important hearing. I think we have gotten some information from
witnesses that I think will be constructive in working together
in a bipartisan way to come up with some solutions to help
patients. And one of the things I think we need to look at is
where a lot of these profits are landing. And with that, Mr.
Chairman, I yield back.
Chairman Comer. Thank you very much. The Chair now
recognizes Ms. Bush from Missouri for 5 minutes.
Ms. Bush. Thank you, Mr. Chairman. St. Louis and I are here
today specifically in support of Medicare for All and
healthcare as a human right. Leaving life or death medical
decisions in the hands of drug manufacturers and multibillion
dollar PBMs instead of patients and their healthcare providers
is literally killing people.
Let us put this conversation into context. In the wake of a
deadly pandemic that has left millions traumatized, disabled,
and suffering long-term health challenges, Republicans are
using the debt limit to needlessly restrict access to Medicare
and Medicaid. This will leave millions more uninsured or
underinsured and have to rely on predatory corporations like
PBMs to receive medical care. As we have heard today, pharmacy
benefit managers are intermediaries that negotiate with drug
manufacturers, health insurers, and pharmacies to determine the
cost and the coverage of medicine.
As a nurse, I have seen America's broken healthcare system
force patients to make the impossible choice between paying for
lifesaving medication or buying groceries. I have seen them cry
because their medications were changed, and the doctor ordered
one thing, and they were not able to get that particular
medication because of this broken healthcare system.
When congressional Democrats and the Biden Administration
worked to pass the Inflation Reduction Act, we capped the price
of insulin for Medicare beneficiaries and empowered Medicare to
directly negotiate lower prices for drugs. But St. Louis and I
know that we still have such a long way to go. That is why
Senator Bernie Sanders and I recently introduced the Insulin
for All Act, historic legislation to rein in Big Pharma and cap
the price of insulin at $20 per vial for every person who
depends on insulin to live. The privatization of our healthcare
system itself is at stake, which is why I stand with my
colleagues, and I demand Medicare for All be enacted now.
Dr. Duane, according to a 2019 study by the American
Medical Association, one in eight pharmacies closed between
2009 and 2015, and these closures disproportionately affected
independent pharmacies in low-income neighborhoods. In St.
Louis, 15 percent of residents live more than a mile away from
a pharmacy, and the lack of trust in culturally insensitive
medical providers, which I have seen firsthand, can pose just
as great a barrier to accessing care as a lack of
transportation. What can be done, Dr. Duane, to level the
playing field so independent pharmacies, like GreaterHealth in
my district, can keep serving our communities and those hard to
reach populations?
Mr. Duane. Yes, ma'am. Thank you for the question. I think
that the biggest thing that we could do is to make sure that
providers are being not asked to subsidize any system that is
in place. Like, my pharmacy is in a predominantly low-income
area as well, and sometimes we have to make heavy decisions
about whether we participate in certain Medicare plans or
whether we participate in certain Medicaid plans because we
know that it will not be sustainable for us to do so, and that
hat is not a choice that as a healthcare provider I should not
have to make. I should just be able to do what I went to
school, what God put me on this earth to do, which is to care
for people.
So I think that anything that we look at has to be looked
at through the lens of making sure that the practitioners that
are here to serve all patients, those underserved patients
included, make sure that they are able to do so in a
sustainable manner based on not the profitability of three, you
know, Fortune 12 companies, but of what we as practitioners
need the resources, the tools in order to do what is right by
those patients.
Ms. Bush. Yes. Thank you for those insights. This industry
is dominated by three big PBMs that control about 80 percent of
the entire market. These PBMs also integrated with insurance
companies and pharmacies to funnel business toward their own
pharmacies at the expense of our independent community
pharmacies, which our communities lean on. Dr. Duane, does this
create a conflict of interest, in your opinion?
Mr. Duane. It absolutely does. I think that no matter what
walk of life you come from or what kind of insurance you carry,
you ought to be able to choose the person that you receive care
from. And when the PBMs restrict their networks, or when they,
you know, steer you through the advertising that they send to
your home, or the logo that they print on your insurance card,
it makes you second guess yourself or wonder, you know, if you
can go to a certain practitioner, or if you are forced to go to
a different pharmacy, or something like that.
So, I think that it does disadvantage people because, you
know, this is a very difficult concept for someone like me who
lives it and breathes it every day. But for someone who, you
know, is of low health literacy or is just not able to involve
themselves in their care to the extent that they may want to,
it becomes almost insurmountable to understand really the
complexities of that system. And I think that the PBMs end up
taking advantage of that, and they rely on people to not
investigate and instead to just kind of, you know, go with
their intention, which is to push them to the pharmacy that
they stand to benefit from the most.
Ms. Bush. And with that, I yield back. Thank you, Dr.
Duane.
Chairman Comer. Thank you. The Chair recognizes Mr. Fallon
from Texas for 5 minutes.
Mr. Fallon. Thank you, Mr. Chairman. So much of this is
head scratching, the formularies and gross-to-net bubbles and
aggregators. I mean, it kind of makes my brain hurt a little
bit, to be quite honest. I think it is purposely complex,
though. I think there is a method to the madness, and I have
seen my colleague from Georgia, Congressman Buddy Carter, a
great pharmacist in his own right.
I was reading through this, and kind of in the middle, he
made mention that 2,300 independent pharmacies, the United
States lost 2,300 independent pharmacies between just December
2017 to 2020, in just 3 years. That scares me as a small
business owner, a former small business owner. And just
curious, Dr. Duane, do you think this is in part because it is
so difficult for independent pharmacies to join PBMs that we
have lost so many in just 3 years?
Mr. Duane. You know, it can sometimes be a lose-lose
because if the PBM offers a contract to us that is
unsustainable and we take it, it runs us out of business
quicker. If we decline a contract that is unsustainable, their
affiliate pharmacies stand to gain those same members that I do
not serve for that reason. So yes, I think it is.
Mr. Fallon. Is it fair to say, I mean, we have seen as
spending on drugs has decreased as a percentage of overall
healthcare expenditure since 2009, but I think it perhaps could
be the vulturous vertical integration that is not helpful in
any regard. In the fall of 2022, Express Scripts announced that
they would be reducing prescription reimbursements for almost
10 million TRICARE members. Additionally, 15,000 primarily
rural and independent pharmacies were dropped from the TRICARE
network. That is particularly concerning to me because I
represent 10 rural counties. Options for TRICARE patients and
their families were reduced, especially in rural communities.
The TRICARE pharmacy network was temporarily reopened in
November 2020 after significant congressional pressure. To my
knowledge, no new pharmacies rejoined the networks.
So, Mr. Baker, you may not be able to speak to this from
direct experience on the issue, but I would like for you to
talk about how this impacts access and competition. It was
reported that Express Scripts removed rural staples like
Walmart, Kroger, Sam's Club in favor of CVS, of course, a
pharmacy owned by one of the other big three. As a smaller PBM
competing with the big three, do you find it harder to compete
in the market?
Mr. Baker. We absolutely do. Yes, sir. Yes.
Mr. Fallon. Have you seen evidence that the big three
playing favorites with are preferring pharmacies that they own
over other pharmacy options?
Mr. Baker. I think when we deal with jumbo, self-funded
employers who have mandatory mail and specialty programs, that
is very obvious. Yes, sir.
Mr. Fallon. And if we are removing competition from TRICARE
networks, how does that improve service and lower costs?
Mr. Baker. We agree that it does not do either of those
things.
Mr. Fallon. And what is particularly concerning to me is
when you have three PBMs owing 80 percent of the market share
and then 82 percent of Americans participating in this, that is
very, very concerning. And Dr. Duane, did you know Admiral
Kevin Delaney, by the way?
Mr. Duane. I do not know.
Mr. Fallon. No. OK. Just curious. He was a staple in
Jacksonville. You spoke in your opening statement about how
TRICARE-covered patients are affected by PBM pharmacy network
changes. How is this impacting our veterans' community?
Mr. Duane. It is terrible. I mean, I am not going to
sugarcoat it. There was a story on the local NBC channel the
week before last that said that people were waiting days,
sometimes weeks for their medicine. I do not think that is any
fault of the Navy base. I think they are working with them as
much as they can. But I think that, you know, what you
mentioned, the dropping of tens of thousands of pharmacies
almost overnight, and then you spoke to the reopening of the
network.
I can tell you that I examined that contract fairly and
closely, and I looked, and on any typical brand name medicine,
we would have lost somewhere between $20 and $30 every time we
tried to fill a medicine. And that is before we talk about the
$10 or $12 that it takes to fill a medicine and break even. So,
I mean, you are talking about $40 to $50, sometimes at that
point. So, I think that they have a markedly reduced option now
to get their medicine. The options that do exist in
Jacksonville are overburdened and overstressed as a result, and
I think that ultimately that leads to poor patient care, and I
do not think that that can be argued.
Mr. Fallon. OK. Well, Mr. Chairman, what I have seen here
is a lot more agreement that I have seen in the two-and-a-half
years I have been in Congress just today, so I think we do have
a mandate and we should be talking about solutions. I think
these rebates, kickbacks, whatever you want to call them, are
something that probably we need to address, and eliminate, and
prohibit moving forward, but this is something that we have an
opportunity. Let us do the right thing by the American people.
Let us work together, and let us fix this. Thank you very much,
and I yield back.
Chairman Comer. Absolutely. Thank you. The Chair recognizes
Ms. Brown from Ohio for 5 minutes.
Ms. Brown. Thank you, Mr. Chairman. I am pleased that this
hearing presents an opportunity to consider broad bipartisan
agreement regarding the dangers of a healthcare system that
prioritizes profits over people. We cannot lose sight of the
big picture. Caring for the sick and providing lifesaving
medications should not be a cash cow opportunity. It is
staggering that last year alone, pharma spent $8.1 billion on
advertising, while millions of Americans still cannot afford
their medications. This kind of behavior by Big Pharma and
pharmacy benefit managers, or PBMs, squeezes those in greatest
need who have the fewest resources.
So, Dr. Duane, I appreciated hearing your testimony about
your work as an independent pharmacist. Could you tell us why
it is important patients have access to a local pharmacy they
trust?
Mr. Duane. Yes, thank you. So, people need to be able to go
to a pharmacy that they know will be able to take care of their
complex medication regimens, and I think that the average
person sees their pharmacist a lot more than they see their
doctor. So, I think that it is very important that they have a
variety of choice, because someone needs to, just like any
other healthcare practitioner, have a level of trust and
confidence in that person that they are receiving care from.
Ms. Brown. Thank you so much for that, and I want to circle
back. As stated by my colleague, Rep. Bush, according to one of
the studies in 2019, 1 in 8 pharmacies closed between 2009 and
2015. This is deeply unfortunate, especially for those who rely
on their neighborhood pharmacies for more than just their
prescription pickup. Now, we heard from Dr. Duane when he
responded to Ms. Bush's question. But I want to ask you, Mr.
Isasi, if you could elaborate a little bit more on how the
closure of an independent or a community pharmacy limits
healthcare access for a patient living in a low-income urban
setting.
Mr. Isasi. You bet. So, important to say that pharmacists
can play a critical role in the ability of people to get high
quality healthcare. There are wonderful examples across this
country. North Carolina Community Care comes to mind where they
help patients who are coming in for a very complex inpatient
procedures, and pharmacists played a key role in continuity of
care and making sure they were OK.
When you move people to mail order pharmacies, you move
people out of community-based settings. You lose all of that
context. And for folks who are in underserved communities, they
already have much less access to doctors, nurses, et cetera.
Pharmacists can be on the very front line and very effective,
so it is a really concerning trend if we are creating financial
incentives that are closing the access that patients have to
their pharmacists.
Ms. Brown. Thank you so much. According to the same study,
in 2019, closures were twice as likely to occur for independent
pharmacies located in lower-income neighborhoods. These
pharmacy closures, as you stated, make it more difficult for
the people that are already more likely to experience health
disparities to access care and medication. I also continue to
call for greater transparency from PBMs on how and why specific
drugs make it into their formularies. The secretive selection
process of winners and losers where PBM make backroom deals
with manufacturers is just unacceptable.
I am proud of the achievements that congressional Democrats
delivered in the Inflation Reduction Act, elevating quality
care for vulnerable populations and dramatically lowering the
cost of prescription drugs for Medicare patients. Democrats are
committed to putting patients over profits, and we will
continue to fight to make healthcare more accessible and more
affordable. I want to thank the Chairman and the witnesses
today for their testimony. This is a very important issue, as
you can see by the level of participation and the collaboration
of both Democrats and Republicans. And with that, I yield back.
Chairman Comer. Thank you. The Chair recognizes Mr. Edwards
from North Carolina for 5 minutes.
Mr. Edwards. Thank you, Mr. Chair. Thanks to all of our
witnesses for being with us today. I am curious, as we look at
some of these examples, on the charts earlier today, and there
is no denying there is reason to be alarmed with those margins.
Can any of you point to any impetus that may have led to these
types of margins, or is this something that has grown over
time? If it has grown over time, for what period of time has it
grown to this point? Anyone?
Mr. Baker. Yes, I will go ahead and get that started. I
think it starts in the reality that healthcare is generally run
by for-profit companies that need to make more money next year,
the year after, and the year after. You know, I would note we
do not think that, you know, for-profit companies are a bad
thing, but we have, you know, designated ourselves as a public
benefit corporation. You know, I love the comments. Our motto
is same, patients over profits. I think if we focus on patients
first, you can still do the right thing and bring a lot of good
to this world. But I think it also hits what we call in the
industry a lot the balloon squeeze, right? So, as somebody
starts looking in one area, PBM profitability, there is always
another profitable area that kind of pops up in a more opaque
fashion. So, depending on how they need to maintain their
profitability to achieve better shareholder value year over
year, I think that is why those situations occur.
Mr. Isasi. And the only thing I would add to that is, you
know, the fish stinks from the head down, right? The problem,
the reason these prices have gone up so fast is because the
manufacturers are charging outrageous prices. The PBMs are just
a set of those middlemen who are siphoning off those outrageous
prices. And what we have seen is, in Medicare, for example, we
do have medical cost ratio requirements where we can limit the
amount of profit that they can make, but in other sectors, it
is not transparent. We do not know, and there seems to be a lot
of gaming around rebates. And so, we need much greater
transparency and guardrails, right, but they are negotiating a
better rate than we would get if we just went straight to the
manufacturer.
Mr. Edwards. Thank you for that. My next question is, as I
have heard because this is not a new issue, I have served in
the North Carolina Senate for a number of years, this was
something that was always at the forefront. I have heard from
drug manufacturers that they need to charge more than cost for
drugs in order for research and development to add additional
cures for diseases to create drugs that would have less side
effects and that sort of thing. Do any of you have an opinion?
Mr. Isasi. Yes, I absolutely do. And just to make it very
clear, first of all, the deal that was struck under patent law
for drug manufacturers was go out there and find a cure for
cancer and make a bunch of money for a limited period of time,
you know, 9 years, 11 years depending, and then go find
something else. Every single moment that we let drug
manufacturers use patent thickets and games so that they are
making money from existing drugs, we are disincentivizing
innovation. And to be very clear, this is a direct quote from
the Stanford business professor in Forbes magazine.
``In the 21st century, most drug companies have replaced
moonshots with chip shots, strategies aimed at minimizing risks
rather than chasing elusive game changing drug. Today's
biopharma giants focus on monetizing easy wins. We know they
are spending much more on marketing than they are on research
and development.''
Mr. Edwards. Thank you for that. My last question, Dr.
Duane is in the North Carolina legislature, again, this was at
the forefront. And what we did in North Carolina is that we
gave more authority to our insurance commissioners and feel
like we gave him the tools to better make transparent
transactions with PBMs and to regulate them. Have you seen any
other states take any actions? And can you comment on what you
see working in the states, what you see not working, and any
advice that you have got for this Congress as a result of what
we have learned from what is taking place in the states?
Mr. Duane. So, I think that states have taken steps for
that. The state I live in, Florida, has just recently passed a
large bill to address a lot of the things that we have talked
about today, like spread pricing. In the state of Florida, the
legislature, working with the Governor, made sure that rebates
were passed down directly to the point of sale to the patient
to make sure that it lowers their out-of-pocket costs through
their premiums that they pay and their co-pays at the pharmacy
counter. So, I think that that is important. Other states have
looked at reference-based pricing structures and reference-
based dispensing fee structures.
So, I think that, yes, there are states that have taken the
lead. I mean, certainly we do not hear about states' actions
that have been taken that have risen drug prices faster than
what we see nationally. So, I think that that speaks for
itself, what the states are doing and how they are regulating
their office of insurance regulation and those kinds of things
have lowered costs because we have heard nothing to the
opposite.
Mr. Edwards. Thank you. Mr. Chair, I yield. Thank you.
Chairman Comer. Thank you. Chair recognizes Mr. Garcia from
California for 5 minutes.
Mr. Garcia. Thank you very much, Mr. Chairman. Thank you to
our witnesses for being here. We appreciate your time. And I
think we can all agree that, certainly, our country is the
wealthiest Nation on earth. We should be ensuring that everyone
has access to high-quality, affordable healthcare all across
our country, regardless of whether someone is in between jobs,
unable to work, or wherever their condition is, whatever their
age is.
Now, we know that the Inflation Reduction Act has made
really great progress in this area, and we are really grateful
to the work of the Administration. And the cost of prescription
drugs is a critical issue for our country, and we know that the
prescription drug industry overall has failed to prevent prices
and price surges as a history in this country. And we know that
pharmacy benefit managers play a role in that, and so I
appreciate all the comments that have been made.
Now, for millions of people, we know that these people make
impossible choices. I have heard it back home, and we all hear
it from constituents and the choices of medication, the choice
of paying rent, the choice of being late on bills, is a real
thing for so many Americans, for seniors, especially for low-
income folks as well, and I appreciate this hearing. But I just
want to remind us, and make it crystal clear that the biggest
obstacle to fair pricing is Big Pharma, period. I will say it
again, the biggest obstacle to fair pricing is Big Pharma. They
wield the most power in this market, and so this hearing is
really important. I would love to have a hearing with the heads
of all Big Pharma to be able to ask them the questions as to
why they are price gouging the average American. I think that
is also a very important, and an important conversation that we
need to have.
Now, we know that in a 5-year period between 2016 and 2020,
pharmaceutical companies raised their prices on drugs 36
percent, almost four times the rate of inflation during that
same period, and this is something that is continuing to
happen. We do not see it stopping, and we have done some
incredible work. I want to thank the President, again, the
Inflation Reduction Act, and the work it is doing around
Medicare, and the capping of prices is really, really
important. This has been a priority. It is finally getting
done, and we want to thank President Biden for that.
This Committee found that from 2014 to 2018, taxpayers lost
$25 billion in savings on seven drugs alone because Medicare
cannot negotiate those prices. Now we are going to have some
reform, we are going to have some change, which we want to
encourage. I want to also just say for the record, I have been
a long advocate for Medicare expansion, and Medicare should be
covering everyone, in my personal opinion. Medicare is popular.
We should be building on that work, and I just wanted to make
sure we noted that.
Going back to pharmacy benefit managers, it seems clear to
me that, essentially, a lot of pharmacy benefit managers are
essentially extracting fees, serving as middlemen, and not
passing on, in my opinion, a lot of value or significant value
to consumers or the public. And we should always be looking at
unnecessary costs and strategies to uphold monopoly pricing.
Now, monopoly power is a huge concern in the pharmaceutical
space, as well as pharmacy benefit managers where three
companies control 80 percent of the market. Well, that has been
discussed already in this hearing. Mr. Baker, can you also
again, briefly once again, describe why consolidation hurts
consumers?
Mr. Baker. Yes. I think at the end of the day, when you
look at the fact that three of these organizations are
controlling hundreds of billions of dollars of revenue, it
gives them the ability to basically make whatever rules they
want to drive to higher costs. And then those higher costs, as
we have discussed today, always fall back to a percentage of
profit for them. So, it allows them to drive to that higher
profit.
Mr. Garcia. And this monopoly that is currently in place in
our country is hurting average Americans, and especially low-
income folks and seniors. Would you agree?
Mr. Baker. I think that is accurate. Yes, sir.
Mr. Garcia. Do you think it is fair to say that this
consolidation is directly allowing these benefit managers, and
the pharmaceutical space in general to price gouge?
Mr. Baker. I would agree with that. Yes, sir.
Mr. Garcia. I think we obviously need to look at more
enforcement, and so I think something I hope the Committee
looks at as well in the future is how we are going to enforce
and ensure that this price gouging is not happening. What we
have essentially going on right now is a system, a monopoly
system, that is causing direct harm to consumers and to folks
within our healthcare system that need access to
pharmaceuticals. And so, I just think we ought to uplift that
and continue to call out this serious monopoly that is going on
in our country.
I want to again, just thank you for the work, for the
witnesses. Again, I think that we should have another hearing
with the heads of all the pharmaceutical companies who are
causing the absolute biggest damage to consumers to those that
need medicine, who need healthcare. And with that, Mr.
Chairman, I yield back.
Chairman Comer. The Chair now recognizes Mr. Donalds from
Florida for 5 minutes.
Mr. Donalds. Thank you, Mr. Chairman, and first of all, Mr.
Chairman, I do want to recognize fellow Floridian, Mr. Duane.
Dr. Duane, my apologies. I want to make sure I get it right.
Mr. Duane. Thank you.
Mr. Donalds. Thank you so much for taking the time to come
up here. The rest of the witnesses, thank you so much for your
time as well. Dr. Duane, I am going to start with you. In your
testimony, you described PBMs as the monster in a nightmare. Do
you care to elaborate on that? And also, do you think the rest
of the witness panel would agree with your characterization?
Mr. Duane. So, my wife and I bought the pharmacy with an
SBA loan. We saved up what money we needed in order to put the
money down. The rest of it we used an SBA loan for. That was in
2016. Since 2016, PBM, vertical integration, the steering that
they do to push their patients to their own affiliated
pharmacies, has increased dramatically. If I knew then what I
know now, I probably would not have done the same thing. So, in
that, I say that what I saw to be a wonderful opportunity, what
I hope can still be a great opportunity for my community, is in
peril because, specifically, the things that we have talked
about today. So, in that, what we believe to be the real
American Dream, owning your own business, owning your own
destiny, that kind of thing, it has been a whole lot tougher
than what we thought it would be.
Mr. Donalds. Anybody else want to comment? Dr. Atkins? Mr.
Baker?
Dr. Atkins. Yes, I would agree. As I mentioned in my
testimony, when I first became a physician, I could just focus
on taking care of patients. Now, every day I have to fight a
faceless corporation who does not do what I do, does not
understand what I do, and really does not care. They try to
tell me how to take care of my patients, what drugs I can and
cannot use. They take prescriptions from my patients, delay
their care, delay them.
And another example of the mail order about patients where
some chemotherapy agents require a certain temperature for the
drug, so these medications sometimes left on their front porch
in the heat of the summer. So, when they get the drug, it may
be too hot, and then we do not know if it is still effective.
Sometimes the drugs are lost, and patients are charged. These
are obstacles for patients.
Sometimes PBMs also mandate the use of an innovative
product instead of using a less expensive biosimilar, and all
these things interfere with patient care. They also destroy the
patient's hope and destroy their quality of life.
Mr. Donalds. Mr. Baker? I see you have bated breath over
there, Mr. Baker. Go ahead.
Mr. Baker. Yes, so, thank you. I think even a different
spin on this. I think we have talked a lot about the
independent pharmacist and the patient impact. But even from
the employer perspective, we deal with a lot of the largest
employers in the country, and they do not get access to their
data. So, they do not really know what they are paying for
their medications. They do not see at the claim level how much
rebate dollars are making back to buy down the cost of their
healthcare.
So, this lack of data is a real problem. If we go to any
manufacturers and ask what they are paying for aluminum, what
they are paying for tires, what they are paying for any of the
other vendor services that they use, they can tell you almost
exactly at that CFO level. But for some reason, when it comes
to PBMs, everybody is OK saying, well, gosh, I do not get the
data. I do not know. And that lack of data causes a lot of real
problems, in our opinion.
Mr. Donalds. Mr. Baker, real quick and probably in the last
minute and a half, can you expand on the transparency piece of
it, and, really, how do you think transparency through PBMs?
And by the way, I see over there, Claudia. Claudia Davant. I
worked with her when I was back in the state legislature where
we took on some reforms of PBMs back in Florida. But could you
comment to what those adjustments federally would kind of look
like and what that level of transparency would mean for
consumers and for medical professionals, obviously, in the
field of medicine?
Mr. Baker. Yes, thank you. I think it goes back to again,
if you look at any other industry, consumers can make a
decision on how much they want to pay for something and what
profit is OK. You know, that is the basic form of capitalism.
And I think we have tried to live in a world where that applies
to the pharmacy industry, and unfortunately, it does not
because that same level of visibility into costs and profit do
not exist in our space, and because of that, then it has
continued to drive up profit that hurt American corporations.
They need to then continue to increase premiums for their
overall health plan, and then, unfortunately, all the people
where 55 percent of self-funded employers use co-insurance and
high deductible health plans, when those PBMs are preferring
brand over lower cost generic options, when the patient shows
up at the pharmacy counter, they have to pay a percentage of a
much higher cost.
So pretty significantly across the board, those higher cost
decisions are made. They are made in a way that is always, to
me, at the detriment of the American corporation and family,
and it absolutely needs to be something we continue to address.
Mr. Donalds. Well, thanks so much everybody for being here.
Mr. Chairman, great hearing. We should continue this work, and
I yield back.
Chairman Comer. The gentleman yields back. The Chair
recognizes Mr. Frost from Florida for 5 minutes.
Mr. Frost. Thank you, Mr. Chairman. Hello. Thank you all so
much for being here. According to the AARP, nearly 3 in 10
Floridians have stopped taking prescription medications because
of the cost. Big Pharma's massive profits are being paid for
literally by the lives of our people. It is very important that
we in Congress understand the practices that lead to higher
drug prices, and one of these practice entails PBMs offering
pharmaceutical companies prime placement on a health insurer's
list of covered medications in exchange for steeper discounts
or rebates on drugs. Mr. Baker, can you briefly walk us through
how exactly the specific rebate process works?
Mr. Baker. Yes. Thank you, sir, and I think the best way to
do that is through an example. We have talked for years in the
industry about the biosimilars coming for Humira. Humira is the
largest pharmaceutical drug in the history of the world, $200
billion medication. We now have lower cost generic alternatives
available. Very first biosimilar that came out, came out at two
list prices, one what we call high-WACC, high rebate. So, it
was a five percent discount off what is almost a $9,000 a month
drug. The second one was a low-WACC, low rebate, 55 percent
off. So, as my previous comments just made, when we think about
somebody who has got coinsurance or deductible and they have to
show up at the pharmacy counter and pay a percentage, high is
bad.
The other issue is there is no visibility on how much of
those rebate dollars are actually being paid into the system
to, you know, make cost of healthcare better. So, we are living
in a world where most PBMs continue to pick the high WACC, high
rebate because they like the lack of transparency that goes
into those rebate dollars. They can siphon some of that money
off, and we really do not know which one of these is cheaper,
but it should be going to the lower cost option in our opinion.
Mr. Frost. And some would say that the current system
incentivizes drug companies to have higher prices so they can
give higher discounts rebates to PBMs. Do you agree with that?
Mr. Baker. I would agree with that. Yes, sir.
Mr. Frost. Florida consistently ranks as the most popular
place to retire in America; however, with a larger population
of seniors comes a larger population of folks vulnerable to
healthcare challenges, and that, essentially, is especially
sensitive to the price of prescription drugs.
Dr. Atkins, you testified about a case in which your
patient's insurance company charged her a co-pay of $1,500 per
month for a drug she needed to treat her cancer. That is simply
unaffordable for many Americans. In fact, most Americans, over
60 percent cannot afford the unexpected $400 bill tomorrow.
What happens to patients whose doctors are not able to take the
time out of their busy day to see if their prescriptions can be
obtained for a more affordable price?
Dr. Atkins. Most of those patients just will not take the
medication, and then that will affect their life expectancy.
Mr. Frost. Dr. Duane, my first question for you is--and
hello to another fellow Floridian--my question for you is, can
you briefly share the important role of independent pharmacies
like yours, what role they play in the community, especially
for those who face barriers to accessing healthcare?
Mr. Duane. Yes, thank you for that question. So, my
pharmacies are located in lower income parts of Duval County.
We are kind of the hub. It is more than just, you know, here
are your medicines, we put the pills from a big bottle into a
littler bottle for you. I have people that bring letters from
their bank or from the electric company and ask me to read them
because they are functionally illiterate. I have people who
ask, you know, my HMO is telling me I have to see a new doctor,
I need a new primary care doctor, do you have any
recommendations? Who else do you see that comes through here?
So, it is much more important to the community than just
the actual prescription filling process. I will say that a
representative earlier asked about an article from the Journal
of the American Medical Association about what happens when a
community pharmacy, especially independent community pharmacy
closes. People get sicker when that happens. In that zip code,
when a community pharmacy closes, their blood pressure goes up,
they have more heart disease, there are more heart attacks.
These are things that we can definitively link to the absence
or presence of a community or independent pharmacy in a
particular zip code, so it is vital for the community.
Mr. Frost. And PBMs have a lot to answer for when it comes
to the sky-high prices of drugs, but big pharmaceutical
companies, like Representative Garcia pointed out, have been
price gouging for years. This is something that personally
impacted me. You know, in 2017, Mylan, the pharmaceutical
company responsible for EpiPen, settled a $465 million class
action lawsuit over a scheme to avoid paying rebates, so they
can maximize profits. In 2016, an EpiPen two-pack costs folks
$313. According to the suit now, the cost is between $650 and
$700. Four years ago, I almost died because I did not have an
EpiPen. I carry one everywhere I go. If you are not able to
afford it and you have an anaphylactic attack, you die.
Dr. Duane, almost no time left, but real quick, Dr. Duane,
what can be done to level the playing field so independent
pharmacies like yours can keep serving our communities and
hard-to-reach populations?
Mr. Duane. Yes. I mean, it is just very difficult for us to
compete when the person that we are trying to compete with
holds all the cards, when the person who makes the contract is
also the person who owns the competitor, which is also the
person who increasingly owns the doctor's office, which is also
increasingly the person who owns the insurance company. I mean,
you cannot hope to compete with that. So, I think anything that
is addressed as far as looking at how they stack up, how they
got to be that stacked up, and how we can make sure that there
is still a level playing field within that system of
integration.
Mr. Frost. Of course. Thank you so much for your time. I
yield back.
Chairman Comer. The Chair now recognizes Mr. Sessions from
Texas for 5 minutes.
Mr. Sessions. Mr. Chairman, thank you very much. I have
been sitting here for an hour and a half or so and not sure
that we really get it right.
[Slide]
Mr. Sessions. This slide shows--I hope you can see it--Cost
Plus Drugs, which Congressman Higgins showed, cost annually
$499, CVS pricing $110,000. We have heard about how great this
Administration was at lowering drug prices. We have heard how
great it is to have everybody go on Medicare. The bottom line
is, is that there is money here, what did the Administration at
the time they cut the deal, what did they think about this, and
did they not look at this price? It is one thing to blame the
drug manufacturers. It is another thing to look at what the
consumer pays, and I am not sure we have gotten to that.
Perhaps we have, Dr. Baker, but please help me to understand
what did the Administration do when they saw this, or did they
ignore it? Dr. Baker? Mr. Baker?
Mr. Baker. Yes. No, thank you, sir. What I would say is,
this is a very interesting example. It is a generic drug. There
are no rebates and nobody can have any rebate conversations
around it. This is simply pure cost, and this is----
Mr. Sessions. By the way, let the record reflect that each
of you on this panel, or at least several of you, are agreeing
with what you are saying. Please continue, sir.
Mr. Baker. Yes, thank you, and in this situation, it is a
drug that gets mailed. We talked a lot about the impact on
independent pharmacies. Many of these, especially in oral
oncolytic drugs, maybe if you want to mail them, that is OK
because they do not need special patient monitoring
requirements. But many specialty drugs are injectable. They
have very bad side effects. And in my opinion, the mailman,
when they force people to go to their own specialty pharmacy
and mail it to your home, is not the best person for injection
technique. Probably an independent pharmacist would be much
better at that, so.
Mr. Sessions. I could agree with that.
Mr. Baker. Yes.
Mr. Sessions. But go to this difference. What did the
Administration see when they were trying to thoughtfully help
the American public and the consumer? What did they do about
this because they are the ones that, by and large, has
universal access to this problem? We talk about Congress all
the time. Our young Chairman and others do want to fix this.
What did the Administration do about this?
Mr. Baker. To my knowledge, I have seen most of the
regulation focused on brand manufacturers, and with this being
a generic medication, I am not aware of anything that has
occurred to fix that problem.
Mr. Sessions. But this is big.
Mr. Baker. It is a big problem.
Mr. Sessions. Is this an isolated problem? No, it is not,
so there is more work to be done, I think is what I would say.
More work to be done. What should be done, in my opinion, is
why we are having this hearing today. We are trying to filter
out things, but the bottom line is, is that this cost somebody
$499, and this cost somebody 110,000. Who paid this?
Mr. Baker. I would bet most of that payment came out of the
plan sponsoring that situation, and then ultimately everybody
who is part of the plan had to pick up the costs.
Mr. Sessions. So, they spread it out?
Mr. Baker. Yes, sir.
Mr. Sessions. What advantage would a person have who did
this? Is it individual person, a person perhaps who was paying
up an HSA? What kind of person would this be versus this being
a plan? What is this? I know what it is, but what kind of
person benefited from that?
Mr. Baker. I would say the person who bore more of the
costs and could actually see what those total costs were. In
the $110,000 situation, I guarantee that cost was buried in
millions of claims, and nobody is really looking at it because
they do not know what----
Mr. Sessions. And I am talking about maybe an end user or a
person who used this. What kind of person is this? Is this a
person who was maybe uninsured? And we have heard that there is
some disparity there. What kind of person comes to Cost Plus
Drugs or DrugRX or Blink or any these other seemingly smaller,
perhaps companies, but non-PBMs?
Mr. Baker. Yes, I think the root of the problem stems, and
you can look at the fact that 10 percent of all prescription
drugs filled in America go to cash discount cards, and 85
percent of those people who use those have insurance. So, it is
a classic case where insurance is not driving to the lowest
cost, and now American consumers have to try to figure out this
arcane system on their own to find a medication they can
afford.
Mr. Sessions. Mr. Chairman, I know, I am at my time. Do you
think an answer is possible by this Committee? Do you think
that we can study it and pinpoint those problems, whereas the
Administration evidently did not go that direction?
Mr. Baker. I am very encouraged by the overall positive
comments we are hearing from everybody that we are talking to
today that there could be a solution that we can figure out.
Yes, sir.
Mr. Sessions. Well, I am hopeful that there are people in
the American public, perhaps other people who have great
knowledge have on this, and I hope that they will write our
young Chairman. I am the Subcommittee Chairman for Government
Operations. Not saying all this falls in my bailiwick, but I
hope people will give us feedback. I want to thank each of you
today, and I think we are getting closer by having the hearing
today. Mr. Chairman, I yield back.
Chairman Comer. Absolutely. Thank you. The Chair recognizes
Ms. Balint from Vermont for 5 minutes.
Ms. Balint. Thank you, Mr. Chair. In many rural communities
like Windham County, Vermont, where I live, pharmacies play a
vital role in meeting community healthcare needs, just like,
Dr. Duane, you said earlier, that resonated so much with me,
all of what you said about the role that independent pharmacies
play. It is really beyond dispensing medication. It is
providing basic medical information services, providing
counseling.
And, you know, at one point, I was between healthcare plans
and the paperwork was not done. And my independent pharmacist,
his name was Frank, came in, and my asthma medication was
hundreds of dollars a month. He came in, he said, ``you know,
Becca, it has not come in, it is not running.'' He literally
gave me the medication. He said, ``I know where you live. Come
back when you have it straightened out.'' That is the kind of
care that you get from independent pharmacies, so thank you for
doing what you are doing for your community.
Now PBMs, as we all know, is what we are talking about
today. They contract with pharmacies to create these pharmacy
networks and whether or not patients use pharmacies in these
networks can affect the amount that patients pay at the
counter. And these arrangements can drive patients away from
independent pharmacies in their communities. And in fact, I had
a pharmacist tell me at one of my independent pharmacies, I
cannot really fill this for you or I am going to take an
incredible hit on my bottom line. And you have been a customer
with us for years, and it is paining me to tell you, you are
going to have to fill it somewhere else.
So, when I was the leader of the Senate in Vermont, we
tackled the problem by enacting legislation that prohibits PBMs
from reimbursing pharmacies in Vermont less than they would
reimburse PBM affiliates for the same services, which I think
is critically important. And, Dr. Duane, I know Representative
Frost asked you some about this, but I am wondering now that we
have a little bit more time, can you explain why it is so
difficult for independent community pharmacies like yours to be
part of these pharmacy networks? Just lay it all out for us.
Mr. Duane. So, it is twofold. The first thing is that they
can afford to offer themselves contracts that are poor, and
then they can offer me the same contract. They will happily,
when they are vertically integrated, lose money out of one
pocket to ensure that the money stays in the other pocket, so
it is a lose-lose.
Ms. Balint. And you do not have another pocket?
Mr. Duane. No, ma'am, I do not.
Ms. Balint. Yes.
Mr. Duane. So, if I participate in that contract and it is
a poor contract, I run out of business all the quicker, and
they are happy. And if I do not participate in the contract and
I close my doors to those patients, then those patients find
themselves into an affiliated pharmacy, and they are able to
keep that money.
Ms. Balint. Yes, and this is the reason why we have lost
over half of our independent pharmacies in Vermont, for this
exact reason. And we know, and you talked about this, that each
of the three largest PBMs also owns a specialty pharmacy that
they use to dispense medications that treat rare or complex
health problems, but these drugs do not legally have to be
dispersed through a specialty pharmacy. And any licensed
pharmacy can dispense a specialty drug as long as that drug can
be purchased from a manufacturer or authorized wholesale
distributor. So, Mr. Baker, how do PBMs use the specialty
pharmacies that they own to incentivize patients to fill their
prescriptions at the specialty pharmacy instead of Dr. Duane's
independent pharmacy?
Mr. Baker. Yes. I would say they do not necessarily
incentivize anything, they mandate.
Ms. Balint. Thank you.
Mr. Baker. It is you cannot go to his pharmacy, you have to
come to mine.
Ms. Balint. Thank you for just like cutting right through
that.
Mr. Baker. Yes, ma'am.
Ms. Balint. Not an incentive, just a mandate. So, it is not
hyperbole to say that independent pharmacies in so many of our
rural communities are the heart of the community. That is where
people get the medical attention and advice that they need.
Especially as rural America is losing so many of its healthcare
providers, the pharmacy is critically important to communities
like my own.
And so, it is really important that we understand the ways
that PBM practices, you know, may be steering patients away
from these pharmacies and making it impossible for these
pharmacies to stay open. So, it is a critical part of the
ongoing work that I see that we have to do and that Democrats,
I feel like, have been doing for years to try to make
medication more affordable and accessible to all. And I am so
glad that we are having this hearing. I really appreciate this.
Mr. Chair, this is part of a problem that is making it
incredibly difficult for rural Americans to stay healthy. It is
as simple as that. Thank you. I yield back.
Chairman Comer. Very good. The Chair now recognizes Mrs.
McClain from Michigan for 5 minutes.
Mrs. McClain. Thank you, Mr. Chair, and thank you all for
being here on this very important topic. I think what is
encouraging is if you look around, we all agree, finally, there
is a problem and it needs to be fixed, right? It does not
matter what side of the aisle you are on, what color your skin
is, what race, we have a problem, which is wonderful. Now we
can get down to the business to fixing it.
What I want to make sure that we first understand is to
make sure I understand it correctly. And if I am correct,
pharmacy benefit managers were originally meant to facilitate
negotiations really to drive the cost of prescription drugs
down for their patients, correct? I mean, originally. I do not
think it was done with malice.
Mr. Isasi. Yes.
Mrs. McClain. That was the original. However, PBMs, it
seems like, has evolved into middlemen with an outsized role in
the pharmaceutical marketplace, operating really behind the
scenes to manipulate drug costs, control access to certain
medications, and, ultimately, decide the payment pharmacies
receive for all of their own benefits, so it seems that it
switched. Am I directionally tracking?
Mr. Isasi. Yes. I would not say it switched. The main
driver is still Big Pharma, but to your point, there are all
these other ways they are trying to make money, that PBMs are
trying to make money, that is distorting the original----
Mrs. McClain. Right. I mean, the largest PBMs control 80
percent of the market, right? Each own their own pharmacies,
disincentivizing negotiations and enabling them to further
benefit, really, from higher prices. So, I have a good
understanding of what it was and what it has evolved to now.
Mr. Baker, real quick, what do you believe the No. 1 goal or
priority should be?
Mr. Baker. Yes, thank you. I think we have used the word
``transparency'' quite a bit here today as witnesses. The other
thing I think is important to point out, we have tried to say
as a public benefit corporation how are we going to be a
completely unconflicted PBM. Like, so how am I going to make
sure I am always making decisions in the right vein for our
clients and their members?
Mrs. McClain. Yes.
Mr. Baker. And I think a big part of that is we have made
this decision never to own our own pharmacy. I think the day I
start deciding what I pay myself, conflict can occur, and that
is not a really good thing.
Mrs. McClain. OK.
Mr. Baker. My mail order pharmacy, if I were to have one,
again, does not provide the same level of services we clearly
get from independent and other community pharmacies. And we
think the overall healthcare picture needs to be viewed not
just an insular profit I can make off a drug that I dispense
for my own.
Mrs. McClain. So, who would benefit from increased
transparencies in the PBM world?
Mr. Baker. I think the American corporation would benefit
greatly by knowing what they are actually paying for
medications and being able to competitively figure out if they
want to continue doing what they are doing. I think the
American taxpayer would benefit greatly from that as well.
Mrs. McClain. Why do you think the PBMs are against
transparency? I cannot figure that out.
Mr. Baker. We hide behind the term ``proprietary'' a lot in
this industry. Everything is proprietary. Everything is hidden.
It is going to hurt my ability to negotiate and really get this
better price. I think we have heard that so long, I personally
am callous to it. Everybody likes to----
Mrs. McClain. Do you believe that?
Mr. Baker. I do not, no.
Mrs. McClain. OK.
Mr. Baker. I think we can look at the facts and costs go up
every year, so we can continue doing what we are doing, and
guess what? Costs are going to go up.
Mrs. McClain. Right.
Mr. Baker. Now is the time we need to try to----
Mr. Isasi. And just a point of clarification, which is it
is true that when a PBM negotiates a better price for funds
from the drug maker, that unveiling that price is probably not
the best thing. That is what they are using as a red herring.
We need to know. For example, an employer who is paying for
their services needs to know, and there is a way to keep that
private and still make sure there are safeguards all the time.
Mrs. McClain. And I appreciate that. In the interest of
time because I only have a minute left, what I am trying to
make a correlation to is, we all agree there is a problem,
which I think is dogs and cats living together, OK? In order to
fix a problem, I think we have to fully understand what the
problem is, and the more data and the more we can see, right,
the more transparency there is, will help us figure out which
lever to pull to fix the problem. Would you all agree with
that?
Mr. Baker. Yes.
Mrs. McClain. It is amazing to me, and it always seems like
when we do not want to be transparent. I mean, I come from the
financial planning world. We have to be transparent. We have a
prospectus that we have to give all of our clients to see where
our dollars come from. That was mandated by Congress. Quite
simply, do you think if we made the PBMs or this process more
transparent, do you think that would help us identify the
problems to get to the best solution?
Mr. Baker. Yes, and I love your analogy around financial
services. Everybody knows the prospectus and what is happening
on those. When it comes to healthcare, self-funded employers do
not put that out, right? They do not know how to say here is
the profit being made, here are the fees, here is everything
accounted. So, you plan it, participant knows that information,
I think that is a great analogy.
Mrs. McClain. And it leads to a lot of mistrust as well.
So, thank you, Mr. Chairman, and thank you, witnesses. I yield
back.
Chairman Comer. The Chair now recognizes Ms. Lee from
Pennsylvania for 5 minutes.
Ms. Lee. Thank you, Mr. Chairman. I am excited to be able
to talk about something in this Committee that is actually
meaningful to American people: lowering prescription drug costs
and increasing access to affordable care. I am happy we all
agree that drug prices are out of control, yet we seem to be
the only country suffering from this problem. This Committee's
3-year investigation into drug companies discovered many ways
that pharmaceutical companies prioritize profits over people,
including flagrant anti-competitive behavior, to maintain their
monopoly pricing. Mr. Isasi, how specifically has anti-
competitive behavior led to higher drug prices?
Mr. Isasi. It has driven out competition. It has created
consolidated power amongst individual drug makers, and they
raise their prices unchecked.
Ms. Lee. Thank you. This Committee also found that drug
companies were specifically targeting the U.S. for high drug
prices because Medicare cannot negotiate the price of drugs
directly with those companies. So, Mr. Isasi, can you explain
how the U.S. is different from so many other countries in this
way and how that has led to higher drug prices?
Mr. Isasi. Yes, that is exactly right. We are talking about
an industry that is over a trillion-dollar industry a year.
Half of their profits are coming just from the U.S. and Canada
out of that trillion-dollar industry, so they are fleecing
Americans. And until we passed the Inflation Reduction Act, we
had no ability to get in there and negotiate a fair price. And
it is really important to point out Part D, which is the
benefit that allows seniors to get prescription drugs, so
important, was designed so there was no real negotiation. It
was designed so there were small regional prescription drug
plans who had no negotiating power, so it was, by design, a
terrible deal for the American public.
Ms. Lee. People across the country have been struggling for
years to afford healthcare. Though important, drug prices are
just one piece of that puzzle. How do drug prices inflate
overall healthcare costs that families pay, and what does this
mean on a practical level for someone who relies on high-cost
medication?
Mr. Isasi. Well, what we know is, in many cases, a quarter
of all the premium increases you are experiencing are because
drug prices are going up so fast. And what is really important
to say is, lots of people out there are not taking prescription
drugs, right? So, they do not even realize that every year
their premiums are going up because prescription drug companies
are fleecing them. And it goes into the risk pool of your
employer, the risk pool of your insurance program, et cetera.
Ms. Lee. So, in keeping with that point, more than half of
overall spending goes to so-called specialty drugs, even though
they make up about two percent of the medicines dispensed. This
designation is defined differently across market by PBMs. Mr.
Baker, can you explain how PBM's arbitrary decision-making on
whether to label a drug specialty is affecting patients?
Mr. Baker. Yes, absolutely, and that is an incredible
point. In the pharmacy industry, we can pretty well come to an
agreement on what is considered a brand and generic drug. It
all stops there, so this world especially has really started
growing since about 2014-2015. It is exponentially growing, to
your point, being 50 percent or more of all spend today. And
PBMs can call any drug they want a specialty. Every PBM will
have a different specialty list. Every PBM could have a
different specialty list for different type of fulfillment
channels. So, the specialty list that we use for independent
pharmacies can be different than the one I use for my own PBM
pharmacy if I wanted to use it. So, this lack of transparency
and ability to have oversight on what is considered specialty
limited distribution or other does drive to a lot of
profiteering.
Ms. Lee. Thank you. In the end, this is actually a somewhat
simple conversation. Drug companies set drug prices. If the
drug companies set lower prices for medications, American
families would pay lower prices. That said, it is important to
understand the context in which those drug companies operate
and who they operate with. Americans should not have to choose
between feeding their families and their diabetes medication.
We should not have to go into bankruptcy to treat our loved
one's cancer, and we should not have to raise thousands of
dollars on a GoFundMe site when we are injured in an accident.
This is a uniquely American problem.
Our healthcare system is broken and rotten to its core on
every level. PBMs are just a part of a greater problem, and we
cannot allow them to be a scapegoat to avoid addressing true
issues. Americans deserve universal healthcare. We deserve
Medicare for All. And with that, I will yield back. Thank you.
Chairman Comer. Thank you. The Chair recognizes Mrs.
Boebert from Colorado for 5 minutes.
Mrs. Boebert. Thank you, Mr. Chairman. Dr. Duane, I think
it has been mentioned many times here today, and I apologize
that I was not here for a lot of it. We have other committees
going on as well. But we have seen an increase in prices for
medication and treatments over the past few years. You would
agree?
Mr. Duane. Yes, I would absolutely agree with that.
Mrs. Boebert. Yes, and I think that you all have elaborated
as far as the why, and you are welcome to elaborate more if you
would like. But do you see that patients leave their
prescriptions at pharmacies because they can no longer pay for
it?
Mr. Duane. They absolutely do in my pharmacy. Yes, that
happens more than should make most people comfortable.
Mrs. Boebert. I actually have a fun little story. My staff
is probably going to talk to me about this later, but I left a
prescription at a pharmacy once. I went to get birth control,
and I was there at the counter and went to pay for it, and the
price was very, very high. I said wow, is this a 3-to-6-month
prescription? No, ma'am, this is 1 month, and I said it is
cheaper to have a kid. And I left it there, and now I have my
third son, Caden Boebert, and so actually it turned out to be a
really great thing, but I personally experienced that when
times were tough. But thank you so much for your indulgence
there, and I will talk to the team about that comment later.
Excuse me. Please state your name for me, please.
Mr. Isasi. Isasi.
Mrs. Boebert. Isasi, thank you. Mr. Isasi, now you state
that drug launch prices have increased 20 percent per year from
2008 to 2021. Other than inflation, what other factors caused
this price hike?
Mr. Isasi. Drugmakers' greed.
Mrs. Boebert. And you state that there are, on average, 125
patient applications per drug that extends their monopolies and
blocks competition up to four decades. What kind of distinct
ability do these patients have from others to make them
patentable?
Mr. Isasi. Right. They are exceeding their patent. The
patent was to last 9 years, maybe 11 years or 12 years, and
they are going for 40 years because they are just suing their
way into greed.
Mrs. Boebert. And how could we end patent abuse without
restricting someone's patentability?
Mr. Isasi. I mean, this is so important. By really focusing
in on this kind of greed, what we are actually doing is ending
drug companies' ability to make money by just extending the
existing invention. We want them to stop making money at the 9
year and go find something else, and every year we let them
keep making money from that same drug. We are killing
innovation, so it is critically important.
Mrs. Boebert. Thank you. And, Dr. Atkins, as an oncologist,
can you give us an example in which PBMs have obstructed your
patients from getting the medications that you prescribed to
them?
Dr. Atkins. We could stay here all day, but I will just
give one.
Mrs. Boebert. Yes, ma'am.
Dr. Atkins. Particularly what I mentioned earlier in my
statements that I wrote a prescription October 14. I saw the
patient 2 weeks later, and he still did not have the
medication. Asked him what had happened because we thought we
could fill it at my dispensary, my practice, I found out from a
pharmacist that our dispensary sent a prescription someplace
else, and then the patient's PBM, CVS Caremark, took the
prescription, told the patient we have not heard from your
doctor. We are like, ``that is not true, we have been going
back and forth.'' Anyway, the patient got his medication on
December 1, so this happens very frequently.
Mrs. Boebert. Right, which presents consequences to your
patient?
Dr. Atkins. Definitely. Yes.
Mrs. Boebert. Yes. Thank you very much, Doctor. And, Mr.
Baker, on May 16, your company changed the name and has a new
tagline of Patients Over Profits. What prompted this change?
Mr. Baker. Yes, I think it really falls to a lot of the
conversation here today. We think you can run a very viable
organization that drives to a highest clinical quality, lowest
net cost, and not focus on profit being your sole endpoint. So,
we really want to make sure that everything that we do and
everybody we work with knows that patients come first. And you
know what? This is a hundreds-of-billions-of-dollar-a-year
industry. There is plenty of money left over to create a
market-driven solution that still creates good profit for
people.
Mrs. Boebert. Yes. And in your opinion, do you oftentimes
see PBMs using rebates or promote expensive brand drugs, even
if they do not work as well on patients?
Mr. Baker. We do. You can, publicly available, pull a lot
of PBM formularies and continually see brand name drugs that
have lost patent exclusivity that are now generics, but those
are still the drugs that are preferred on those formularies.
Mrs. Boebert. Thank you very much, Mr. Baker, and, Dr.
Atkins, do you mind explaining the protocol of step therapy or
fail first?
Dr. Atkins. Sure. Fail first, one example I gave of it,
anti-medications for nausea and vomiting for chemotherapy.
There are certain drugs we want to use with certain
chemotherapy because some drugs cause more nausea than others.
So, I may want to use drug X, and the PBM will say no, you have
to use drug number A. And if the patient fails that by getting
really, really sick, then I can go back to the drug I want to
use. That is one example of step therapy or fail first.
Mrs. Boebert. So, you have seen patients be affected?
Dr. Atkins. Yes.
Mrs. Boebert. Do you think that patients are being failed
by PBMs and their insurers?
Dr. Atkins. I think they are. I mean, as a physician, my
job is to take care of patients the best way I know how. And
when I give a recommendation or write a prescription and then
someone else who does not do what I do, does not have my
training, stands in the way of me taking care of my patients,
that is definitely failing the patient.
Mrs. Boebert. Thank you. Well, I am very excited to have
had this hearing today. Thank you, Mr. Chairman, and thank you
to my colleagues on the other side of the aisle. It sounds like
that we have a lot of things that we can work together on.
Thank you so much to our witnesses here for providing your
testimonies and your expertise here in this committee room
today. I hope that we can provide solutions to help you help
your patients and to get this problem that we all see as very
detrimental, under control. Thank you so much. I yield.
Chairman Comer. Thank you. The Chair recognizes Ms.
Crockett from Texas.
Ms. Crockett. Thank you, Mr. Chair, and thank you to each
of you for being here and being willing to repeat yourselves a
lot. So, what I am going to try to do is, No. 1, applaud all my
colleagues, which, you know, this Committee tends to be a
little partisan, and so, I did not know that we could actually
agree on much of anything. And so, you know, today has revealed
the miracles that are still happening in the world.
But I think that we all agree that Americans deserve an
affordable healthcare system that works, and the one that we
have right now is broken, but it does not have to be broken
because we know that other countries are doing this so much
better. But we are supposed to be the gold standard in the
world, and so what I want to talk about is a little bit of my
experiences, and I most likely will maybe have a question for
Dr. Atkins.
When I swore into Congress, I honestly did not know what to
expect as it relates to the No. 1 constituent issue. If I had
to guess, I would assume people would generally call to get
guidance regarding tax returns. After all, I was swearing in in
the thick of tax season, and financially, people were
struggling. But instead, the No. 1 topic of our phone calls was
regarding Medicaid and Medicare. I was floored, but it was so
overwhelming that I recruited an amazing constituent advocate
by the name of Mary from the hospital sector to assist us and
minimize the learning curve of all the complexities regarding
Medicaid and Medicare.
I thought, great, we are off to an amazing start. The
Democrats in the 117th, along with President Biden, were the
architects of the Inflation Reduction Act, which, as mentioned
over and over in this hearing, dramatically reduced some of the
pharmaceutical burdens on our most vulnerable populations. But
there is still more work to do, which is why we are here.
The question is, how did we get here, though? I mean, as
mentioned before, we are the United States. And so, over time,
we have learned that certain medications are more vulnerable to
drug shortages when there is a lack of economic incentives to
produce them. And so, I want to talk to you about a constituent
call that I received because it feels like this is a multi-
layered issue.
So just this week, Melissa called our office, and Melissa
also, I think she wanted to make sure that I got the message.
She decided that she was going to tweet at me as well, and so
she tweeted at me on all my accounts to make sure that I knew,
but it is just that serious, and that is what I want people to
understand. This price gouging while we heard a conversation
about not being able to get birth control is not necessarily
life or death. When Melissa called, Melissa called because
there is a shortage as it relates to cancer medications.
Dr. Atkins, I know that you just mentioned some things as
it relates to cancer, but are you aware that there is currently
a massive shortage that we are experiencing in this country as
it relates to cancer medications?
Dr. Atkins. Yes. Right now, there are several drugs that
are shortage of. One is a medication called carboplatin. And it
is a very old drug. So, it is only generic, and there are not a
lot of incentive to keep making it. So right now, I mean I
talked to my pharmacist about this yesterday before I came here
and said where do we stand with carboplatin. And he told me,
well, we are allowed to order based on what we ordered last
month, so we are good through June, but after June, we do not
know. And so, every other oncology practice in this country is
experiencing the same thing. Another medication that is on
shortage is a medication called 5FU. 5FU is the base drug for
every GI cancer, colon, stomach, appendiceal, esophageal. So,
these are our real problems that we face every day, and that is
not on top of the price of drugs.
Ms. Crockett. Exactly. And so, it is frustrating because,
literally, Melissa, called our office, and Kylie who answered
my phone, sent a message talking about the fact that she was
almost in tears when she got off the phone because Melissa is
scared that she literally may lose her life because she cannot
gain access in this country.
What is frustrating for me--I am from the state of Texas,
as mentioned, and even in the state of Texas, there was a bill
that was just passed. And this bill is creating an organization
within the state of Texas so that we import drugs from Canada
because of the cost that our drugs are placing on our most
vulnerable.
The final point that I really want to make, though, is that
we are also right now in the midst of a fight as it relates to
the debt ceiling, and right now, this is the partisan issue. I
am going to tell you that it is quite frustrating that we are
talking about potentially not funding folk that are already
struggling because this hearing is about the fact that most
people cannot afford these drugs as it is. And now we are
talking about they may not even have the coverages of Medicaid
and Medicare because we are talking about cutting them off. We
deserve better, the American people deserve better, and I
appreciate your fight. We are in this together. Thank you so
much, and I yield back.
Chairman Comer. The Chair now recognizes Mr. Fry from South
Carolina.
Mr. Fry. Thank you, Mr. Chairman, for having this hearing
today. This is actually pretty remarkable, just the back and
forth, the camaraderie a little bit that we see on both sides
of the aisle.
Last year, PBMs raked in billions of dollars in profits.
This effectively means that every American, based on the
profits, pay about $70 to PBMs just to have access to
prescription drugs. Drug manufacturers received 37 percent of
that money spent on prescription drugs, which is a decrease
from 50 percent in 2013. PBMs are retaining 69 percent of the
money hardworking Americans are spending.
And I get these figures, Mr. Chairman, and I think Dr.
Carter is going to be in here, but if he does not make it, I
would like to request unanimous consent to put his paper,
``Pulling back the curtain on PBMs: A Path Toward Affordable
Prescription Drugs,'' into the record.
Chairman Comer. Without objection, so ordered.
Mr. Fry. Thank you. One of the things that we touched on a
little bit, and another Ranking Member did, and Ms. Boebert
did, are fail first policies or step therapy. Dr. Atkins, in
your role as an oncologist, how frequently are your patients
required to fail first a medication?
Dr. Atkins. I could not give an exact percentage, but one
time is too many, as far as I am concerned. To give another
example, I had a patient who had stage 4 breast cancer, and
there was one medication I wanted to give her called a CDK4/6
inhibitor. And the one I wanted to use, her PBM said, no you
have to use this one, and if she fails that one, you can use
the one you want to use. Well, the thing that was frustrating
was, one, they are getting in the way of me taking care of my
patient. That is No. 1. No. 2, per the national guidelines, if
a patient fails one CDK4/6 Inhibitor, you do not give them
another one. So, they are getting in the way of me taking care
of my patient, also trying to treat a patient without a
license, and trying to treat that patient in the wrong manner.
Mr. Fry. Right. They are not medical doctors.
Dr. Atkins. No, they are not.
Mr. Fry. They are not licensed in your state. They do not
have the training that you have. Is that correct?
Dr. Atkins. That is correct.
Mr. Fry. But they are making these decisions, and we can
speculate why. We have a lot of reasons why, but they are
making these decisions without being in the room, the clinical
room, with you and that patient.
Dr. Atkins. Exactly.
Mr. Fry. Why do you think they do that? What do they cite
as a reason when they deny a patient?
Dr. Atkins. Well, the real reason is money. They do
whatever is more profitable for them. They will say it is for
safety or to maybe rein in unnecessary spending, but that is
not the truth. The truth is, the more they inhibit me, the more
money they make.
Mr. Fry. Right. And so, what does your patient do when they
are required to fail first?
Dr. Atkins. The patient is very upset. They lose hope.
Their life expectancy is shortened. And with oncology, you have
the cancer diagnosis, and you have the emotional toxicity of
the whole diagnosis. So, if someone cannot get their treatment
on time, the treatment that their doctor recommends, it pretty
much destroys the patient emotionally.
Mr. Fry. You are a very competent doctor. When your
patients call, I am sure you call them back. But you see these
barriers, these delays even within the office setting when a
patient is required to fail first, they have to call your
office back, correct?
Dr. Atkins. Yes.
Mr. Fry. And get another prescription. Is that right?
Dr. Atkins. Yes.
Mr. Fry. And you have other patients that you are seeing.
You are incredibly busy. And so, in one of the most vulnerable
moments of their life, they do not have the ability to get the
treatment that they need because these PBMs are requiring you
to fail first?
Dr. Atkins. Exactly.
Mr. Fry. Without that medical training?
Dr. Atkins. Exactly.
Mr. Fry. And this is not just cancer, Doctor, right? These
are a whole host of other medical conditions, right? I mean, if
you look at opioid use disorder, you are required to fail first
on that. Congressman Higgins talked about MS. You are required
to fail first on that. These are not just cancer drugs. These
are a whole litany of conditions that somebody may have that
they are required to fail first.
Dr. Atkins. That is correct.
Mr. Fry. So, you have the delays. Is it fair to say that
you have an increased cost to the patient because they are
constantly having to go back to the doctor?
Dr. Atkins. That is correct, yes.
Mr. Fry. So, who is this saving money for?
Dr. Atkins. PBM, I suppose, but not the patient.
Mr. Fry. Well, I mean, based on the data, I would say that
it does not even save them money.
Dr. Atkins. I think if the patient does not take the
medication or the patient is no longer alive, they may save
money by not providing care.
Mr. Fry. Can you talk about the dangers this poses with
life-threatening illnesses, like cancer in your instance, what
dangers these delays pose to a patient?
Dr. Atkins. Several. One, patients may not get the
medication. I have one example where there was a patient who
was prescribed a medication called Cabometyx. So, they wanted
to get the medication at the drugstore, where the pharmacy,
where the physician was. Usually in our office, we have a
patient account manager, who will help patients get assistance
for drugs.
Mr. Fry. Are you aware of any instances where a fail first
policy led to a severe disability for a patient, maybe yours or
somebody else's?
Dr. Atkins. I will say yes. Someone has a lot of nausea and
vomiting, they are very sick unnecessarily if they fail the
first. They are not allowed to use the medication I want to use
if they fail significantly first. Yes, I will say nausea,
vomiting probably are the most common one.
Mr. Fry. Thank you, Mr. Chairman. I know I am out of time,
but with that, I yield back.
Chairman Comer. The Chair now recognizes Ms. Stansbury from
New Mexico for 5 minutes.
Ms. Stansbury. Thank you, Mr. Chairman, and I want to say
thank you also to our witnesses. Thank you for serving, caring
for, and fighting for our families and communities.
I personally believe that healthcare is a human right, a
fundamental right. The ability to access healthcare, obviously,
is not just about the dignity and wellbeing of our communities
but about the survival of our family members. Yet millions of
Americans and thousands of New Mexicans struggle to access even
the most basic care. In New Mexico, in my home state, over 60
percent of our community members are dependent on Medicaid and
Medicare to receive care of any kind. We have one of the
highest rates of Medicaid and Medicare need in the entire
country.
You know, today, we have talked a lot about policy. We have
talked about very technical issues around billing and
insurance. But at the end of the day, what we are talking about
is people's lives. These are our parents, our grandparents, our
children, people who are unable to actually access lifesaving
care, medications, because No. 1, they cannot afford it. No. 2,
in New Mexico, we have such a severe provider shortage, they
are not actually able to access providers. And I think as we
heard today, these for-profit companies are helping to drive
more and more care providers out of business. So, when we talk
about these issues, we are talking about the life and death of
our communities.
And for me, this is a very personal issue. I grew up in a
very low-income family. Before the Affordable Care Act, I did
not have healthcare insurance. I have watched as countless
members of my community could not access care, could not access
lifesaving medication. And it is why I have spent much of my
elected career, since I was first elected in 2018, fighting to
change this broken system, advocating in the state legislature
to reform prescription drugs, and prior authorizations, and
other necessary improvements in insurance, and here fighting
for the passage of the Inflation Reduction Act.
We have talked a lot this morning about the Inflation
Reduction Act and the ways in which it will enable Medicare, in
particular, to address prescription drug costs. But I was
struck, Mr. Isasi, in your testimony, and I really appreciated
that you provided a pretty detailed description of many of the
ways we can build on the IRA to address these issues. So, I
wonder if you could briefly just share some of those solutions
so that we can walk away with some real solutions today.
Mr. Isasi. Yes, absolutely. Thank you for the question. So
first and foremost, we have to extend the negotiated price to
the 180 million Americans who have employer-sponsored coverage,
who right now do not get the benefit of that. Two, we have to
expand the number of drugs. Right now, in 2026 we will have 10
drugs negotiated, right? We should have at least 50 that are
subject to negotiation. So those are the two really, really
important reforms, make sure the inflationary caps apply across
all patient populations, et cetera.
Ms. Stansbury. Yes. In your testimony, you said, and I
quote, that ``the Inflation Reduction Act is the most
significant legislation ever passed by Congress to end the
abusive price gouging by pharmaceutical companies,'' and I
think a lot of people do not really know what the Inflation
Reduction Act is. And not only did it address pharmaceutical
prices, but it extended access to Medicaid in New Mexico for
thousands of individuals. Those are lives that will be saved.
Those are people who can go to see doctors, like Dr. Atkins, in
order to get lifesaving care, and to get their medications. So,
what we do in this chamber is not just a bunch of talking
points.
And I want to add on the note that my colleague from Texas
made, that while I do appreciate the bipartisan tone and tenor
of this particular hearing, we are in the midst of a battle
right now in the halls of this chamber over our debt ceiling.
And part of the cost of that battle right now is our colleagues
across the line are threatening to take away access to Medicaid
for millions of Americans. So, while we can sit here in this
hearing room and talk about how discouraged we are, that these
for-profit companies are price gouging our elders and our
family members, our friends across the aisle are actually
trying to take away your healthcare right now. So, let us be
real about what is actually happening in the chambers of this
Congress right now.
So, I appreciate the conversation. I do appreciate that we
have talked about some real solutions today. I appreciate, Dr.
Atkins, your lived experience and you are sharing about your
patients. Thank you for bringing those stories into this room.
But if we really believe that healthcare is a human right, then
it is not just about one hearing, one bipartisan hearing. It is
about making sure that the laws that we pass, that the
arguments that we have in these chambers actually reflect that
we believe and are going to take action to make healthcare a
reality for every American. And with that, I yield back.
Chairman Comer. The Chair recognizes Mr. Timmons from South
Carolina.
Mr. Timmons. Thank you, Mr. Chairman. I think over the last
few decades, we have been having this conversation about is
healthcare human right. I think that has been put to bed. I do
not necessarily agree with the outcome of it, but I think for
all intents and purposes, that has been ceded. So, if that is
the case, I would like to talk about the fact that rights come
with responsibilities.
The American population is failing, is failing. Thirteen
percent of the population of planet earth is obese, 40 percent
of the United States. As you get overweight and obese, it goes
up to 70 percent in the United States. Diabetes alone, 37
million Americans, of which about 95 percent have type 2
diabetes. That costs annually $237 billion in direct costs and
$90 billion in lost productivity. And we are talking about
costs, and we are nickel and diming where we can. That is what
we do, but at the end of the day, we have to overhaul the
system. We treat sickness. We do not facilitate health and
wellness. And if you have been taking a pill for more than a
couple of weeks or months, you probably could have made life
changes that would result in you no longer needing that pill.
I own a CrossFit gym and a yoga studio. I have coached
people from being type 2 diabetic to no longer having to take
any drugs because of that. I have seen people lose 40 pounds,
go from taking 15, 16 pills a day to taking zero pills. So,
while we are talking about the costs associated with our
current healthcare system, I think it is wrong for us to not
have the really core conversation of we cannot continue down
this path. We cannot even field a military. We cannot even
field a military and our lost productivity, our healthcare
system is failing.
I guess, Dr. Atkins, I mean, do you agree that diet and
exercise can solve the vast majority of illnesses facing
Americans?
Dr. Atkins. It plays a role. However, when I have a patient
with cancer, my goal is to treat them. I am not concerned about
what happened before they got the diagnosis.
Mr. Timmons. What is your probability of getting cancer if
you are 200 pounds overweight and have not exercised at all? Is
it higher or lower than if you are relatively fit?
Dr. Atkins. It is higher. I do not know the exact
percentage, but it is higher.
Mr. Timmons. OK. So, it is higher. So again, even cancer,
if you are not taking care of yourself, then you have a higher
probability, which again, insurance is a game of underwriting
risk. And you have to take into account the healthiest person
with the least healthy person, and I guess we are just losing
this personal responsibility component of all of this. So, what
are some ways that we could incentivize health and wellness,
and I am going to throw it out?
But, I mean, as far as I am concerned, at some point there
has got to be some sticks involved. We have to have carrots to
facilitate health and wellness. But you cannot--I always use
alcohol, or, I mean, if you drink two handles of liquor a week,
you will likely get cirrhosis of the liver eventually. And at
some point, somebody is going to tell you, this is the outcome.
Where is the personal responsibility in that because they do
not have any additional premiums? They had no change in their
financial perspective. Do you think that we can find a way to
incentivize? Dr. Atkins, again, do you think that we can find a
way to incentivize health and wellness and disincentivize
unhealthy habits?
Dr. Atkins. I am sure there is a way, but I do not have an
exact answer to that question.
Mr. Timmons. Mr. Baker, what percent of the prescriptions
that are written are for longer than, let us just say, a month,
how many people are chronically taking drugs?
Mr. Baker. I think we probably see about 65 percent of our
medication fills for chronic needs and about 35 percent for
acute, so antibiotics or other.
Mr. Timmons. And, Dr. Duane, I want my pharmacist to be
incredibly competent and awesome. I do not want to know them
because if I know them, it means that I have made some
decisions to get there. What percent of your clients have you
approached? How many prescriptions you fill, do the individuals
know your name?
Mr. Duane. Well, at an independent community pharmacy, I
think the clientele may be self-selecting, so I would say that
it is much higher. I would say a lot of my patients, the
majority of my patients, I would say know me, know my family,
know my story, ask about my children.
Mr. Timmons. That is more because of a rural population as
opposed to----
Mr. Duane. No, we are more of an urban inner-city
population, but, no, I just think it is because what those
people are seeking out.
Mr. Timmons. OK. Well, again, I just really think that we
need to find a way to incentivize good decisions and prioritize
diet and exercise because that will bring down the cost of
healthcare for everyone if we have a healthier population, and
we do not have 68 percent of the United States population being
obese. With that, Mr. Chairman, I yield back. Thank you.
Chairman Comer. The Chair now recognizes Ms. Porter from
California.
Ms. Porter. Mr. Duane, you own Panama Pharmacy. What kinds
of things can your shoppers buy besides prescription medicine
at your pharmacy?
Mr. Duane. We have a selection of medical supplies and
over-the-counter type items for treating simple illnesses,
vitamins.
Ms. Porter. Let us say a shopper needs vitamins. How does
the shopper know how much the vitamins are going to cost?
Mr. Duane. We have prices on our shelf tags.
Ms. Porter. They can see the price they will pay.
Mr. Duane. That is right.
Ms. Porter. It is just printed right there on the shelf.
They can comparison shop, they can choose, they go to the
register, and that is what they are charged.
Mr. Duane. That is correct.
Ms. Porter. Now, let us say the shopper, in addition to
vitamins, also needs to fill a prescription. Can they look at a
price tag on a shelf, on a kiosk to find out how much they are
paying for the medication?
Mr. Duane. No, ma'am. There is nothing like that.
Ms. Porter. So how do they get that information?
Mr. Duane. Well, they could ask me, and sometimes they do,
and I tell them what their insurance is charging them. I
suppose I could call their insurance company and ask them as
well, but for most people, I think it is just unknown.
Ms. Porter. Does every consumer who buys the same jar of
vitamins pay the same price?
Mr. Duane. Yes. In my pharmacy, the price is the price, so
that is correct.
Ms. Porter. You do not eyeball consumers and decide who has
Aetna and who has Humana and then the vitamins cost a different
amount?
Mr. Duane. No, ma'am. We do not do that.
Ms. Porter. There is not differential pricing for melatonin
based on whether they are being ripped off by Aetna or ripped
off by UnitedHealthcare?
Mr. Duane. That is correct.
Ms. Porter. What happens if I go to fill a prescription at
your pharmacy? Does every customer pay the same price?
Mr. Duane. No.
Ms. Porter. Why not?
Mr. Duane. Well, I mean, it is because of the insurance
company that is paying for their drugs.
Ms. Porter. And who negotiates with the insurance company
about whether those drugs are covered and at what price?
Mr. Duane. Oftentimes the insurance companies themselves
negotiate with the manufacturers of the drugs, and that is how
they come up with the price that will be charged to the
patient.
Ms. Porter. Then what do pharmacy benefit managers do?
Mr. Duane. They purport to do that.
Ms. Porter. Explain.
Mr. Duane. Pharmacy benefit managers argue that they work
with pharma in order to negotiate the best discounts. In my
opinion, it sounds like they are talking on both sides of their
mouth when they say you have to have us in order to lower drug
costs, but, oh, by the way, drug costs have been completely and
utterly unaffordable in the same amount of time.
Ms. Porter. Well, so pharmacy benefit managers, though,
they say that they are negotiating prices, where can I go to
learn how much they are saving us, saving me, saving our
country? Where do I go to find this information to quantify
this purported good that they are doing?
Mr. Duane. I have not seen anything publicly available that
reports that.
Ms. Porter. Me neither. Pharmacy benefit managers do not
reveal to either health insurance companies, or patients, or
pharmacies exactly who is getting what deal, and they make
money at every step of the process. They pocket money from drug
manufacturers, they pocket money from pharmacies, they pocket
money from health insurance plans, and nobody knows if they are
actually driving down the cost.
I believe that there was a time that pharmacy benefit
managers maybe did save some money along the way, and I think
that is why health insurance companies gobbled them up because
now they can profit twice. They can profit once as Big Pharma,
as the health insurance company, as Big Pharma, as drug
manufacturers, and they can profit again as pharmacy benefit
managers. Mr. Isasi, what do you think of this theory?
Mr. Isasi. I think that it depends on which payer. I think
in Medicare, we do actually get the information. We know what
the prices are, and we know that they are saving us money. And
that is what CVO gives us, a score that says if you take them
away, prices go up.
Ms. Porter. But why could not Medicare just negotiate? Why
do I need to hire? Is there something, like, special like oil
you get rubbed on you when you become a pharmacy benefit
manager that you are able to drive a bargain that our
government officials cannot do?
Mr. Isasi. Absolutely not, except that when Part D was
created, in the law it said you cannot negotiate.
Ms. Porter. So, Congress created this beast.
Mr. Isasi. That is exactly right.
Ms. Porter. And it would now be on Congress to rein it back
in.
Mr. Isasi. That is right.
Ms. Porter. Mr. Duane, do you think that PBMs always
negotiate a better price than your customers would have paid
without insurance?
Mr. Duane. No, I do not think so. I think that the fact
that there are so many discount card programs and cash pay
programs are evident of that.
Ms. Porter. I mean, I have actually asked how much it cost
with insurance, gasped in dismay, and then had the pharmacists
suggest that I walk over and get a little plastic GoodRx card,
and I have heard from other constituents who do that. Since my
first term in Congress, I have introduced legislation to get
full pricing information to patients without them having to
ask. We cannot stop PBMs from gouging us until we have the
information, we need to hold them accountable. Some of that
information is upside to what they are actually negotiating in
terms of savings, but some of it is down to the consumer.
In two Congresses, I have not had a single Republican join
my Lowest Prices for Patients Act, which would require patients
to be told whether it was cheaper to get the drug without
insurance. I would like to invite any of my colleagues to join
me in that legislation. This has been a great showing of
bipartisanship, Mr. Comer, but I think we need to deliver
solutions together as well.
Chairman Comer. Thank you. The Chair now recognizes Mrs.
Luna from Florida for 5 minutes.
Mrs. Luna. Hey, everyone. Rough day? Yes, that is OK, but
my questions will not be that bad. Dr. Duane, how are PBMs
antithetical to a patient-centered, consumer-directed
healthcare system?
Mr. Duane. Well, I think that if something was patient
centered, then by definition, it will be looking out for the
what is benefit of the patient. But I think that you can look
at stockholder reports and just the placement of PBM companies
on the Fortune's list of richest companies and know that
whoever they are looking out for does not seem to be the
patient.
Mrs. Luna. I could not agree more. When PBMs provide
contract terms to pharmacies like your own, are you able to
negotiate the terms of the contract, or are you forced to take
the terms presented to you?
Mr. Duane. No, I have tried to redline and scratch out
terms that I do not agree with and add terms that I think would
be mutually beneficial to myself and the patients, and they are
universally denied. It is a take-it-or-leave-it scenario.
Mrs. Luna. So, you really do not have a voice?
Mr. Duane. That is correct.
Mrs. Luna. How have PBM clawbacks, which occur when PBMs
charge a consumer a co-pay that is higher than the full cost of
the drug and then claw back the extra money from a pharmacy,
impacted your pharmacy?
Mr. Duane. It is tough to budget. I mean, it is just like
anything else. We are a small business. When I get paid one
amount of money and then months later have a very large
proportion of that money clawed back, it is very hard to do
business like that. It is very hard for me to forecast hiring
and retention of employees, things like bonuses, benefits. It
makes it almost impossible to do that kind of business.
Mrs. Luna. So, would it be safe to say that it makes it
hard for you to financially plan for your business?
Mr. Duane. It would be very safe to say that, yes.
Mrs. Luna. The state of Florida is leading the Nation by
recently signing into law comprehensive reforms that will
increase accountability and transparency for prescription drug
costs. This legislation institutes a series of patient
protections to include prohibiting a PBM from forcing a patient
to undergo step therapy or failing twice, i.e., the practice of
forcing someone to restart a medication that they know does not
work when they switch insurance companies. What impact will
this legislation have on your business?
Mr. Duane. So, I worked with the Florida legislators and
Governor DeSantis with this legislation, and it is going to be
very impactful to my business and to the patients that I serve.
I think that patients will be in a position to what they see is
what they get. They will not have surprise billings after the
fact. Also, we will not have surprise clawbacks after the fact.
I think it will save patients money in passing the rebates
along to the point of sale and to lower their out-of-pocket.
So, I think that it is a very robust legislative package that
the state of Florida passed that is going to do a lot of good
for our patients and my business.
Mrs. Luna. Do you think that this is a good model that we
should replicate at the national level?
Mr. Duane. I think it absolutely is. I think that it
eliminates spread pricing. It makes sure that pharmacies can be
on a fair level playing field, no matter if they are a small
business or if they are a large conglomerate. So absolutely, I
think it is a framework.
Mrs. Luna. And just my last question before I yield back
the rest of my time. In some instances, the medications that
these patients are forced to have to go back and do again, are
these medications treating cancer and terminal illnesses?
Mr. Duane. Absolutely, they are. Yes, we see that.
Mrs. Luna. So, it is essentially forcing someone to do
something that they know it is not effective and could kill
them?
Mr. Duane. That is correct.
Mrs. Luna. OK. Thank you, Chairman. I yield my time.
Chairman Comer. The Chair now recognizes Mr. Connolly from
Virginia.
Mr. Connolly. I thank the Chair and the Ranking Member for
having this very important hearing.
I recently heard from a constituent who is on TRICARE and
spent 30 hours trying to secure his wife's prescription for a
very serious illness through a PBM named Express Scripts. The
constituent found out this prescription was only available
through an Express Scripts-owned specialty pharmacy called
Accredo. Quoting the constituent, Accredo was initially unable
to tell him how much the medication would cost before they sent
it. When they finally gave him an answer after 30 hours, that
answer, in fact, proved wrong, and he still does not know what
the medicine for his wife's lifesaving is going to cost. Dr.
Duane, shouldn't consumers be able to get a fairly
straightforward answer and not take 30 hours to get the wrong
answer on what prescription drug or a drug would cost?
Mr. Duane. I think they absolutely should, and I think it
is doubly wrong when it is someone who signed up to fight for
this country, to die for this country, to be given benefits
that are commensurate with the sacrifices that they made, only
to be told that the amount of hoops that they have to jump
through, that the amount of, you know, 30 hours to your point,
it is unconscionable.
Mr. Connolly. Dr. Atkins, we have talked about, and you
talked about transparency, and I agree that transparency is
absolutely essential. But I also believe that if I had cancer
and you were my oncologist, I want you making decisions about
my treatment and the drugs you prescribe that you think are
necessary and efficacious with respect to my condition. How do
we restore the power of physicians to make decisions instead of
bureaucrats at a PBM?
Dr. Atkins. If you eliminate the PBMs, that would be one
major step. And with your patient that spent 30 hours, I pretty
much guarantee the physician's office probably spent 8 hours
dealing with Accredo before the patient spent 30 hours. They
inhibit our ability to take care of patients every day.
Mr. Connolly. Yes.
Dr. Atkins. If you get rid of that middleman, that will
make our lives a lot easier and the patients' lives easier.
Mr. Connolly. Because I think this is important. Is bad
enough that they have such monopolistic or oligopolistic
control that they influence prices. I think, Mr. Baker, you
pointed that out that compared to Europe or other places, we
are paying multiples for the same drug more, and in part it is
because of this influence, but it is also they are making
medical decisions. And in some cases, those are life and death
decisions, especially when it comes to Dr. Atkins' patients.
Mr. Isasi, what was the purpose of PBMs?
Mr. Isasi. To basically allow for a consolidation and
negotiation, to get a better price for drugs.
Mr. Connolly. And has that worked?
Mr. Isasi. The honest answer to that is, it is very mixed.
And in, for example, in Medicare, we are getting some better
prices, but then there is all of these crazy distortions that
are also in play, and we need to solve them. We need
transparency, point of service, all of those things.
Mr. Connolly. But, I mean, are the incentives in place for
PBMs to want to negotiate lower prices for consumers?
Mr. Isasi. In some instances, they are. For example, in
Medicare, there is a requirement under the medical loss ratio,
right? So, they cannot actually make more profit.
Mr. Connolly. But put aside Medicare for a minute, what
about the rest of us?
Mr. Isasi. The rest of it, particularly for large employers
who use them all the time, it is a huge problem because they do
not have the information. And there is no way, especially with
vertical integration, to track the money flows.
Mr. Connolly. So, what do you think we should do by way of
reforming the system to make a better deal for consumers and to
maybe make more competitive what is now a near monopolistic
kind of system?
Mr. Isasi. Yes. Well, first is expand negotiation for fair
drug prices by the government. No question that will have the
biggest impact. But second, I mean, you will hear these
stories. It is crazy that an organization that was created to
negotiate fair price is making money by steering people away
from a community pharmacy. That should not be allowed.
Mr. Connolly. Which is why I asked you do you think it has
really worked. The intent was good, but listening to all of you
testify, it does not seem like the outcome is what was desired.
Mr. Isasi. Right. Right. The tricky thing here is that CBO
is going to give you guys scores because there are discounts
happening. But these discounts can continue, and we can make
sure that they are neutral to, for example, who fills a
prescription or why should a PBM be able to hide its rebate,
the money flowing through rebates to a manufacturer. That
should be available to the employer who is paying their bill,
right? So, there are key reforms that can really change this.
Mr. Connolly. My time is up. Mr. Chairman, I look forward
to working with you on bipartisan legislation because I think
it is just critical.
Chairman Comer. Thank you, and I think we can do that, and
I appreciate that. The Chair now recognizes Mr. Burlison for 5
minutes.
Mr. Burlison. Thank you, Mr. Chairman. We heard a lot about
the evils, the profits of PBMs today. I just kind of want to
get an idea, level set, and I will just go in line. Is profit
evil? Is it evil to profit?
Dr. Atkins. No.
Mr. Burlison. OK.
Mr. Baker. I would agree it is not evil to profit.
Mr. Burlison. OK.
Mr. Duane. No.
Mr. Isasi. Depends on what you are profiting on.
Mr. Burlison. Is it evil to profit off of patients?
Dr. Atkins. It is if it risks their life, yes, it is.
Mr. Burlison. OK.
Mr. Baker. I think as long as we understand the profits
being made and the value we are getting out of said profits, it
is not.
Mr. Duane. I mean, I am a community pharmacy owner, so the
profit that we make goes directly back into caring for more
patients. In that way, I do not think that profiting off of a
particular patient to help more is a problem.
Mr. Isasi. I would say, if you can develop a system that is
actually in the profit be in line and actually what is good for
patients, that is a great outcome.
Mr. Burlison. I am glad that, Dr. Atkins, you and Dr. Duane
said that it is not, because I am sure, Dr. Atkins, you would
agree that your firm does not lose money every year, year after
year, correct?
Dr. Atkins. We cannot stay in business and take care of
patients if we lost money year after year, so yes.
Mr. Burlison. And you are not guilty of the profits that
you make. I do not think you should.
Dr. Atkins. No.
Mr. Burlison. Same thing with you, Dr. Duane.
Mr. Duane. That is correct. Right.
Mr. Burlison. OK. So, I think what we have established
there is that there is maybe a difference between the profits
that you make, the profits that a PBM makes, correct? What
gives them the ability to make such egregious profits?
Dr. Atkins. I think they just took the ability. They did
not ask anyone. They just made up their own rules.
Mr. Burlison. They made up these laws?
Dr. Atkins. They make their own rules.
Mr. Burlison. Mr. Isasi, did they make up these laws?
Mr. Isasi. No, Congress created laws that are allowing all
of these abuses to take place.
Mr. Burlison. Yes. In fact, I would contend, I kind of like
your line of logic, is that if PBMs are the monster, this place
is Dr. Frankenstein, OK? This place has totally turned the
healthcare industry from a free market into a total sick
industry, and first, we did it by things like occupational
licensing. We force patients to have to go to Dr. Atkins
specifically for treatment-related oncology. Then we added on
things like requiring health insurance companies to be mandated
to provide XYZ, you name it, everything in the book, including
all the pharmaceuticals. And then whenever we get angry, and
say, look at these doctors, they are making so much money, how
are they making so much money, we have got to pay through
insurance, we added another law, right? And then we say these
insurance companies are making so much money.
What is Congress' answer? Let us add a law that says
everyone has to buy insurance. That will fix it, and then we
overregulate insurance companies to the tune where--how many
choices in the marketplace are there? How many insurance
carriers? Mr. Baker, how many insurance carriers?
Mr. Baker. There are three that dominate, but then there
are a lot of significantly smaller----
Mr. Burlison. There are three. If people are going to make
so much money, why are there only three companies that want to
do it?
Mr. Baker. Well, again, I think there are a lot of
companies that want to do it. It is just hard to break in when
those----
Mr. Burlison. Because of this place.
Mr. Baker [continuing]. Everything.
Mr. Burlison. Because of this place and government
regulations. So, my question is, we created this monster. We
did it through government regulations. Do you really think that
this place has the answers to fix it? Mr. Isasi?
Mr. Isasi. What I would say is it has a moral obligation to
fix the problem they created. It has a moral obligation to do
that.
Mr. Burlison. And by adding more laws?
Mr. Isasi. No, by addressing the distortions that people
are leveraging.
Mr. Burlison. So, would you say peeling back some of those
laws that we have added?
Mr. Isasi. Well, for sure, the first law we should peel
back is the ability of the government to negotiate a fair price
for American families.
Mr. Burlison. Well, let me ask you, Mr. Isasi. If we
eliminate PBMs today, who would benefit, other than patients?
Some people say patients.
Mr. Isasi. No question, drug makers would benefit.
Mr. Burlison. Drug makers. I mean, in one way, you could
say this meeting was brought to you by Pfizer because if there
is one company that will make money, it is pharmaceuticals
because no one will be there to negotiate with them. I am
looking for things to eliminate laws, to bring this healthcare
industry back to a market force so that patients know the
prices, and we do not have to force them. Let me ask, Dr.
Atkins, you are all in favor of price transparency. Are you
transparent on your prices and your profits with patients?
Dr. Atkins. I am transparent on how much I pay for the
drug, but I do not know what the insurance paid.
Mr. Burlison. I am talking about your services. Do you have
a menu and you tell patients when they walk in what they are
paying?
Dr. Atkins. No, because it is different for every insurance
carrier.
Mr. Burlison. Right, because the market does not have to
because people do not make choices at that level. The employer
made the choice for them through the three or four insurance
companies that are available. Thank you, Mr. Chairman. I yield
back.
Chairman Comer. Thank you. Yes. The Chair recognizes Mr.
Auchincloss.
Mr. Auchincloss. Mr. Chairman, I appreciate the opportunity
to waive on to the Committee for this hearing as the rent-
seeking and self-dealing of pharmacy benefit managers has been
a focus of mine.
What we have heard today and what has been the thrust of
major proposed Federal legislation to date has been really
about transparency, and transparency is necessary, but it is
not sufficient. And to that end, myself and many others in
Congress have been drafting much more pointed legislation to
address point-of-sale rebating, spread pricing, DIR fees,
specialty pharmacy steering, improved NADAC reporting,
patients' assistance legalization, prior authorization reform,
and more.
And yet, Wall Street and the Big Three PBMs believe they
can shrug off this legislation and other proposed reforms, and
do not take my word for it. A recent JP Morgan Equity Research
report argued that Cigna and CVS investors, for example, should
not overreact to state and Federal scrutiny noting that
although, ``Legislation is on the rise, we believe the PBM
industry can digest these changes.''
Mr. Baker, I am worried that JP Morgan is right and that
the vertical integration of PBMs with insurers and retail
pharmacies fortifies them against piecemeal actions, even
strong ones, like the ones I mentioned. Should Congress take a
comprehensive approach to reform so that we are not just
squeezing the balloon but actually fully popping the gross-to-
net bubble?
Mr. Baker. I think that is an excellent question that has
so many layers, it is hard to give one linear answer. I do
fundamentally believe that the market can take care of itself
if the market is given the right rules to follow. And right
now, these large PBMs, because you do not know where the money
is going, they have full control. They have the ability to do
what they want. It goes against the American public.
Mr. Auchincloss. So maybe instead of saying
``transparency,'' we should be saying ``alignment of
incentives.''
Mr. Baker. I think that would make sense.
Mr. Auchincloss. And that we need this comprehensive suite
of reforms all at once so that we are not squeezing one part or
the other, but really doing root cause reform. I have been
encouraged to that end that the FTC recently expanded its
investigations into the anti-competitive practices of PBMs to
include yet another element of their vertical integration and
market concentration, which are group purchasing organizations,
have not been talked about enough, I do not think. These are
like PBM's PBMs, and these GPOs--Ascent, Zinc, Emisar--were
formed by the PBMs after President Trump's proposed reforms to
prescription drug rebates, and have kicked into high gear in
recent years as the Democrats have started to crack down on the
dysfunctional system under the Biden Administration. Two of
these PBM GPOs are headquartered overseas, despite PBMs being a
uniquely American phenomenon, in Switzerland and Ireland, both
famous for both tax and opacity arbitrage.
Mr. Baker, while these GPOs are opaque, even by PBM
standards, and that is saying something, and the FTC
investigation is just beginning, do you think it is likely that
these GPOs have been formed to do the following three things:
generate revenues and fees that will not need to be passed on
to plan sponsors; two, permit tax arbitrage; and three, provide
a hedge against U.S. reforms to PBM pricing practices?
Mr. Baker. I think those are three very good reasons that I
would create a GPO, two of which would be overseas. Yes, sir.
Mr. Auchincloss. Yes, and I want to put the PBMs on note
right now. You are not going to be able to offshore your
thievery, OK? That is not going to stand in the United States.
The FTC is coming after them, and they are going to have the
full support, I expect, of both sides of the aisle on that.
Mr. Isasi, I would say in this hearing and in your written
testimony, probably the most vigorous defender to date in this
hearing of the PBMs, you say in your testimony that, ``Some
drug costs are lower than they otherwise would be because of
PBMs. And yet, the trend line in the United States averaged
across all pharmaceuticals has been for gross prices to rise
and net prices to fall.'' In other words, PBMs have done a
great job of negotiating for themselves because the delta
between gross and net feeds their profits, but a bad job of
negotiating for patients whose out-of-pocket costs are based on
gross prices. Again, their out-of-pocket costs are based on
gross prices in this country. So just to be very clear, who
determines the out-of-pocket exposure of a patient, the drug
manufacturer or the insurance company?
Mr. Isasi. The insurance company.
Mr. Auchincloss. The insurance company does. It is, to me,
both a violation of medical best practice and immoral to say to
patients who have paid their premiums to insurance companies
that when a doctor prescribes them a medicine that they need,
that they have to have out-of-pocket cost. We should have zero
out-of-pocket costs for medically prescribed drugs in this
country, and let us be very clear about who is making that out-
of-pocket requirement. It is insurance companies, not drug
makers.
Chairman, I yield back. Thank you again for your
affordance.
Chairman Comer. Thank you for being here. Before I yield to
the next questioner, I want to say that this will be the last
question for a bit. They called votes, so we are going to
recess. It should not take very long, and then 10 minutes upon
the vote series ending, we will reconvene here and finish the
questions, and then provide a wrap up.
So, the Chair now recognizes the distinguished member from
Tennessee, Mr. Burchett.
Mr. Burchett. Thank you, Mr. Chairman. As the last person
up here for a little bit, you all have to act surprised and
delighted at my questions and act like they have never been
asked before. Dr. Atkins, thank you, ma'am, putting up with all
of these men up here today. I appreciate you, ma'am, and I want
to ask you a question. What pharmacy is associated with your
medical practice?
Dr. Atkins. We have an in-house dispensary.
Mr. Burchett. OK. Have any of your patients' medications
been denied or delayed due to pharmacy benefit manager
practices?
Dr. Atkins. Yes.
Mr. Burchett. OK. Is there any financial incentive for
pharmacy benefit managers in favoring expensive medications
over generic medications?
Dr. Atkins. Yes.
Mr. Burchett. Thank you. Dr. Duane. I assume that is the
way you pronounce your name, Duane.
Mr. Duane. It sure is. Yes, sir.
Mr. Burchett. All right. Good. Dr. Duane is the owner of
one of the oldest independent pharmacies in Jacksonville,
Florida and, I might add, the birthplace of the greatest rock
and roll band of all time, Lynyrd Skynyrd.
Mr. Duane. Yes, sir.
Mr. Burchett. Can you explain some of the benefits of
independent pharmacies to me briefly?
Mr. Duane. We can be a center of the community. We are more
than just giving medications to persons. We are acting as a
repository of information for our patients that come here, what
doctor in the community they may be able to connect with, or
what they could use over-the-counter for certain conditions
that maybe they cannot get in to see their physicians.
Mr. Burchett. I am glad to hear you say that. One of my
pharmacists back in Knoxville--I like very much, guy named Hank
Peck at Longs Drugs Store, he is that--you see the folks coming
in and they say, well, I got this, you know, I need a lip balm
or something, and he is more than just the guy behind the desk
throwing out pills, so I appreciate that. But these pharmacies
contract with pharmacy benefit managers to participate in the
pharmacy benefit managers' networks. Is that correct?
Mr. Duane. Yes, sir, that is right. I have to contract with
the PBM in order to bill them and take their plan.
Mr. Burchett. OK. Is it difficult for an independent
pharmacy to participate in a pharmacy benefit manager network?
Mr. Duane. I would say it is difficult to participate in
the process collaboratively. They can give us a contract, and
if we accept the terms, then we are in. If we do not accept any
of the terms, then we are out. There is no negotiating.
Mr. Burchett. OK. Could you also explain what the DIR fees
are?
Mr. Duane. So, DIR fees are a way for, really, more opacity
in the program. We get paid a certain amount of money, and then
weeks, sometimes months, sometimes more than a year later, we
get the money taken back, and it is very opaque as to how and
why those decisions are made.
Mr. Burchett. What impact did that 107,400-percent
increase, and my staff told me that is not a misprint, in these
fees from 2010 to 2020 have on the healthcare system?
Mr. Duane. Huge. An absolutely indescribable amount of
chaos in that we really cannot adequately plan for the next
week, next month, the next quarter because of the amount of
money being taken aback.
Mr. Burchett. OK. It gets to the point where these folks
were trying to be nice but are acting like a bunch of dirtbags,
in my opinion. They really are. I mean, this is pathetic. And
the DIR fees, they have had a negative impact. You have already
stated that, correct?
Mr. Duane. Absolutely. Tremendously negative impact.
Mr. Burchett. OK. Thank you. Dr. Atkins, what pharmacy is
associated with your medical practice?
Dr. Atkins. We have our own in-house dispensary.
Mr. Burchett. You told me that already. I am sorry, ma'am.
I got mixed up on my questions. I apologize, and I was overcome
by you and dealing with the rest of these knuckleheads all day.
This is just for the general bunch. Could the pharmacy benefit
manager practice be harmful to patients' health?
Dr. Atkins. Yes. They inhibit care and try to tell us how
to practice medicine when they do not have a license.
Mr. Burchett. Right, and it is somebody driving a four-
legged mahogany, as I like to say. They are behind the desk
somewhere. Are the benefit managers compromising patients'
health in exchange for profit?
Dr. Atkins. Yes.
Mr. Burchett. What should we do? What do you think should
be the end result? Should we do away with these things
completely? I mean, they were created to do good, and then
obviously the dirtbags took over and greed took over. What do
you all think?
Dr. Atkins. Well, one thing we have talked today that the
top three control 80 percent, and the next three control
another 16. So, six companies control 96 percent, so we disband
that, got rid of the oligopoly, that may help a little bit.
Mr. Burchett. OK. If we just passed a rule that said do
away with the whole daggum thing, could you all manage it?
Would you all not turn into a bunch of greedy dirtbags and we
would have to have you all back up here again?
Mr. Isasi. Well, the prices would go up.
Mr. Burchett. Prices would go up.
Mr. Isasi. Prices would go up.
Mr. Burchett. Do you agree with that, Dr. Duane?
Mr. Duane. No, I do not think necessarily. I mean, I think
that competition would breed just like anything else. So, I
mean, no, I do not agree with that.
Mr. Isasi. But let us remember that they are competing
against a very small, concentrated group of drug manufacturers
and try and negotiate price. So, this idea that they are
consolidated gives them more bargaining power, but to the
point, like, there are all these other ways they are trying to
make money now. They have nothing to do with negotiating good
price, and those things have to be eliminated, right? And, for
example, they should be neutral to where you are getting
prescription. Is it a community pharmacy?
Mr. Burchett. It should be what? I have run over time.
Mr. Isasi. Neutral.
Mr. Burchett. Neutral, OK.
Mr. Isasi. Neutral. Those are examples of ways in which
they should make sure that cost sharing for patient at point of
care is based on the price that is being paid, not on the list
price. There are very clear reforms that would actually put
them back on track to do what they are supposed to be doing.
Mr. Burchett. Thank you, Ranking Member, Chairman. I have
gone over my time. Thank you all very much.
Chairman Comer. Thank you very much. And due to votes, the
Committee will be in recess until 10 minutes upon the ending of
the last vote.
[Recess.]
Chairman Comer. The Committee will reconvene. The Chair
recognizes Mr. Langworthy for 5 minutes.
Mr. Langworthy. Thank you very much, Mr. Chairman, and I
want to thank all of our witnesses for being here today to
discuss such an important topic to millions of Americans.
In my district, community pharmacies demonstrated in real
time during the COVID pandemic the value of their service to
the communities that they serve. Our community pharmacies have
local connections to other services available in the community
to help deal with social determinants of health such as
nutrition, financial assistance, transportation services, and
offering free delivery of medications. Our community
pharmacists make up the backbone of small-town America, and we
need to address anti-competitive tactics used by PBMs and move
toward an environment where both can thrive.
Dr. Duane, have you experienced PBMs steering patients away
from your pharmacy?
Mr. Duane. Yes. That is a pretty common occurrence that I
experience. We especially experience it in some of the managed-
care plans. I have a patient that lives three doors down from
where my pharmacy, and instead she has to ride a bus from the
bus stop right in front of my pharmacy down to a large chain
pharmacy because we are not offered participation in that
contract.
Mr. Langworthy. Do you think that PBMs owning pharmacies
that compete with you is a conflict of interest?
Mr. Duane. It is a tremendous conflict of interest. I
think, if anything else, the thing that has probably been a
little undersold by me today in my comments is the conflict of
interest issue. I mean, anytime you have your direct competitor
also setting your prices, I do not know how you can invite
anything but you know bad things to happen.
Mr. Langworthy. Can you or anyone on the panel explain what
DIR fees are?
Mr. Duane. Yes. So, DIR fees are in Medicare program. And
what it amounts to is, we would get paid one amount of money,
and then sometimes months or even a year or more later, we
would have the PBM come back and clawbacks a quite substantial
part of that money, and it wreaks havoc on our ability to
budget.
Mr. Langworthy. And what are the impacts of direct and
indirect remuneration fees on your business?
Mr. Duane. I mean, it is hard to plan for things. It is
hard to make sure that we are going to have enough money in the
bank to make payroll to see if we want to expand, hire another
pharmacist, move into a clinical service, a non-dispensing
service. Anything like that really gets put on hold when you
are not sure if the money that is in your bank account today
will actually be there in a month or whether it is going to be
clawed back.
Mr. Langworthy. Now, how far down the line might those DIR
fees get clawed back?
Mr. Duane. There are some cases where it is more than an
entire year after that claim could be adjudicated.
Mr. Langworthy. So that customer might not even be one of
your customers anymore. They can come back and take those fees?
Mr. Duane. I have had payments clawed back from claims that
I know that the patient is deceased at the time that they
clawed the money back from me.
Mr. Langworthy. Do you believe that there would be any
impact of eliminating those fees entirely?
Mr. Duane. I think the impact would be tremendous. You
know, in 2024, I think that the fees are going to move to the
point of sale so that they will not be retroactive, but I
really think that that only solves a portion of the problem. By
eliminating the incentive for, again, my direct competition to
assess, you know, arbitrary fees on the business, that is what
would be most impactful to our ability to predict what we can
do with our staffing levels and our operation in general.
Mr. Langworthy. And to sum up, in the pharmacy world, would
you say that most independent pharmacies suffer at the expense
of PBM practices, which you know, some call monopolies?
Mr. Duane. Yes, we absolutely do suffer, and it is to the
detriment of our patients and their health.
Mr. Langworthy. OK. And last, Dr. Atkins, specialty
pharmacies serve patients who suffer from complex conditions,
and their medicines are usually brand name and single source
drugs. PBMs are shifting the high-cost drugs to their own
pharmacies to turn a higher profit. What should Congress do to
address this directly?
Dr. Atkins. One easy solution might be if I have the drug
in my dispensary in my practice, we could fill it there because
usually when we fill it onsite, it is better for the patient
and also more economical.
Mr. Langworthy. OK. Thank you very much for all of your
testimony, and thank you, Mr. Chairman. I yield back.
Chairman Comer. The Chair now recognizes Mr. Goldman from
New York for 5 minutes.
Mr. Goldman. Thank you, Mr. Chairman, and thank you very
much for holding this hearing. It is certainly much more
constructive and much more helpful than digging into the
finances of a President's family, so I am happy that we are
trying to do something meaningful here.
Last year, the Committee Democrats issued a report
discussing the ways that PBM formularies disproportionately
require patients to pay out-of-pocket for certain methods of
contraception. And, Mr. Chairman, I would ask unanimous consent
to enter into the record the Democratic Oversight Committee
staff report, titled, ``Barriers to Birth Control: An Analysis
of Contraceptive Coverage and Costs for Patients with Private
Insurance.''
Chairman Comer. Without objection, so ordered.
Mr. Goldman. Thank you.
Mr. Goldman. Now, the report found that products most
likely to face out-of-pocket costs are newer products and
products that are most appropriate for patients with distinct
medical needs. But the report also found that one of the
significant causes for the failure to provide contraceptives
under the ACA at no cost to the patient was a practice that is
often called fail first step therapy and prior authorizations,
which can be a barrier for patients trying to access
medications despite the fact that their doctors deem medically
appropriate, that they have to try a different perhaps lower
cost prescription medication or contraceptive prior to that.
And I am concerned about the PBMs' role in this and that
the PBMs are engaged in an effort to restrict reproductive
healthcare. Mr. Isasi, maybe you can talk a little bit to how
the fail first step therapy is intertwined with the PBMs role
in setting either price targets or access to various
prescription medication?
Mr. Isasi. Sure. Well, to begin with, we have to be a
country where when a drug is identified as important for your
health and well-being, that you can receive that drug and not
have a barrier put in between you and accessing that drug, and
that is what we stand for at Families.
The problem is when we continue to allow the drug
manufacturer to price gouge and then we put PBMs in the middle
and say now negotiate a price, right? Part of the negotiation
for them, part of the effect of that is to put one drug, prefer
it, steer people that way so they can get the discounts for
that drug that they have negotiated. When you take away the
ability for them to do that, it is harder for them to negotiate
a discount, but it really hurts the people for whom those drugs
are the ones that are needed.
Mr. Goldman. And given that many PBMs are owned by
insurance companies, obviously there is an incentive for the
insurance companies to pay less for a medication to solve a
particular issue if they can. How does that impact the ultimate
decision about what medication to prescribe to any given
patient?
Mr. Isasi. It is a real mess. Honestly, it is a real mess
because remember, we also live in an environment where doctors
can make more money if they prescribe a more expensive drug.
There are so many conflicts of interest in the system. So,
ultimately, what we need is the right drug to get to the
patient and not have all these conflicts of interest. And you
are describing one, the PBM conflict, but there are a lot of
other ones too. And we know that Americans are getting
prescribed a drug that costs $1,000 when an aspirin could be
just as good or better, right? There are a lot of perverse
incentives in the system.
Mr. Goldman. And Dr. Atkins, on the ground in dealing with
patients, can you describe for us how fail first step therapy
and prior authorizations actually impacts the care that you can
give to your patients?
Dr. Atkins. Sure. I will start with fail first. I will give
an example of a patient with metastatic breast cancer. There
was a medication I wanted to give her called a CDK4/6
inhibitor. I wanted to give her that one particular drug. Her
PBM said, no, you cannot give her that one, you can give her
this one, but if she fails this one, you can give her the one
you want to use. Well, per the National Comprehensive Cancer
Network guidelines that we use for oncology every day, if you
get one CDK4/6 inhibitor and fail it, you do not give them
another one because it is the same type, same class of drugs.
That, and then we have the issue with the anti-nausea
medicines for people who are getting chemotherapy. If we want
to give them one drug, they have to fail it and get really
sick. And then the PBM will say, OK, you can use the drug you
want to use to prevent this patient getting sick. Those things,
inhibit care, slow down care, cost patients----
Mr. Goldman. Even when you know what the side effects will
be and you have a way of solving for those side effects, you
are not able to give the compensatory drugs to offset the side
effects until they actually experienced those devastating side
effects?
Dr. Atkins. Correct.
Mr. Goldman. Wow, thank you. That is pretty shocking, and I
now yield back.
Chairman Comer. The Chair now recognizes Mr. Grothman from
Wisconsin.
Mr. Grothman. Yes. First of all, I am going to ask you a
question that is entirely on point. You probably do not know
the answer, but I have been trying to find the answer. Do any
of you guys know how much a hospital makes off of prescription
of remdesivir? You probably do not have any reason to.
[No response.]
Mr. Grothman. OK. On to the next question. I guess we will
start with Dr. Duane. You can pass if you give it to somebody
else. How much, and I know it must vary wildly from drug to
drug, but if I go to the pharmacy and get $200 for the drugs,
how much you think, on average, the pharmacy benefit manager
makes up for that?
Mr. Duane. I would not be able to hazard a guess. I mean, I
think that depending on what they have for the rebates and
things like that, they could make a whole lot of money or, you
know, on a generic drug of the same price where there is zero
rebate, they probably would not make very much money.
Mr. Grothman. Like, could you even guess wildly any one of
those?
Mr. Isasi. Well, we have studies of this, and University of
Southern California just put one out and said for a drug that
costs $100, the profit to the drug maker is $26, and the profit
for the pharmacy benefit manager is $2.
Mr. Grothman. Do you guys agree with that?
Mr. Duane. The average rebate on a brand name drug is much
higher than two percent on $100, so I do not know that study,
but I would not see it that way.
Mr. Isasi. But the rebate is not the profit. The rebate is
just part of the cash-flow.
Mr. Grothman. OK. We will give this one to Mr. Baker. PBMs
act as the middleman between drugs manufacturing payers, right?
Mr. Baker. Correct.
Mr. Grothman. After negotiations occur and agreements are
made between entities, where are those discounts going? Are
they making their way back to the patient or not, do you think?
Mr. Baker. A portion of them are, yes. What portion, we do
not know. I guarantee it is not 90 percent. It is probably not
80 percent. So, there is still a significant amount of money
kept in the middle that just kind of disappears and does not
help patients or anybody else who is fundamentally aligned with
trying to drive down costs,
Mr. Grothman. You feel it is going to the PBMs, or where do
you think it is going?
Mr. Baker. I think it is going to the shareholders of those
organizations, yes.
Mr. Grothman. OK. Do you think PBMs are using the drug
rebate payments to promote the use of more expensive brand
drugs?
Mr. Baker. Every day. Absolutely.
Mr. Grothman. OK. Do you think rebates that a drug
manufacturer pays to PBM can, therefore, lead to an increase in
the price of drugs?
Mr. Baker. Yes, sir, I do.
Mr. Grothman. Explain how that happens.
Mr. Baker. Basically, if there is a generic drug available
that is on the market, and there is a brand drug available on
the market for the same disease or condition, call it, what we
typically see is a lot of times the PBM is going to prefer the
brand name drug because they get those back in manufacturer
payments and rebate dollars. They get a pill from, you know,
most times overseas. Then what money actually gets repatriated
back into the United States and, you know, helps drive down
costs, nobody really knows if it is the right percentage or
not. So, it gives them the ability to create this opacity in
the system to drive profits themselves, and nobody really knows
what that profit is.
Mr. Grothman. It seems like consolidation of PBM market
lines up with the subsequent rise in drug prices. How often do
you hear customers complain about high price prescription
drugs?
Mr. Duane. I mean, I have my customers complain about the
high price of prescription drugs all the time. You know, when
you see people that are on these coinsurance plans, where they
have to pay 20 percent. I mean, 20 percent of a larger price is
a larger price, so as these prices go up the list prices, so,
too, they are out of pocket.
Mr. Grothman. I will give you a general question. If you
could straighten this out to your liking, how much do you think
cost of drugs would fall in America, basket of drugs?
Mr. Duane. I mean, I know that there is a proposal in the
Medicaid program to anchor Medicaid prices and dispensing fees
to an evidence-based marker. And I think the CBO scored that at
a billion dollars over 10 years, and that is just in the
Medicaid space. So, I think in the commercial space, you would
see a very big multiplier of that.
Mr. Grothman. OK. I would like to thank you for being here.
I do try to get around my district and I have a lot of small
towns in my district. I like to stop in on the pharmacies
similar to what you guys have. If the pharmacy does not have a
CVS or Walgreens on the front, I ask to see the pharmacist. I
always get things similar to what you folks have been telling
me today. So, I would like to thank you for coming over here,
and I hope, on a bipartisan basis, something positive comes out
of the Committee. I would also like to thank the Chairman. It
is unfortunate we have not had a hearing like this in the
Committee since I have been here, but finally, we got a
Chairman who is not afraid to take this on, so thank you very
much.
Chairman Comer. Thank you. The Chair recognizes Mr.
Moskowitz from Florida for 5 minutes.
Mr. Moskowitz. Thank you, Mr. Chairman. I, too, want to
echo the sentiments and appreciate the Chair's indulgence and
the Committee for holding the hearing. You know, it is nice
that we can look at something like this and probably a lot of
other topics of oversight in which we will find bipartisan
agreement. It should not be a breath of fresh air when it
happens, wish we have did a little more, but it is good that we
are here today.
You know, a lot of my colleagues have focused on cost, and
one of my previous colleagues, Representative Crockett talked
about supply, and I want to talk about that because, obviously,
I think it is directly related to cost. And so right now, Mr.
Chairman, there is a significant shortage in some chemotherapy
drugs, and as someone whose father passed away from cancer, I
was the Director of Emergency Management at the time during
COVID. My dad got diagnosed with stage IV pancreatic cancer,
and so I had to leave that job to go spend time with him. I got
18 months. I got 18 months to be with him based on his
diagnosis and based on just the available treatment. I know
there are other people on this Committee who have lost people
to cancer, obviously our own Ranking Member being diagnosed
with cancer. But, you know, there is a shortage in chemotherapy
drugs.
And what is amazing to me is that after COVID, after we had
significant supply chain issues, we spent $7 trillion-plus
dollars during COVID in a bipartisan basis at the end of the
Trump Administration, beginning the Biden Administration,
passing all pieces of legislation, and yet we have done little
to fix supply chain issues in medicine.
According right now to the FDA drug shortage data base,
chemotherapy drugs are in the top five of shortages. One of
those drugs is a drug called cisplatin. The reason I know
cisplatin is that literally was a drug that my dad was on. That
was a drug that extended his life. And, you know, I do not know
that Americans know that 80 percent of the active ingredients
in all drugs is made overseas. It is made in India, and it is
made in China. The idea that we are still relying on China for
medication after COVID seems to just boggle the mind.
Cisplatin and another drug called carboplatin,
manufacturing delays at several pharmaceutical companies are
largely to blame because there are quality control issues in
these other countries. In a March report from the U.S. Senate
Committee on Homeland Security and Government Affairs, this is
a direct quote from that report: ``Neither the Federal
Government nor the industry has end-to-end visibility of the
pharmaceutical supply chain. The lack of transparency limits
the Federal Government's ability to proactively identify and
address drug shortages.''
We do not even know when a drug shortage is going to
happen, and as a result of which we cannot address it because
it catches us off guard because we have no visibility into the
problem. If there is a plant and they make a certain drug, and
they go down because, you know, they are retooling the line,
and there was no planning to put enough of that drug on the
shelf, we run out. We saw this in the formula instance where we
lost a plant and we had a massive formula shortage. Now we are
having it with chemotherapy drugs.
I was literally contacted by a resident in my district when
this issue started happening. She has breast cancer. She has
treatable breast cancer. Her chemotherapy treatments were moved
because they did not have the drugs. Three weeks. She is
waiting 3 weeks now for treatment she was supposed to have last
Monday, which she will now get on June 5. I think it is long
overdue that the FDA explained to us why we continue to have a
problem with supply chain, why have we not fixed the problems,
or what are the problems so that Congress can figure out how to
fix them.
Mr. Chairman, I appreciate your time. I appreciate the
indulgence. I yield back.
Chairman Comer. Thank you. The gentleman yields back. The
Chair recognizes Ms. Harshbarger from Tennessee for 5 minutes.
Ms. Harshbarger. Thank you, Mr. Chairman, and thank you for
taking a leading role in investigating PBMs. Look, I have been
a pharmacist for 36 years, and it is good to see you all there.
We get two pharmacists, physician. It is fantastic, let me tell
you. I will tell you this, PBMs have not cured one disease.
They have not insured one American life, have they, or saved a
life. They have not done any of that, and to have the power
that they have over our healthcare system is unbelievable. I
have been following this for 30-plus years, and now my son runs
the pharmacy, so I understand, Dr. Duane, when we talked in the
hall exactly what you are going through.
Mr. Baker, it is good that we have a pharmacist that is
also the head of a transparent PBM, and that is almost an
oxymoron, a transparent PBM, but we need companies like yours
to expose what is going on. The Federal Trade Commission has
recently subpoenaed the group purchasing organizations
affiliated with CVS and Cigna, expanding the Agency's probe
into the PBM industry. These organizations contend that they
are using their size to gain leverage and counter price hikes
made by pharmaceutical manufacturers. Do you agree these
organizations are helping improve drug affordability, the GPOs?
Mr. Baker. I do not think that they are.
Ms. Harshbarger. I do not think they are either. Glad to
hear that. I have another question for you, Mr. Baker. You
spoke about price gouging. As these PBMs and/or GPOs talk about
saving Americans money, their profitability continues to grow,
while overall prescription costs are increasing for about
everybody. The traditional PBM industry creates formularies
which include drugs that can be approved, but increasingly,
they are excluding more and more medications. Everything that
both sides have said, I agree with, except some of the things
talked about the Inflation Reduction Act and Big Pharma, OK?
Physicians are now being told by PBMs what they can and
cannot prescribe for their patients, and it has been said
before they are practicing medicine without a license. In your
opinion, do these formularies drive to higher clinical quality
at lower cost, or are they just another mechanism for PBMs to
create pools of profits?
Mr. Baker. They are another mechanism by which PBMs create
pools of profits.
Ms. Harshbarger. Totally. Absolutely. Thank you for
clarifying that. Dr. Atkins, it is good to see you again. You
know, I asked both HHS Secretary Becerra and CMS Administrator
Brooks-LaSure at separate Energy and Commerce hearings to work
with me in solving the problem CMS has created in restricting
delivery of cancer drugs to your patients. Although they both
said they would, they ignored my pleadings and 50 other
bipartisan pleadings from other Members to fix this situation.
Can you please comment on how even restricting a caregiver
access to picking that patient's cancer medicine up hurts
patient care?
Dr. Atkins. It definitely hurts patient care because many
patients with cancer do not feel well.
Ms. Harshbarger. Yes.
Dr. Atkins. They may not have transportation. And so, if
their family member or designated person who is in their chart
under the HIPAA law is not able to pick the medication up for
them, they will not be to get the medication because some
patient just cannot get in. And that will certainly hurt the
patient, hurt the outcome.
Ms. Harshbarger. Yes. I mean, I had a story the other day
where someone had reached out to me and said they could not get
a patient to be compliant. Once they got him compliant, now
they cannot get his medication delivered. So that is going to
cause a breach in therapy, and he may become resistant to that
drug therapy. There are whole lot of factors involved in that.
And, Dr. Atkins, this is another thing that I have been
made aware, and I am going to talk to Energy and Commerce about
this, too. We hear more and more about attempts by PBMs and
your insurers to white bag cancer drugs. And I do not know if
you gentlemen understand what that is, but it is sometimes an
abusive-payer-mandated drug distribution model that often
circumvents hospitals' supply chain controls by requiring
patient medications to be distributed through a narrow network
of specialty pharmacies that are often directly affiliated with
the payer. That is white bagging. Do you agree with white
bagging? How does this impact your patient care, Dr. Atkins?
Dr. Atkins. I do not agree with white bagging, and
fortunately, right now our practice is able to avoid white
bagging. We refuse to do it because it is just not safe. We get
our drug from someone that we trust. We mix it ourselves.
Ms. Harshbarger. Yes.
Dr. Atkins. So, we know that it is safe. We cannot risk
something that is shipped in. And another example, we run about
250 patients through my office. We have three locations. One is
about 250 per day, another is 100, and another is 150. We
cannot manage 200 different bags of medication----
Ms. Harshbarger. Yes.
Dr. Atkins [continuing]. And location per day.
Ms. Harshbarger. Absolutely. It is more convenient to the
patient, and, well, my time is up Chairman. I have got more
questions, but just know that we sympathize and we are hitting
them on Energy and Commerce, Oversight, and Ways and Means. It
is going to come to an end, and we are going to come to a valid
solution for this. Thank you, guys.
Chairman Comer. Thank you. The Chair recognizes Mr. Garcia.
Mr. Gomez. Gomez.
Chairman Comer. That is the second time I have done that.
Mr. Gomez. I was looking down at Garcia. I apologize.
Mr. Gomez. No, no. No worries.
Chairman Comer. Sorry. It is my bad.
Mr. Gomez. First, how do I say this in as polite a way as
possible? My colleagues on the other side of the aisle, the
Republican Majority, is talking about controlling drug pricing
and drug costs for the American people. That is great. I want
them to do that. But this is in the midst of a context of what
we are dealing with when it comes to the debt ceiling
catastrophe that could occur any day now. And my Republican
colleagues, in order to get cuts in programs that are helping
support the American people every single month, are playing
with fire. So, I just do not feel that it is sincere when it
comes to reducing costs for pharmaceutical drug prices for the
American people because if it was, they would not be holding
the American people hostage, especially when it comes to Social
Security and Medicaid and Medicare.
One single fact: about $40 billion is paid to Medicare
Advantage insurers and Medicare Part D prescription drug plans
on the first of every month. So, if the Republican default
occurs, those are the programs are going to be impacted. The
same people that we are trying to support and reduce drug costs
for, they are going to cause so much more harm in the short and
long term. So, if they want to help reduce drug costs, pass a
clean debt ceiling limit increase, and stop trying to undermine
all these programs that help the American people. And a
Republican default on the national debt would be a tragedy that
we would be feeling for months, if not years, and the people
that will be suffering are the American people and even
globally.
And while we are at it, let us maybe stop trying to repeal
the Inflation Reduction Act, which made historic cuts to drug
costs. The Inflation Reduction Act capped out-of-pocket costs
for patients covered by Medicare Part D at $2,000 per year,
benefiting over 1.4 million Medicare beneficiaries annually.
And I would like to enter into the record, data analysis
conducted by the Oversight Committee Democrats demonstrating
the cost-saving benefits of inflation reduction costs for
millions of Americans across the congressional districts.
Chairman Comer. Without objection so ordered.
Mr. Gomez. If the Inflation Reduction Act's drug pricing
reform provisions had been in effect in 2020, Medicare
beneficiaries would have saved a total of $4.5 billion in
reduced premiums and out-of-pocket costs. Nationwide, the total
savings from the Inflation Reduction Acts drug price reform
provision would have amounted to nearly $15 billion in 2020
alone. For far too long, Americans have paid too much for
lifesaving prescription drugs. They have been forced to
navigate a complex healthcare system just to access affordable
and quality healthcare.
Mr. Isasi, in addition to saving Americans money, how would
the Inflation Reduction Act's drug pricing reforms improve
long-term health outcomes for Americans seeking care?
Mr. Isasi. Well, thank you for the question. There is no
question the No. 1 barrier right now for Americans is the price
of prescription drugs, and the IRA will lower prices on some of
the highest spend drugs in Medicare. It is going to be huge
benefit for seniors, and then importantly, it took those
savings and reinvested in the Medicare program.
So, for the first time ever, seniors now have a cap on
their annual drug expenses of $2,000. That is enormous. That is
enormous. It also provides for free immunizations and a host of
improvements for low-income Medicare beneficiaries. One of the
things the law did that was so powerful was it finally stopped
price gouging by Big Pharma, and then it took those savings and
made really important investments in our seniors.
Mr. Gomez. And that is one of the main points is that we
have passed things to control saving. I am not saying do not
deal with these other issues because the drug pricing system is
complex. And each part of it increases the cost when it comes
out-of-pocket costs for seniors and all Americans, especially
when it comes to repealing the Inflation Reduction Act and then
playing with fire when it comes to the debt ceiling limit. A
Republican default would be devastating, and all this talk
about controlling drug costs will be for naught. With that, I
yield back.
Chairman Comer. The gentleman yields back. The Chair now
recognizes Mr. Buddy Carter from Georgia.
Mr. Carter. Thank you, Mr. Chairman, and thank you for
holding this hearing today. I am sorry I did not get to sit
through the majority of it. I had another committee that I had
to chair, so I could not leave, but it is probably just as well
because I have only been here for about 20 minutes, and I think
my blood pressure is increased probably 100 points in that
period of time.
To begin with, let me clarify something that my colleague
Mr. Grothman asked one of the witnesses about how much a price
of a drug goes toward the pharmaceutical manufacturer and how
much goes to the PBM. I would like to submit for the record a
report by the Berkeley Research Group that shows that 37
percent--only 37 percent--of the price of a drug goes to the
pharmaceutical manufacturer, which begs the question, where
does the other 63 percent go?
Chairman Comer. Without objection, so ordered.
Mr. Carter. Thank you. Second, we talked about, again, my
colleague asked about spread pricing and what can be done about
it. Actually, I have a bill up tomorrow in Full Committee with
the Energy and Commerce Committee that will prohibit spread
pricing in Medicaid and that will help us tremendously.
Hopefully we can expand that later on into the commercial
market, but right now we can get it through Medicaid, and that
will be something that will help us.
Dr. Atkins, you mentioned white bagging. I was down at MD
Anderson in Houston probably a couple of months ago. And they
were just up in arms about the white bagging and how they were
having to deal with that, and what a problem it was for them,
and they are being forced to do it by the PBMs. And it is just
something that is an obstacle to care, and they cannot in good
conscience. They do not know that this is a valid prescription
or a valid drug and that it is formulated correctly. They have
to do it in-house in order to be able to do that. So white
bagging, as you point out, is a serious, serious problem.
The other thing since I have been here, again, I am
certainly glad I was not here the whole time. Lord, I would
never get through. But you talked about the IRA and about the
prescription provisions that were in the IRA and how good they
are. I think they are awful. I think they are the worst thing
that has ever been done in the way of prescription drug
pricing. The CBO, which of course, is nonpartisan, and looks at
the economic and results of legislation. The CBO estimated that
as a result of the prescription provisions that are in the IRA
that we can expect anywhere from 15 to 20 fewer cures in the
next 30 years as a result of that. Fifteen to 20, that is not
from me. That is from the CBO.
Now, I would ask you, which of the 15 or 20 cures is that
going to be? Is it going to be the cure for cancer? Is it going
to be the cure for Alzheimer's? Which one is it going to be?
So, I just have to disagree, respectfully, the prescription
provision in IRA is something good.
Wow. It flies when you only have 5 minutes, but I will tell
you, as you know, and, Dr. Duane, I want to ask you this
because I have practiced pharmacy for over 40 years. I started
when I was 10 years old as that explains that, but I practiced
for over 40 years. I was the one, like you, who had to tell the
patient how much the medication costs, who had to add to watch
the senior citizen make a decision between whether they are
going to buy the medicine or whether they are going to pay for
groceries. I was the one who watched the mother cry when she
could not afford the antibiotic for a child. Now, you have
naval bases within your area, and recently, Express Scripts,
through TRICARE, has limited participation in that program. Has
that impacted you and your pharmacy?
Mr. Duane. Yes, sir, it has by quite a lot. We were dropped
from the TRICARE network, along with ten plus 1,000 other
pharmacies. And yes, we have Naval Station Mayport. We have
Naval Air Station Jacksonville, and it has been a big impact.
We have patients who really want to come with us, to continue
to come with us in the TRICARE program. We cannot do it. Now,
of course, some of them can. They choose to pay out-of-pocket,
and they still come to my pharmacy because they appreciate the
level of service that we give, but they pay out of their own
pocket. They cannot use a TRICARE benefit.
Mr. Carter. And these are our heroes. These are our
veterans and their families who have served our country, and
they are being told by a PBM that they cannot get medications
from what I suspect they have been getting it for years from
you, generations.
Mr. Duane. Yes.
Mr. Carter. I had the same thing happened to me, literally
patients in tears. I have only got just a few seconds left. Dr.
Atkins, I have to ask you. All of this is egregious, but it is
especially egregious in the oncology world, especially with the
specialty pharmacies, and you are seeing this chart behind me.
I meant to mention this as well.
[Chart]
Mr. Carter. This shows you the vertical integration. You
see how busy it is. That is what the vertical integration is,
but, Dr. Atkins, you have seen it. You have seen where the PBMs
are directing that your patients go to their specialty pharmacy
to get the medication, which, as you know, and, Dr. Duane, you
know as well, oftentimes, they just throw up their arms, and
they just do not get it. Any comment, Dr. Atkins?
Dr. Atkins. That is correct. If I give the patient a
medication in my office, I know they walked out the door with a
drug. If I will wait for it to be mailed to them, I do not know
if they got the medication. I do not know if the medication is
safe. I do not know how long they sit on their porch. A lot of
moving factors going on. It is just not safe for patients.
Mr. Carter. Absolutely, and it is all about the patient.
Look, I am not opposed to anybody making money. It is
capitalist society. I get it and understand that, but I am
telling you, PBMs bring no value whatsoever to the healthcare
system, no value. At least pharmaceutical manufacturers put
money back into research and development. PBMs do not do that.
This is highway robbery. They are, as the Attorney General of
Ohio has said, they are gangsters. We need to stop them, and I
cannot thank you enough, Mr. Chairman, for having this hearing
and for bringing this to light. And I yield back.
Chairman Comer. The gentleman yields back. And let me say
it was very important for us to include two members from the
Energy and Commerce Committee, you and Ms. Harshbarger, because
we want to work with you all to solve this problem and I
appreciate your attendance today.
Now I would like to, before I recognize the Ranking Member,
enter into the record, three things: first of all, a coalition
letter from healthcare groups pertaining to PBMs, a statement
by Patients for Affordable Drugs Now pertaining to PBM, and a
statement for the record from the Pharmaceutical Care
Management Association.
Without objection, so ordered.
Chairman Comer. Now I would like to recognize Ranking
Member Raskin for closing remarks.
Mr. Raskin. Thank you very much, Mr. Chairman. I want to
start by thanking all of our witnesses for their excellent
participation today in what was a super productive hearing. Mr.
Chairman, I want to thank you for calling this oversight
hearing on a serious public policy problem that all Americans
are interested in and invested in. And I think we showed that
we can have some differences of perspective and nuance and
emphasis, but still converge around a basic sense of a public
policy crisis. And we have got one here, and we used our common
sense, and so I want to thank you for showing really what
oversight hearings should be like.
I want to just start by saying one thing my friend, Mr.
Carter, I do not know if he left, but I looked up the statistic
that he was invoking, and it is a little bit different.
Inflation Reduction Act, which we obviously defend on our side
of the aisle, reduced to $35 a month what people on Medicare
are going to pay for their insulin shots, if they are diabetic.
Cap overall out-of-pocket cost, $2,000 a year when some people
are paying, you know, five times that for their prescription
drugs and so on.
But the CBO found that the changes in the bill that were
made would lead to 15 fewer drugs reaching the market over the
next 30 years, or about 1 percent of an estimated 1,300 in that
time. So, I think he was saying 15 to 30, or 20 to 30 a year,
and this looks like 15 fewer drugs reaching the market over the
next 30 years, 1 percent of that 1,300 expected.
In any event, look, we now all know that only three PBMs
control 80 percent of the market. They administer prescription
drug benefits for more than 260 million Americans. And this
market dominance gives them an extraordinary amount of power,
which enables them to determine which medications patients can
access and at what cost. They can direct patients to use
certain pharmacies, and often we have seen they direct patients
to use their own pharmacies.
And this is because of the three major PBMs that control 80
percent of the market are owned by a parent corporation that
also owns a major health insurer, a specialty pharmacy and a
medical services provider. This kind of vertical integration--
PBMs health insurers, pharmacies, and medical service providers
all being owned by the same parent company--is ripe for
monopoly, abuse, and conflict of interest. It sets up a
scenario where practices among some of the largest PBMs benefit
themselves and their peer companies at the expense of patients
and the expenses we have heard today of independent pharmacies.
We have also learned today about the shocking lack of
transparency in PBM pricing practices, which still makes much
of this shrouded in obscurity and ambiguity. I appreciate that
this hearing gives us an opportunity to better understand how
they do operate within the healthcare system. And I look
forward to further work on making these opaque relationships
and practices far more transparent so we can properly reform
them.
We also learned about the ways that the Big Pharma
companies, the ones that actually set the prices for these
medications, are continuing to take advantage of the American
consumer and American taxpayer by pricing lifesaving
medications way out of reach for most people. It is critical
that we build on the work of the Inflation Reduction Act to
stop abusive practices and make sure that every person in
America can access the affordable care and medication that they
need.
I would like to enter into the record before I conclude,
Mr. Chairman, a statement from Patients for Affordable Drugs
Now regarding the need for greater transparency and the role
that PBMs play in the healthcare system.
Chairman Comer. Without objection, so ordered.
Mr. Raskin. And with that, I yield back to you, and thank
you again.
Chairman Comer. I want to thank the Ranking Member. I want
to, again, thank our witnesses for being here. Let me say that
I think today's hearing was very substantive and very positive.
Congress has talked about this issue for a long time. They have
studied this issue, but I think what you are going to see
moving forward, and I hope that this Committee has a big role
in that, is actual action. It is time. It is past time to do
something about the pharmacy benefit manager.
This Committee is not known for its bipartisanship. This
Committee was not assembled to be the most bipartisan committee
in Congress, but we were assembled to provide oversight. And I
think both leaders, both Leader Jeffries and Speaker McCarthy,
put people on this Committee that were sincere about trying to
determine waste, fraud, and abuse in the Federal Government.
And when you look at problems that every American has, the
cost of prescription drugs is at the top of the list, but I do
not think you can have a sincere hearing on prescription drug
costs without talking about the PBMs. And this is the first
time we have had a Committee hearing in the six-and-a-half
years I have been in Congress on actual PBMs, dedicated to
PBMs. And there is a sincere desire on this Committee to do
something about that, and I think that was proven today.
And I think that we can work together, Mr. Ranking Member,
not just our Members, but our staff on trying to come up with a
bipartisan solution. And we want to work with our friends in
the Energy and Commerce Committee. They obviously have
legislative jurisdiction over anything that would come through
Congress pertaining to PBM reform.
The one thing I want to mention, you know, we talked about
pharmaceutical companies, and I am not defending the
pharmaceutical companies, but there is a difference between the
pharmaceutical companies and the PBMs. The pharmaceutical
companies, especially when you are talking about making a
profit, the pharmaceutical companies theoretically invest in
research and development because we all want to find innovative
solutions to new drugs or to new diseases and new illnesses.
And I think that we have a success story here in the United
States with our pharmaceutical companies in trying to do that.
They invest in research and development, and that is, I would
assume, how they spend some of their profits.
The PBMs do not do that. And even though I am free market
guy, the margins that we showed on some of these drugs and the
difference between your PBM, Mr. Baker, and other PBMs, that is
ridiculous. That is waste, fraud, and abuse. That is fraud to
the consumer. That is waste for the Federal Government, whether
it be on Medicare, whether it be in private healthcare.
So, I think there are some areas where we can agree. Price
transparency, that is something that we should all agree on. I
think we have bipartisan agreement on that. DIR Payment Reform,
at best reform, I am going to be very friendly here. That is
something that we can address in Congress. And I think most of
us would agree PBM should not be vertically integrated, and I
know there is an investigation now, but I think that is
something that Congress needs to play a role in fixing.
So, you know, I have asked a lot of stakeholders about PBMs
because this is an issue that has weighted importance in rural
areas. Ms. Balint even said that we do not have a lot of chain
pharmacies in our area. We depend on mom-and-pop pharmacies.
And the pharmacist when describing PBM, used words like
``extortion.'' It is less than flattering words with respect to
how PBMs extract money, steal customers, at the very least
steal intellectual property, from mom-and-pop pharmacies.
So, you know, this is a huge problem, and someone made the
statement--I think it was you, Mr. Baker--that many patients
talk to their pharmacist a whole lot more than they talk to
their family physician, and I think that is a very accurate
statement. I know it is in Kentucky. So, we do not need to do
anything that would prohibit mom-and-pop pharmacies from
providing quality healthcare to their customers, and
unfortunately, that is what the PBMs are doing, maybe
unintentional--we will give them the benefit of the doubt--but
it is what is happening.
And, Dr. Atkins, no cancer patient should ever have to
worry about finding a PBM to get their medication and be
delayed days, weeks, or even months for medication. I mean, I
cannot imagine the worry that that would compound on a cancer
patient.
One of the things I want to mention, the PBM Association
expressed frustration that they were not invited to this
hearing. I think this is the first hearing, and what I would
like to do, Mr. Ranking Member, I would like for us to huddle
up, our staffs huddle up, and try to come up with some
potential solutions that we can agree on both sides and then
have the PBM Association come back and get their take on it,
because the one of the things that the stakeholders have told
me, we actually need PBMs. My friend Buddy Carter said we did
not. More people tell me we do than we do not. But if we do
need them moving forward, then we need to fix the problem, and
I think that we have the ability to do that. I think there is a
sincere desire on both sides of the aisle to do that.
So, we thank you for being here. I think this will be a
very valuable Committee. This was a substantive hearing, and I
look forward to coming up next with some solutions to the
problem. So, in closing, again, I want to thank our panelists
for their important and insightful testimony today.
With that, and without objection, all Members will have
five legislative days within which to submit materials and to
submit additional written questions for the witnesses, which
will be forwarded to the witnesses for their response.
Chairman Comer. If there is no further business, without
objection, the Committee stands adjourned.
[Whereupon, at 3:13 p.m., the Committee was adjourned.]
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