[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?

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

                                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                    
          
-----------------------------------------------------------------------------------                                  
                            
               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
                                 ------                                
                         
                         C  O  N  T  E  N  T  S

                              ----------                              

                                                                   Page

Hearing held on May 23, 2023.....................................     1

                               WITNESSES

                              ----------                              

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

                              ----------                              

  * 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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