[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
THE ROLE OF PHARMACY BENEFITS
MANAGERS IN PRESCRIPTION DRUG
MARKETS PART III:
TRANSPARENCY AND ACCOUNTABILITY
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON
OVERSIGHT AND ACCOUNTABILITY
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
__________
JULY 23, 2024
__________
Serial No. 118-123
__________
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
56-324 PDF WASHINGTON : 2024
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
Michael Cloud, Texas Gerald E. Connolly, Virginia
Gary Palmer, Alabama Raja Krishnamoorthi, Illinois
Clay Higgins, Louisiana Ro Khanna, California
Pete Sessions, Texas Kweisi Mfume, Maryland
Andy Biggs, Arizona Alexandria Ocasio-Cortez, New York
Nancy Mace, South Carolina Katie Porter, California
Jake LaTurner, Kansas Cori Bush, Missouri
Pat Fallon, Texas Shontel Brown, Ohio
Byron Donalds, Florida Melanie Stansbury, New Mexico
Scott Perry, Pennsylvania Robert Garcia, California
William Timmons, South Carolina Maxwell Frost, Florida
Tim Burchett, Tennessee Summer Lee, Pennsylvania
Marjorie Taylor Greene, Georgia Greg Casar, Texas
Lisa McClain, Michigan Jasmine Crockett, Texas
Lauren Boebert, Colorado Dan Goldman, New York
Russell Fry, South Carolina Jared Moskowitz, Florida
Anna Paulina Luna, Florida Rashida Tlaib, Michigan
Nick Langworthy, New York Ayanna Pressley, Massachusetts
Eric Burlison, Missouri
Mike Waltz, Florida
------
Mark Marin, Staff Director
Jessica Donlon, Deputy Staff Director and General Counsel
Daniel Ashworth, Deputy Chief Counsel for Oversight
Reagan Dye, Senior Professional Staff Member
Sarah Feeney, Professional Staff Member
Ellie McGowan, Staff Assistant and Administrative 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 July 23, 2024.................................... 1
WITNESSES
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David Joyner, President, CVS Caremark, Executive Vice President,
CVS Health
Oral Statement................................................... 5
Adam Kautzner, PharmD, President, Express Scripts and Evernorth
Care Management
Oral Statement................................................... 6
Patrick Conway, MD, MSc, CEO, Optum Rx
Oral Statement................................................... 8
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
----------
* Report, Economic Analysis on PBM Criticisms - Compass
Lexecon; submitted by Rep. Burlison.
* Letter, May 27, 2024, Beth Waldron; submitted by Chairman
Comer.
* Letter, July 23, 2024; from DLC and DPAC; submitted by
Chairman Comer.
* Letter, July 22, 2024; submitted by Chairman Comer.
* Settlement Agreement, CVS-OAG Fully Executed Redacted;
submitted by Chairman Comer.
* Statement, July 22, 2024, ASHP on PBMs in Prescription Drug
Markets; submitted by Chairman Comer.
* Statement, May 31, 2024, CF Foundation; submitted by Chairman
Comer.
* Article, The New York Times, ``How Chaos at Chain Pharmacies
Is Putting Patients at Risk''; submitted by Rep. Biggs.
* Article, Drug Topics.com, ``Independent Pharmacies Continue
to Face Financial Hardships as the Clock Ticks on PBM Reform'';
submitted by Rep. Biggs.
* Article, ASHP.org, ``Mail-order Medications Often Exposed to
Unsafe Temperatures''; submitted by Rep. Biggs.
* Article, The American Prospect, ``Prescription Drug Middleman
Potentially Profiting off Veterans''; submitted by Rep. Biggs.
* Article, Daily Mail, ``Rite Aid, CVS and Walgreens will shut
more than 1,500 stores''; submitted by Rep. Biggs.
The documents listed are available at: docs.house.gov.
INDEX OF DOCUMENTS
* Article, The Wallstreet Journal, ``The 90-Day Prescription
Isn't for Everyone''; submitted by Rep. Biggs.
* Article, US Pharmacist.com, ``TRICARE Removed 15,000
Independent Pharmacies From Network''; submitted by Rep. Biggs.
* Letter, July 17, 2024, from 60 Plus PBM; submitted by
Chairman Comer.
* Letter, May 30, 2024, from the Association of Accessible
Medicines; submitted by Chairman Comer.
* Letter, June 14, 2024; from NACDS and NCPA; submitted by
Chairman Comer.
* Letter, July 23, 2024, from NAM; submitted by Chairman Comer.
* Letter, July 19, 2024, from PBM Accountability Project;
submitted by Chairman Comer.
* Letter, July 22, 2024, from the Pharmacy Coalition; submitted
by Chairman Comer.
* Report, 2021 Committee PBM Report; submitted by Chairman
Comer.
* Report, APCI, Insights Issue 001; submitted by Chairman
Comer.
* Report, FTC, Interim Staff Report on PBM; submitted by
Chairman Comer.
* Report, PBM FINAL with Redactions; submitted by Chairman
Comer.
* Ruling, July 15, 2024, NYCBS NY District Court; submitted by
Chairman Comer.
* Statement, July 23, 2024, NACDS; submitted by Chairman Comer.
* Statement, July 23, 2024, Patients Rising; submitted by
Chairman Comer.
* Ruling, July 15, 2024, Memorandum and Order filed; submitted
by Rep. Langworthy.
* Letter, December 8, 2023, from AFSCME; submitted by Rep.
Mfume.
* Letter, May 31, 2024, CF Foundation, submitted by Rep. Mfume.
* Letter, July 22, 2024, from Pharmacy Coalition; submitted by
Rep. Mfume.
* Article, KFF Health News, ``Save Billions or Stick With
Humira''; submitted by Rep. Porter.
* Letter, July 23, 2024, from Pharmacist Bryan Homberg;
submitted by Rep. Tlaib.
* Letter, July 23, 2024, from Pharmacist Jordan Marchetti;
submitted by Rep. Tlaib.
THE ROLE OF PHARMACY BENEFITS
MANAGERS IN PRESCRIPTION DRUG
MARKETS PART III:
TRANSPARENCY AND ACCOUNTABILITY
----------
Tuesday, July 23, 2024
U.S. House of Representatives
Committee on Oversight and Accountability
Washington, D.C.
The Committee met, pursuant to notice, at 10 a.m., in room
2154, Rayburn House Office Building, Hon. James Comer [Chairman
of the Committee] presiding.
Present: Representatives Comer, Gosar, Foxx, Grothman,
Palmer, Sessions, Biggs, Fallon, Donalds, Timmons, McClain,
Fry, Langworthy, Burlison, Raskin, Norton, Lynch, Connolly,
Krishnamoorthi, Khanna, Mfume, Porter, Brown, Stansbury, Frost,
Lee, Casar, Tlaib, and Pressley.
Also present: Representatives Harshbarger, Miller-Meeks,
Carter, Maloy, and Auchincloss.
Chairman Comer. This hearing of the Oversight and
Accountability Committee will come to order. I want to welcome
everyone here today.
Without objection, the Chair may declare a recess at any
time, and I want to add that we will be recessing. We hope to
get all the opening statements in. The House is unfortunately
called to vote this morning, supposed to be somewhere around
10:30. But we will attempt to get mine and the Ranking Member's
opening statements in as well as the opening statements of our
witnesses, then we will hopefully take the recess, we will have
votes, and then we will reconvene the hearing and begin with
the questions.
I now recognize myself for the purpose of making an opening
statement. But first, without objection, Representatives Buddy
Carter of Georgia, Diana Harshbarger of Tennessee, Celeste
Maloy of Utah, Mariannette Miller-Meeks of Iowa, and Jake
Auchincloss of Massachusetts are waived on the Committee for
the purpose of questioning today's witnesses.
Without objection, so ordered.
I want to welcome everyone to today's hearing on the role
of pharmacy benefit managers in pharmaceutical markets. This is
the third in a series of hearings discussing pharmacy benefit
managers, or PBMs, and their role in the pharmaceutical market.
At our first hearing, we heard from practitioners who interact
with PBMs daily and a transparent PBM executive. They shared
how PBMs affect their ability to help patients and can
negatively impact patients' health. Dr. Miriam Atkins, an
oncologist in Georgia, discussed how PBMs dictate which drugs a
patient can use and require the use of mail-order pharmacies.
Kevin Duane, an independent pharmacist in Jacksonville,
Florida, explained that he is no longer able to serve Tricare
beneficiaries because Express Scripts forces Tricare
beneficiaries to use specific pharmacies on military bases. As
a result, hundreds of thousands of uniformed service members
and their families have less access to prescription
medications. Greg Baker, the CEO of a transparent PBM,
discussed the importance of PBM reform in reducing the costs of
prescription drugs.
At our second hearing, we heard from several stakeholders,
including the National Community Pharmacists Association, the
Pharmaceutical Research and Manufacturers of America, the
Association for Accessible Medicine, and the Pharmaceutical
Care Management Association. These witnesses provided testimony
that the largest PBMs use spread pricing and abusive rebating
practices, making it more difficult for generics, biosimilars,
and other competitors to gain market share. We heard that the
largest PBMs under reimburse competing pharmacies while
overcharging payers and pocketing the difference. We learned
that the largest PBMs steer patients to the pharmacies they own
while often charging payers more and providing less care.
Now this Committee has the opportunity today to hear from
the CEOs of the three largest PBMs: CVS Caremark, Express
Scripts, and Optum Rx. In March of last year, I sent letters to
CVS Caremark, Express Scripts, and Optum Rx requesting
information about each business. Since then, we have received
more than 140,000 pages of documents from the three largest
PBMs, including details about their formularies, rebates,
pharmacy networks, and contracts. In reviewing these documents,
we have learned the three largest PBMs have used their position
as middlemen and integration with health insurers, pharmacies,
providers, and, recently, manufacturers, to enact
anticompetitive policies and protect their bottom line. The
largest PBMs share patient information and data across their
many integrated companies for the specific and anticompetitive
purpose of steering patients to PBM-owned pharmacies.
These PBMs frequently tout the savings they provide for
payers and patients through negotiation, drug utilization
programs, and spread pricing, but evidence indicates that these
schemes increase costs for patients and payers. The largest
PBMs force drug manufacturers to pay rebates in exchange for
the manufacturers' drugs to be placed in a favorable tier on a
PBM formulary, making it difficult for competing, lower-priced
prescriptions, often generics or biosimilars, to get on
formularies.
As many states and the Federal Government weigh and
implement PBM reforms, the three largest PBMs have begun
creating foreign corporate entities and moving certain
operations abroad to avoid transparency and proposed reforms.
The largest PBMs' use of tools, such as prior authorizations,
fail first policies, and formulary manipulations hurts patients
and result in poorer health outcomes. The anticompetitive
policies of the largest PBMs have cost taxpayers and reduced
patient choice.
Today, the Committee is releasing a staff report outlining
the results of our investigation into PBM policies. Simply put,
the Committee's investigation has found that while PBMs'
position as middlemen should have enabled them to reduce the
costs of prescription drugs and improve Americans' health
outcomes, they have not. Instead, the cost of prescription
drugs has gone up every year for 15 years. Instead, patients
have less choice and worse health outcomes.
I ask unanimous consent to enter the Committee staff report
titled, ``The Role of Pharmacy Benefit Managers in Prescription
Drug Markets,'' into the record.
Without objection, so ordered. I encourage everyone to read
this.
I am hopeful that today's hearing will provide transparency
and accountability for how PBMs have impacted the market for
prescription drugs. I now recognize Ranking Member for his
opening statement.
Mr. Raskin. OK. Thank you, Mr. Chairman. Welcome to the
witnesses. It is the third Committee hearing this Congress on
the subject, and we finally have the largest PBMs here at the
table. Thank you for joining us. Patients say that some of your
practices are making it more difficult and more expensive to
access the medication that they need, and so we need to hear
from you about what is going on. The three companies
represented today account for 80 percent of the PBM market,
which means that the three of you sitting here are responsible
for the policies and practices that directly affect the lives
and the health and the pocketbooks of 270 million people in
America, most of whom are not even aware that your companies
exist.
People do not choose their PBMs. People do choose a health
insurance plan, which, in turn, has a PBM. Most people are
offered a choice between a small number of health insurance
plans, and then they wade through somewhat confusing language
and murky distinctions to find the one that they think is best
suited to the needs of their family. Nobody is thinking about
the PBM that accompanies the health plan they use. In fact,
most people do not even know that the health plan they are
selecting is going to be working with a PBM. No one is
considering the health insurance plan that they spend hours
trying to select is closely affected not just by the insurance
company, but also by another enormous business looking to
profit.
Although PBMs operate way outside of public consciousness,
your companies have immense power over patients. PBMs create
the list of medications that determine what will and will not
be covered by an insurance plan. They determine how much those
medications will cost, and they determine which pharmacies a
patient can or cannot use to access the medications. Your three
companies are dictating these terms for four out of five people
in our country, and I am glad you are here with us today to
provide serious, robust insight into these decisions.
While we do not have a lot of visibility into the inner
workings of PBMs, the work this Committee has done on PBMs this
Congress has provided many examples of how your policies are
not necessarily always working for the people that are served.
The New York Times recently reported that one of your companies
was charging patients on Medicare more than $650 for a
medication that would have cost less than $50 at an online
pharmacy without any insurance at all. A different patient was
reportedly charged $211 by one of your companies for a drug he
could have acquired at Costco for $22. That is a 10-to-1 ratio
between what people are paying through the PBMs versus what
they could get in just an out-of-pocket purchase. Who do these
policies benefit? Well, obviously not the patients. It seems
they benefit the PBMs, which gets reimbursed by the health
insurer for that higher price.
Even if this system works for some patients, it is clear
that many served by your companies are falling through the
cracks, whether they experience delays in getting the medicine
they need or they are forced to overpay. In a for-profit
healthcare system, we know companies are going to seek profits,
but it is unacceptable for those profits to come at the expense
of patients getting the basic medicine that they need to lead
their full and healthy lives.
Democrats on the Committee have long worked to hold Big
Pharma accountable for the ways in which they relentlessly
manipulate the price of medications and make them unaffordable
for tens of millions of Americans. Our 3-year investigation
revealed that pharmaceuticals use anticompetitive tactics to
stop generics from entering the market and to target the U.S.
for high prices because our government simply did not have the
power to directly negotiate with them the way that our pure
countries do. But last Congress, Democrats passed the Inflation
Reduction Act, and the wins from that landmark legislation are
already being felt. Beginning next year, Medicare will
negotiate drug pricing directly with the pharmaceuticals, and
drug companies will now have to reimburse the government when
they raise prices beyond the rate of inflation.
But we have a long way to go to place people over profits
to put healthcare first. I hope that today's hearing can shed
light on the way that PBMs are taking a page from Big Pharma's
practices and exacerbating the drug affordability crisis. We
need a healthcare system that is going to work for the people.
Thank you, Mr. Chairman. I yield back.
Chairman Comer. The gentleman yields back. Today we are
joined by David Joyner. He is the president of CVS Caremark and
executive vice president of CVS Health. He has worked for more
than 27 years in the healthcare and PBM industry. Dr. Adam
Kautzner--did I pronounce that right? I usually do not--I
apologize--is the president of Express Scripts and Evernorth
Care Management. He earned his Pharm.D. from the St. Louis
College of Pharmacy and is a nuclear pharmacist. Dr. Patrick
Conway is the CEO of Optum Rx. He is a practicing pediatric
hospitalist, who earned his medical degree from Baylor College
of Medicine and a Master of Science in clinical epidemiology
from the University of Pennsylvania. Thank you all for
appearing here today. I am looking very forward to your
testimony and questions.
Pursuant to Committee Rule 9(g), the witnesses will please
stand and raise their right hand.
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
answered in the affirmative. Thank you all. You may take a
seat.
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. 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 it will turn yellow. When the red light comes
on, your 5 minutes have expired, and we would ask that you
please wrap up.
I now recognize Mr. Joyner for his opening statement.
STATEMENT OF DAVID JOYNER
EXECUTIVE VICE PRESIDENT
CVS HEALTH AND PRESIDENT OF CVS CAREMARK
Mr. Joyner. Thank you, Chairman Comer, Ranking Member
Raskin, and members of the Committee. I am David Joyner,
President of CVS Caremark. I am here to provide you with the
facts about what we do at Caremark: to bring down the cost of
prescription drugs for millions of Americans.
We have successfully converted 90 percent of prescriptions
to generics, driving costs to historic lows. That means our
patients only pay $8 out of pocket, on average. We did the same
for brand-name drugs. From 2017 to 2022, our proven tools and
strategies drove down the net cost of brand-name drugs by 15
percent. Despite these successes, brand products with little to
no competition remain the chief source of rising drug costs,
spurred by their high list prices. Last year, a new-to-market
drug carried a median annual price of $300,000, and Humira,
Ozempic, and Stelara alone cost more than every generic drug we
covered, combined.
Humira perfectly illustrates the challenge. Thanks to a
strategy of patent manipulation, AbbVie blocked any
competition, and it became the single most expensive drug for
our customers and their members. The good news is that we were
uniquely positioned to promote the adoption of biosimilars to
deliver lowest costs at the pharmacy counter and to get these
drugs to the people who need them. So, in April, we dropped
Humira from our major formularies, covering only the
biosimilars. Today, members are paying lower costs, in most
cases zero dollar out of pocket, and employers, unions, and
health plans have realized over half a billion dollars in
savings. That is the impact we are having with just one drug.
Now, across the more than 70,000 drugs we cover, we are leading
the industry and our clients by prioritizing products with low
list prices while maximizing savings for employers.
And let me be clear. We do not contribute to rising list
prices, a fact confirmed by multiple, quantitative independent
studies. Hampering our ability to negotiate lower drug costs
only benefits the pharmaceutical manufacturers. These drug
manufacturers who testified on Capitol Hill said they would not
lower list prices if rebates were eliminated, it would only
remove an essential tool in our ability to deliver lower cost
medications, but there is always room for improvement. And I
returned to CVS Caremark last year to evolve our PBM by
increasing transparency and accountability. We have made major
changes that benefit employers, labor unions, public health
plans, Medicaid and Medicare, and the pharmacies that we work
with. The way drugs are priced and reimbursed today is not
transparent enough for patients, pharmacies, or plans.
That is why we built TrueCost, a transparent, cost-plus
model, for every drug that we cover. We show our clients how
much we pay and reimburse for every single drug, for every
pharmacy in our network. For the more than 27,000 independent
pharmacies in our network, they will be reimbursed in line with
the price they pay to acquire each drug and to provide
additional dispensing and administrative fees to cover their
services for patients. Independent pharmacies representing 40
percent of our network are vital to our work. We reimburse them
at a higher rate than we do CVS-owned pharmacies and as much as
25 percent higher for generics. We also have a network of 700
rural pharmacies with even higher reimbursements, 90 of which
were added in the last year alone.
Despite our work, danger lies ahead for the American
healthcare system: the price of GLP-1 drugs. Between
skyrocketing demand and price hikes, the costs are
overwhelming. Ozempic, Mounjaro, and Wegovy drove more than
two-thirds of increased costs for CVS Caremark customers in
2023. If every adult with obesity received a GLP-1
prescription, costs would surpass $1.2 trillion annually. That
is more than America spends annually on all drugs.
We will continue to do what is best: use the power of
competition to make these medications available at lower cost
to the people who need them. It is our job to provide
affordable access to important, lifesaving medications that
improve the quality of life for millions of Americans. We
enable employers, unions, and state health plans to take care
of their people, and when drug manufacturers want to charge
them too much, we are there to rein them in. Thank you.
Chairman Comer. Thank you. I now recognize Dr. Kautzner for
his opening statement.
STATEMENT OF ADAM KAUTZNER, PHARM.D.
PRESIDENT
EXPRESS SCRIPTS AND EVERNORTH CARE MANAGEMENT
Dr. Kautzner. Chairman Comer, Ranking Member Raskin, and
members of the Committee, thank you for inviting me to testify
today. My name is Adam Kautzner. I grew up in rural Missouri
and began my career as a pharmacist for a regional hospital
before joining Express Scripts more than 15 years ago. For
decades, our mission has remained the same: helping employers,
labor unions, government agencies, and health plans provide
more affordable, higher-quality prescription benefits to their
members. These sophisticated purchasers demand value and drive
innovation from Express Scripts every single day. That mission
is also very personal to me. In my early 30's, I was diagnosed
with stage 3 melanoma, which then progressed to stage 4. I am
here today because of pharmaceutical innovation, and it is why
I work so hard to lower costs for more people to access the
drugs they need.
In 2023, we helped keep average patient costs for a 30-day
prescription to $15 for those with employer-sponsored plans.
Alongside our clients, we shield patients from approximately 90
percent of drug costs in the healthcare system. In fact,
patients spent less out-of-pocket in 2023 than in 2022, despite
rising list prices set by manufacturers, because of our work to
negotiate discounts across the supply chain. Our deep clinical
expertise helps patients navigate complex care journeys,
improve medication adherence, and prevent disease progression
and comorbidities. From developing formularies that help guide
patients to clinically sound medications to performing safety
and quality checks on millions of prescriptions each day, we
are the connective fiber fighting to ensure access to safe,
effective, and affordable medications.
Many members of this Committee have expressed concerns
regarding the viability of pharmacy access in rural and
underserved America. As a pharmacist and someone who grew up in
rural America myself, I understand this challenge and agree it
must be addressed. Over the past year, we have worked to
enhance reimbursement to pharmacies serving these areas,
created new pharmacy revenue streams through clinical services,
and we have regularly convened an advisory committee of
independent pharmacists led by a former independent pharmacist.
Over the past 5 years, the number of independent pharmacies in
our network has increased by 20 percent.
I know there are questions regarding the transparency of
pharmacy benefit services. Transparency is built into all of
our pricing models, including our principal revenue sources,
arrangements with manufacturers, and pharmacy claims data.
Personalized information about the cost of prescription drugs
is provided to millions of patients in real time to help them
make more informed decisions with their doctors. I also know
significant challenges remain. The median cost of a new
medication in 2023 was $300,000, up from $180,000 in just 2
years. As newer and more sophisticated therapies continue to
come to market with increasingly unsustainable prices, we need
solutions to ensure people who need them can benefit from these
innovations affordably.
Challenging our efforts to lower prescription drug costs
are brand drug makers who exploit the patent system to maintain
high prices for years beyond the date generics and biosimilars
should become available to patients. For example, the primary
patent for Humira, the best-selling drug in the world, expired
in 2016. But biosimilar competition could not launch until 2023
because of the patent thicket constructed by the manufacturer.
We applaud recent efforts to drive more competition and address
patent abuses intended to maintain high drug prices. These
efforts will lower prices for American patients and save
billions for American businesses and taxpayers.
In closing, our mission and our business model, one,
provide innovative solutions that enable access to medications
at affordable costs and improved health outcomes; two, ensure
clients have choices that enable them to deliver accessible,
affordable pharmacy benefits; and three, share additional
levels of transparency about the value we create. I appreciate
this opportunity to answer your questions about our role and
how the value we create reaches patients. Thank you.
Chairman Comer. Thank you. Dr. Conway.
STATEMENT OF PATRICK CONWAY, M.D.
CHIEF EXECUTIVE OFFICER
OPTUM RX
Dr. Conway. Thank you, Chairman Comer, Ranking Member
Raskin, and Members of the Committee. I am Dr. Patrick Conway,
CEO of Optum Rx, a part of United Health Group. Optum Rx is a
pharmacy services company that works to make healthcare more
affordable and accessible and to improve health outcomes for
our customers and patients. I am also a pediatrician, seeing
patients on weekends at a Boston hospital, and I would like to
share one experience from my earliest days as a physician that
I will never forget and shapes my mission for patient care.
I sent a child home from the hospital with a prescription
for a common antibiotic to treat a mild infection. In less than
24 hours, the child was back, readmitted, because when the
mother took the prescription to the pharmacy, it cost $200 that
she did not have. A scared kid and a terrified parent spent 7
days in a Boston hospital because they could not afford an
antibiotic. This was a costly outcome for the system and, most
importantly, an example of how we must do better for patients
and families.
Experiences like that one, the realities that people face
when it comes to paying for medicine and accessing care, drive
our work at Optum Rx. They are what we have in mind when we
deploy innovations like our Critical Drug Affordability Program
that offers low or zero-dollar cost sharing on more than 290
brand and generic medicines including common antibiotics. Optum
Rx exists to ensure patients have access to the safe and
effective prescription drugs they need while managing their
cost. My testimony focuses on how we do just that.
I would like to start with our critical role in
prescription drug affordability and access. The high price of
new drugs are challenging the healthcare system. In 2023, the
median annual list price for a new medicine was $300,000, a 40-
percent increase from 2021. The 5,000 plus customers who hired
us, including employers, unions, health plans, and governments,
rely on Optum Rx to be the counterweight to drug manufacturers'
high and increasing list prices.
Our negotiated discounts and clinical tools deliver more
than $2,000 per person in average annual drug savings, and a
recent analysis found that PBM saved the broader healthcare
system approximately $145 billion annually. Today we compete
with more than 70 companies that offer a full range of pharmacy
benefit services. We compete on the strength of our clinical
capabilities, patient support programs, drug trend analytics,
and our ability to lower drug costs for our customers.
Everything we do is rooted in a clinical foundation,
starting with our independent Pharmacy and Therapeutics
Committee, which, through clinical rigor, provides unbiased,
evidence-based review of new and existing drugs and their place
in therapy. We offer clinical programs and affordability tools
to support each stage of a patient's healthcare journey. We
also offer our customers a wide range of formularies and
pricing solutions to meet their affordability, predictability,
and accessibility expectations. We negotiate with drug
manufacturers to secure the lowest possible net cost for our
customers. More than 90 percent of prescriptions are for low-
cost generics, often without rebates, so negotiated discounts
on the remaining 10 percent of expensive branded drugs are the
only check on manufacturers' pricing power. Optum Rx passes
through 98 percent of those discounts to our customers.
Our customers recognize the value of our work. In a recent
survey, 97 percent of employers said they were satisfied with
their PBM, and 93 percent said that it is essential to have the
flexibility in how they offer prescription benefits to their
employees. Our customers have diverse priorities, and
preserving the options available to them is critically
important. Optum Rx is committed to providing its customers
with actionable transparency that helps them understand their
options and how their pharmacy dollars are being spent. We are
also committed to supporting our pharmacy partners by, for
example, promoting their value as care providers in rural and
underserved areas. We support legislation that will preserve
and grow options for planned sponsors and how they offer
coverage.
Congress should also take steps to rein in drug
manufacturer patent abuses that have delayed generic and
biosimilar launches, inhibiting the true market competition
that leads to lower prices. We believe this holistic approach
helps promote affordable and accessible prescription drugs.
Several legislative proposals currently under consideration
would work at cross-purposes with these goals. We believe these
proposals would not lower manufacturer list prices, but would
result in increased drug costs for employers, unions, health
plans, and governments. We look forward to continuing our
shared work addressing affordability and access to prescription
medicines.
Thank you for your time today, and we welcome your
questions.
Chairman Comer. Well, thank you all very much for your
testimony. We will begin with questions. The House has called
votes, but we have agreed I am going to get my questions in and
Mr. Raskin will get his in, and then we will take a recess
until 10 minutes after the final vote. So, I recognize myself
for 5 minutes.
Mr. Joyner, are you familiar with CVS Caremark's lawsuit
with New York Cancer and Blood Specialists regarding DIR fees?
Mr. Joyner. I am.
Chairman Comer. Last week, the Southern District of New
York ruled in favor of the practice and ordered CVS Caremark to
pay over $20 million in back DIR fees, interest, and attorney's
fees.
I ask unanimous consent to enter that ruling into the
record.
Without objection, so ordered.
I understand that other oncology practices are in
arbitration with CVS Caremark over the same issue and you are
attempting to prevent those from becoming public. Given the
Federal Court findings, do you intend to pay all practices back
for a clear miscalculation of DIR fees, or do you intend to
fight them all like you did the New York practice?
Mr. Joyner. Thank you, Mr. Chairman. In specific response
to these cases, we do actually comply with all Medicare Part D
rules, and, in fact, part of this is actually creating network
adequacy and also making sure we are managing the network
according to the terms and conditions. So, in this case, our
goal is to apply these consistently across all 65,000
pharmacies and, most importantly, making sure we get the right
drug to the right patient at the right cost.
Chairman Comer. So, are you going to fight the other
rulings, or are you just going to pay, just out of curiosity,
have you decided yet, the other lawsuit?
Mr. Joyner. Yes. Consistent with what I had mentioned
earlier, we do comply with the Medicare Part D rules, and we
will make sure that we are consistent.
Chairman Comer. OK. This next question is to all the
witnesses. During the Committee's investigation, we found
evidence that each of your companies steer patients with long-
term maintenance and other high-cost medications to the mail-
order pharmacies you own, even though it often results in more
difficulty for a patient to get their medication. Will you
commit to stop steering patients to the pharmacies you own and
instead let them choose the pharmacy that is best for them and
pay the same price for the same prescription regardless of
where they pick up the prescription? Dr. Conway?
Dr. Conway. We do provide patient options, including home
delivery, and we will continue to provide those options to
patients.
Chairman Comer. Dr. Kautzner?
Dr. Kautzner. Thank you for the question, Chairman. We
focus on our clients--employers, labor unions, government
entities--to make those decisions on their plan benefit
designs, and so they make the decision on what types of
pharmacies they want to provide.
Chairman Comer. So, are you denying that the PBMs steer
patients from the independent pharmacies to your own mail-order
pharmacies?
Dr. Kautzner. So, we carry out the benefit designs that our
clients choose, and that is how we provide our services. For
home delivery pharmacies today, the safety and efficacy for
those patients----
Chairman Comer. Mr. Joyner, will you commit to----
Mr. Joyner. Yes. Mr. Chairman, we will continue to offer
home delivery at the request of our customers.
Chairman Comer. So, I am going to take that as an answer.
You are going to continue to steer patients away from
independent pharmacies to your own mail-order pharmacy. That is
how I interpret those answers.
Next, during the Committee's investigation, we found 300
examples of PBMs placing higher-cost medications in more
preferred positions on formularies. A report that just came out
found that not only are you prioritizing higher-cost
medications, you are setting dramatically different prices for
some medications across the country. The report found that
Suboxone, a critical treatment for opioid abuse, is being
charged at 600 unique prices by just one of your companies, and
another is charging 448 unique prices. Out of the top five
PBMs, the lowest number of price points was over 200. Your
companies have constantly claimed that drug companies set
market prices, but if that is the case, why are your companies
charging different prices across the country? Mr. Joyner?
Mr. Joyner. So, specifically, as it relates to creating
competition with the manufacturers, we have done a remarkable
job of lowering the cost of brand pharmaceuticals. In fact, if
you look over the time period of 2017 to 2022, brand-name drugs
have decreased by 15 percent. So, in keeping with our goal and
our focus as a pharmacy benefit manager, it is to create the
competition and lower the cost of pharmaceuticals for the
customers which we serve.
Chairman Comer. Dr. Kautzner?
Dr. Kautzner. Last year alone, we saved our clients $64
billion, and we kept patient out-of-pocket costs on a per-
prescription basis at just $15, despite brand manufacturers
raising drug prices on 60 percent of those products. It is hard
work to keep those costs down for patients and clients.
Chairman Comer. Dr. Conway?
Dr. Conway. As you said, manufacturers set the high list
prices, but we are committed to providing the lowest net cost
options to our clients so the drugs are more affordable to the
people they serve.
Chairman Comer. So, your testimony today, it is not the
PBMs, it is the drug manufacturers. That is the answer, because
that is not what our report has concluded. That is not what we
hear from doctors all across America. That is not what we hear
from pharmacists all across America. We hear that you are the
problem, and that is why we have had three hearings on this.
This is why this is a huge issue. This is why just about every
state now is taking up PBM reform.
There is a credibility issue with the PBMs, there is a
transparency issue with the PBMs, and it does not appear that
the PBMs are being consistent. We believe you have
anticompetitive policies. I have more questions, but my time
has expired. I will get some more time in a minute. I yield now
to Ranking Member Raskin.
Mr. Raskin. Thank you, Mr. Chairman. I wonder, do any of
you guys have high school-aged children? You do, Dr. Conway.
All right. So, do not set this at the elementary school level
because I do not want it to be just you trying to help people.
Do not set it at the Ph.D. level, but set it at the high school
level. Explain to a high school student what the PBM does and
what value you render in America's confusing healthcare system.
Could you?
Dr. Conway. Yes. So, the way I would describe it to a high
school student is the following. We provide lower-cost drugs to
the people we serve--employers, unions, state governments,
others--and we provide accessible, affordable options to
people. It is based on clinical evidence on what medicines are
most effective, and then we negotiate for the lowest net cost
transparently and provide that information both to the customer
and to the patients we serve.
Mr. Raskin. OK.
[Chart]
Mr. Raskin. The graphic behind me shows that when combined,
the larger healthcare conglomerates, to which your three
companies belong, control 20 percent of America's national
healthcare expenditures, a figure that has been growing
substantially. And the three PMs represented today, independent
of their parent companies, are so big that you would all fall
within the top 40 businesses in America by revenue, and this
size means that collectively you control nearly 80 percent of
prescription drugs dispensed in the country. The next three
largest PBMs account for 5 percent of the market, and the
remaining 60 PBMs account for 6 percent of prescriptions
managed and dispensed. OK.
So, Mr. Joyner, let us take you. Excluding the two large
companies represented at the table along with you today, of the
60 PBMs that account for just 6 percent of the market, which
does CVS Caremark consider to be, say, its top three
competitors?
Mr. Joyner. So, there are a variety of competitors, 70-plus
PBMs in the marketplace all competing respectively for
customers. This is a highly competitive marketplace, and we
basically win and lose based off the value proposition that we
present to our customers.
Mr. Raskin. OK. So, who would be the top three outside of
the mega corporations represented? Who would be your top three
competitors for that 6 percent?
Mr. Joyner. Yes. It will depend on the market segment. So,
there are some Blue Cross Blue Shield solutions that compete
effectively within that, so that would obviously be a
competitor for that particular segment of the marketplace.
Mr. Raskin. OK. Well, would you agree that the PBMs should
be held accountable to the patients and not just the
institutions you represent, or would you disagree with that?
Dr. Kautzner, let me ask you.
Dr. Kautzner. We are absolutely, Ranking Member Raskin,
accountable to our patients, and I think it is important to
recognize that.
Mr. Raskin. Can you explain how you are held accountable to
your patients?
Dr. Kautzner. Sure. Every prescription that we process
today undergoes 18,000 safety, quality, and benefit checks in
less than 1 second. And with that work, we will prevent
approximately 100 million potential medication errors this
year, so that is how we positively affect patients. We also----
Mr. Raskin. Right, but that is different from the question
of accountability, so, I mean, the answer could be, no, that is
not your function in the marketplace. But is there any
accountability mechanism between you and the actual patients,
or do you just deal with the institutions, the businesses, the
unions, and so on that you represent?
Dr. Kautzner. So, our contracts are with employers, labor
unions, government entities, but we absolutely are committed to
patient care and health and care coordination. That is why we
employ thousands of nurses and pharmacists within our
organizations to provide that high-quality clinical care.
Mr. Raskin. All right. Can you explain again and put it in
clear terms because a lot of this stuff is hard for people to
understand, OK? Why is it that there are so many cases that the
Committee has found--the Chairman has cited them--where people
are ending up being charged 10 times more within one of the
plans than they would be if they were just to go and pay out of
pocket for a drug? Why does that happen? Can you explain that?
Dr. Kautzner. So, today, for over 80 percent of patients in
America, they spend less than $250 on all of their
prescriptions in a given year. There are 1 percent of patients
where challenges still exist, where that 1 percent may spend
over $2,000 annually on prescription drugs. That is the group
that we are providing patient savings programs for and working
hard to provide improved patient benefit designs so that we can
keep costs down in that area.
Mr. Raskin. Again, I feel like the more I hear, the less I
understand. I mean, I just have one simple question. If
somebody is covered by one of the plans, how is it possible
that they have got to pay 10 times more than they would pay if
they were just to go and pay out of pocket for the drug? I
mean, Mr. Joyner, can you explain why that would happen? And, I
mean, I am willing to believe maybe that is not the majority of
the cases. I think that is what you are saying, Dr. Kautzner.
But can someone just tell us why that happens and it can help
us understand the dynamics of this market?
Mr. Joyner. Yes. As I said earlier, there are a variety of
different pricing models in the marketplace today. What you are
referring to is what, generally, is an average pricing that we
have contracted with our clients. The good news is, and as I
mentioned earlier about coming back into CVS Caremark, is I am
trying to change and transform the marketplace, which is in
large part why we introduced TrueCost, which is a price model
that actually allows us to guarantee every drug at every
pharmacy across 14,000 different medications. So, that would,
in effect, get you to the consistency and actually eliminate
many of the headlines that you are referencing.
Mr. Raskin. All right. My time is up, Mr. Chairman. Thank
you for your indulgence, and I look forward to questioning by
our colleagues, including Representative Auchincloss, who is a
real specialist in this. And I hope we will just get some
illumination today about some of these strange things we found.
Thank you.
Chairman Comer. Thank you. The Ranking Member yields back.
Before we recess, I will make an announcement. Director Cheatle
just resigned from the Secret Service.
Mr. Raskin. Well done, Mr. Chairman. That was a great
hearing.
Chairman Comer. Maybe you should sign more letters with me.
No telling what we could do.
Mr. Raskin. I mean, bipartisanship might be the wave of the
future.
Chairman Comer. All right. Pursuant to the previous order,
the Chair declares the Committee in recess, subject to the call
of the Chair.
[Recess.]
Chairman Comer. The Committee will come back to order.
I now recognize the gentleman from Alabama, Mr. Palmer, for
5 minutes.
Mr. Palmer. Thank you, Mr. Chairman. I have got a number of
concerns about how PBMs have operated and how it is impacting
rural pharmacies. I grew up in rural Northwest Alabama and
understand a lot of the pressures that are being placed on
independent pharmacies, and I have just got some questions that
I would like to run by.
There has been some significant confusion as to how much of
the direct and indirect remuneration fees PBMs retain in the
Medicare Part D program. So, I would like to try to clear that
up. And if you could answer this, what percentage of DIR that
your companies receive from competing pharmacies, in terms of
what percentage are distributed to the U.S. Government--you
might want to write this down--patients, insurer, or the plan
are retained by the PBM? Mr. Joyner?
Mr. Joyner. Congressman Palmer, the program you are
referencing was discontinued in 2023.
Mr. Palmer. That program was discontinued?
Mr. Joyner. Yes. Yes, sir.
Mr. Palmer. Can you tell me what percentage of the funds
were retained in those categories up until then?
Mr. Joyner. The program you are referring to was a
performance-based network, and it was distributed to the high-
performing pharmacies as a way of actually rewarding and
recognizing or incentivizing high performance within the
pharmacy network.
Mr. Palmer. You did not answer. You are not answering the
question. So, what I would like to do is rather than go through
this exercise of delay is just have each of you respond in
writing to the Committee. Mr. Chairman, I would like to make
sure that they do that.
Mr. Palmer. The three largest PBMs control over 80 percent
of the market and wield enormous influence over America's
access to prescription drugs and the prices that the people who
need those drugs have to pay. And the PBMs tout themselves as
companies that are reducing the cost of medications for all
Americans. Yet the cost of prescription drugs and the spending
on prescription medications have gone up every year for more
than a decade. And so, it just raises the question, you know,
how can you convince the American people that you are helping
reduce the cost of prescription drugs when they have gone up so
much? Dr. Kautzner?
Dr. Kautzner. Thank you for the question, Congressman. So,
for patients that we serve, in 2023, patients spent less out of
pocket on average for a 30-day prescription as they did in
2022, despite brand manufacturers raising prices on 60 percent
of those drugs.
Mr. Palmer. What we saw is that some name-brand drugs were
costing 35 times more, and that is the information that I have
been given at PBM-owned mail-order pharmacies than independent
pharmacies, and so I do not understand why there would be that
much of a disparity. How could it be that on some of these
drugs, and I am not saying all of them, but on the PBM-managed
mail-order pharmacies, they would be 35 times higher? How do
you explain that?
Dr. Kautzner. So, Congressman, I would be happy to look at
those individual examples and be able to get back to you on
those pieces.
Dr. Kautzner. What I can say is, on average, today, our
employers make the decision on whether they want to have a home
delivery pharmacy included in their network or not, so that is
completely up to them.
Mr. Palmer. But do you think it is acceptable to charge a
substantially higher price through a program that, say, an
employee has to be in than what a competitor would charge if
they had access to the competitor's plan?
Dr. Kautzner. So, our employers hold us accountable to
ensure that we are administering benefits at their direction
that are providing lowest net cost for patients and for them.
We help them build those benefit designs to do that.
Mr. Palmer. I mean, there is a New York Times article that
exposed how PBMs operate in the marketplace, highlighting how
they are driving independent pharmacies out of business, and
they are not paying enough to cover costs. CVS Caremark
overcharged an Oklahoma health plan for state employees
$120,000 for just one cancer patient's medication. They also
overcharged an Illinois cancer patient hundreds of dollars more
than needed due to Caremark's formulary requiring her to use
the more expensive version of the drug. Express Scripts forced
a New Jersey retiree to pay $211 for his allergy medication
when he could have gotten it for $22 at Costco.
So, each of you, I just want you to explain why you
overcharge patients, employers, and the Government at some
fairly exorbitant rates but often reimburse pharmacies less
than it costs them to buy the drug in the first place. That
does not make sense. You can respond to that. I know my time
has expired. Each one of you can respond to that.
Mr. Joyner. So, our experience proves that we actually pay
CVS pharmacies less than we do other pharmacies in our network,
and, in fact, when we do have people go into our pharmacies,
they are paying, on average, 4.7 percent less.
Mr. Palmer. Mr. Joyner, you could pay a huge pharmacy like
CVS less and still be overcharging, creating a massive
disadvantage for the other pharmacies because their volume is
so much lower. I will yield back, but let them respond, Mr.
Chairman.
Chairman Comer. OK. The gentleman's time has expired, but
please feel free to answer the question. Anybody?
Dr. Kautzner. Yes, happy to answer the question,
Congressman. So, I grew up in rural America. I went to
independent pharmacies growing up. I know that they are the
major point for access to care for many underserved areas, both
in urban and rural areas. Our focus as an organization has been
to, one, help them evolve their business model to provide high-
quality care in new and different ways, whether those are strep
tests, biometric tests, behavioral screenings, those types of
things. We also have convened an independent Rx initiative for
independent pharmacists. So, we are convening on multiple times
a year now 3 dozen independent pharmacist owners to help work
with them so that we can become more productive together
because we do agree that having independent pharmacies strong
in our network is something that we feel passionate about. And
actually, in the last year, 1,400 independent pharmacies have
increased in our network in the last year. So, our work is
paying off, and we are seeing more independent pharmacies
continue to come into business and join our network.
Mr. Palmer. Mr. Chairman, I just want to make sure that
people understand that when you have these huge pharmacy chains
that do a massive volume, that they could actually make less on
per transaction, but the cost of the volume still make a
healthy profit than a smaller independent that does not have
that volume. I yield back.
Chairman Comer. The gentleman yields back. Mr.
Krishnamoorthi, are you ready, or do you want to leave?
Mr. Raskin. We will go to Dr. Foxx.
Chairman Comer. Or I can go to Dr. Foxx. You want to go?
Mr. Krishnamoorthi. I can go.
Mr. Raskin. Krishnamoorthi.
Chairman Comer. OK. The Chair recognizes an expert on PBMs,
Mr. Krishnamoorthi from Illinois.
Mr. Krishnamoorthi. Thank you, Mr. Comer, and thank you to
the gentlemen and the witnesses. I understand that you are here
today to advance what I understand to be your shared position,
namely as the CEO of your trade association. PCMA recently
stated, ``Nothing can change the fact that PBMs have a proven
track record of reducing prescription drug costs.'' Mr. Joyner,
this is your collective position, correct?
Mr. Joyner. That is correct.
Mr. Krishnamoorthi. Well, I would like to just review some
documents. First of all, in an interim staff report released
this month, the FTC calls PBMs, ``the powerful middlemen
inflating drug costs and squeezing Main Street pharmacies.''
Mr. Joyner, that is what the FTC says, correct? It is right
here.
Mr. Joyner. That is correct.
Mr. Krishnamoorthi. Now, let me just point to another
headline, this time in the New York Times. The headline of this
New York Times article is, ``The Opaque Industry''--referring
to PBMs--``Secretly Inflating Prices for Prescription Drugs.''
Dr. Conway, you do not deny that the New York Times headline
says this, correct?
Dr. Conway. That is the headline.
Mr. Krishnamoorthi. And further, at least eight different
states have filed lawsuits alleging that PBMs are inflating
drug prices and engaging in anticompetitive behavior. In fact,
Ohio Attorney General Dave Yost states, ``Express Scripts has
used its dominance solely for its financial gain, creating a
complex pay-to-play rebate system that perversely pushes
manufacturers to increase drug prices in order to be placed on
or receive preferred placement on PBM formularies.'' Now, Mr.
Kautzner, you do not deny this is what Attorney General Yost
said about your company, correct?
Dr. Kautzner. I do not recall seeing that exact quote, sir.
Mr. Krishnamoorthi. Well, I will just show you. It is right
here.
[Poster]
Mr. Krishnamoorthi. This is on their website. Ohio Attorney
General Dave Yost, it says exactly what I said. You do not deny
that is what Dave Yost said, right?
Dr. Kautzner. It appears that is what the document you are
showing says.
Mr. Krishnamoorthi. So, on the one hand we have PBMs
claiming to reduce prescription drug prices, and on the other
hand we have the Federal Trade Commission, we have major media
outlets like the New York Times, we have at least eight
different attorneys general, Democratic and Republican, who all
say that PBMs are inflating drug costs. I wonder whom the
American people should believe.
I want to turn to another topic. That is the question of
DIR fees, and I see some pharmacists in the audience. They
probably understand what I am talking about here. DIR fees are
the most insidious part of a class of fees known as post-sale
adjustments or pharmacy price concessions. Essentially, DIR
fees are clawbacks. They are clawbacks that PBMs get from
pharmacies when the PBMs decide not to pay the originally
agreed to reimbursements for the medicines that pharmacies have
already dismissed in the past, in history.
So, let me look at the July FTC report and what they say
about this. They note various public comments stating that DIR
fees are unexplainable, create needless uncertainty for
pharmacies, and are ``a charade.'' The Centers for Medicare and
Medicaid Services says that pharmacy price concessions, of
which DIR fees are a part, exploded by 107,400 percent between
2010 and 2020, a rate of increase that literally staggers the
imagination. I am not making this up. This number actually
comes from CMS. This is not a typo. Mr. Joyner, this is what
CMS says about pharmacy price concessions, correct?
Mr. Joyner. Yes.
Mr. Krishnamoorthi. The top five executives at each of the
corporations that own the PBMs represented today have all had
significant increases in their paid compensation over the past
3 years. Andrew Whittey, the CEO of UnitedHealthcare, earned
between $18 million and $23.5 million, David Cordani saw his
CEO composition go from $20 million to $21 million, Karen
Lynch, the CEO of CVS, went from $20 million to $22 million,
all in the span of 3 years. All at the same time we have these
staggering DIR fees that have gone up by 107,000 percent over
the last decade. At the same time, there have been 7,000
pharmacy closures during that time.
So, what is wrong with this picture? You have fees
skyrocketing, you have pharmacy closures skyrocketing, you have
drug costs increasing, and then you have CEO compensation at
these different companies, that are called PBMs, also
increasing. That is why Congress is scrutinizing this
particular problem today. Thank you, and I yield back.
Chairman Comer. The gentleman yields back. The Chair now
recognizes Dr. Foxx from North Carolina.
Ms. Foxx. Thank you very much, Mr. Chairman, and I want to
associate myself with the comments of my colleague from
Illinois. There is great concern, and the numbers that he put
out have to be paid attention to. As you know, I Chair the
Committee on Education and the Workforce, on which many Members
of this Committee serve, and we have spent this Congress
focused intently on improving transparency in healthcare and
addressing the practices of pharmacy benefit managers, PBMs, in
order to deliver lower healthcare costs to patients and plans.
And, again, as you have heard from members, this is a concern
all over Congress.
I am proud of the House's broad bipartisan support for the
Lower Cost, More Transparency Act, legislation that will
require PBMs to provide employers the information needed to
make informed healthcare purchasing decisions on behalf of
their employees, and I look forward to continuing to work with
my Senate colleagues to enact it this year.
Today, we have CVS Caremark, Express Scripts, and Optum Rx
or the ``Big Three'' represented, which own 80 percent of the
U.S. PBM markets, and we need to know what impact this
consolidation has on overall prescription drug prices, and I am
going to ask you to give succinct answers. With an increase in
consolidation, what incentives exist for PBMs to negotiate
better rebates? Mr. Joyner? Quick answer.
Mr. Joyner. Thank you, Congresswoman. The goal here and how
I am measured by my customers is my ability to lower costs for
themselves and for the members they serve. So, that is how I
compete, and that is ultimately, you know, how they judge and
value our performance.
Ms. Foxx. Dr. Kautzner?
Dr. Kautzner. Congresswoman, we operate in a highly
competitive environment today. Every request for proposal that
clients put out, you will see a half dozen or more PBMs that
are competing aggressively for that business, and we have to
continue to extract value out of pharmaceutical manufacturers
to show that value to patients.
Ms. Foxx. Only a half dozen or more. That is a revealing
number. Dr. Conway?
Dr. Conway. Thank you. We compete in a highly competitive
market. We compete on clinical programs, transparency choice,
and lowest net cost, and the Optum Rx retention of customers is
98-plus percent.
Ms. Foxx. The Federal Trade Commission's interim report on
PBMs found that your three PBMs increasingly rely on group
purchasing organizations, GPOs, which received roughly $7.6
billion in fees from drug manufacturers in 2022. Section 402 of
the Lower Cost, More Transparency Act would require PBMs to
disclose to plan sponsors fees received from manufacturers
through the GPOs. For each of you, does your PBM pass on fees
received from drug manufacturers and through GPOs back to plan
sponsors in the form of rebates or otherwise? If so, what
percentage of such fees do you pass on? Mr. Joyner?
Mr. Joyner. Congresswoman, we pass over 99 percent of
rebates in administrative fees across our book of business, and
in Medicare, we pass 100 percent back to the government.
Ms. Foxx. Dr. Kautzner?
Dr. Kautzner. We do absolutely pass back rebates and fees
to our clients. Many of our clients can receive 100 percent of
those fees if that is the type of benefit design that they
choose, and we charge a simple per claim fee for that type of
service.
Ms. Foxx. Dr. Conway?
Dr. Conway. Similarly, the majority of our clients have 100
percent passthrough of rebates to our clients, and, on average,
we are 98 plus rebate passthrough to clients as well, and it is
their choice.
Ms. Foxx. This Committee has received testimony and
documents that illustrate that transparent PBMs can achieve
dramatically higher cost savings than your three companies. If
that is truly the case, should not all PBMs be transparent? I
just need a ``yes'' or ``no'' answer. Mr. Joyner?
Mr. Joyner. Congresswoman, we are transparent.
Ms. Foxx. OK.
Mr. Joyner. So, we compete in a transparent world.
Ms. Foxx. OK. Dr. Kautzner?
Dr. Kautzner. We are transparent as well and have
transparent offerings that compete with other transparent PBMs.
Ms. Foxx. Dr. Conway?
Dr. Conway. Yes, we are transparent to customers and to the
patients we serve.
Ms. Foxx. Mr. Chairman, I would like to ask one more
question if you will indulge me.
Chairman Comer. Please.
Ms. Foxx. Thank you.
Chairman Comer. I have never told you no.
Ms. Foxx. Thank you.
Chairman Comer. I am afraid to tell you no.
Ms. Foxx. I would not tell you no either. In the employer-
sponsored market, plan sponsors have a fiduciary responsibility
to their employees to provide the highest-quality plan for the
lowest cost. How do large PBMs help employers fulfill their
fiduciary duties? And, again, a quick answer so I do not abuse
my privilege from the Chairman.
Mr. Joyner. Today we are contracted with our customers to
deliver on the contractual commitments they have given to us.
So, in large part, it is making sure that we both deliver and
execute against the guarantees and the contracts that they have
negotiated with us.
Ms. Foxx. Thank you.
Dr. Kautzner?
Dr. Kautzner. Congresswoman, we focus on lowest net costs
for our clients and for patients to deliver that value.
Ms. Foxx. Dr. Conway?
Dr. Conway. Yes, we provide transparency and choice to our
customers, including plan employers, and compete on lowest net
cost and best clinical programs.
Ms. Foxx. Thank you, Mr. Chairman. I appreciate the
indulgence.
Chairman Comer. The Chair now recognizes Mr. Connolly from
Virginia.
Mr. Connolly. Thank you, Mr. Chairman. PBMs and Big Pharma
play a blame game, do they not, Mr. Joyner? Big Pharma
certainly sets drug prices in America and maximizes profit to
its best ability. Would you agree with that?
Mr. Joyner. I would.
Mr. Connolly. Would you speak up in the mic, please?
Mr. Joyner. Yes, sir. I agree.
Mr. Connolly. OK. And this Committee has had hearings on
drug pricing in the past, including, in some cases, really
egregious examples of price gouging on generic drugs, on very
old drugs like insulin, for example, which have not
particularly been improved much over 100 years. How we deliver
them, yes, but the basic insulin drug has not changed much. And
as you know, that led to moves here in Congress to actually cap
the price of insulin at $35 rather than have tens of millions
of Americans suddenly not be able to afford a lifesaving drug.
Any views on that particular example?
Mr. Joyner. I think CVS Caremark has a particularly strong
track record in this one category. These are branded
medications. And if you look at our ability to lower the cost
of insulin, both for our customers, which has actually seen a
reduction for our plan sponsors that we serve, and, ultimately,
the patients that are on these insulin therapies are paying
less than $25 today. So, we have done a really nice job, I
believe, of using competition to lower costs for the customers
that we serve and, ultimately, to the benefit of the patients
that are on these important therapies.
Mr. Connolly. That is kind of a more recent development, is
it not?
Mr. Joyner. No, sir. We created the competition back in
2012, and from that point forward, you have seen the cost of
insulin continue to decline. And so, the recent change where
the manufacturer actually lowered the list price, which we
applaud, came after we actually negotiated significant
discounts to lower the cost for our customers.
Mr. Connolly. Do you believe that the move to, for example,
lower the price of insulin might have had anything to do with
growing political pressure, including political pressure up
here, to force the hand of both Big Pharma and you, otherwise--
that is to say lower the price--or we will do it for you
legislatively? Do you think that had any relationship at all to
the decision?
Mr. Joyner. Yes, it is plausible, plus there was a----
Mr. Connolly. Plausible?
Mr. Joyner. Yes, and there was a change in the way in which
Medicaid priced this category. So, because they removed the
cap, that actually would have penalized the drug manufacturer
for the price increases that they have taken over the last
decade.
Mr. Connolly. So Big Pharma maximizes profits, but, of
course, so do PBMs, right?
Mr. Joyner. Our job is to continue to lower the cost for
the customers which we serve.
Mr. Connolly. Lower the cost?
Mr. Joyner. Correct.
Mr. Connolly. So, when we compare drug prices in the United
States to Europe or Canada, in your efforts to lower costs, do
we see American drugs actually lower in price for consumers
than in Europe or Canada?
Mr. Joyner. For the generic drugs, which is 9 out of every
10 prescriptions in this country are generic medications, and
we believe we have done a remarkable job of lowering the cost
of generics----
Mr. Connolly. That is not my question.
Mr. Joyner [continuing]. And the brands that actually
represent the remaining 10 are more expensive than they are
around the world.
Mr. Connolly. Why?
Mr. Joyner. Because the rest of the world negotiates for
price in order to have access in their country.
Mr. Connolly. So, we do not do that?
Mr. Joyner. Beginning in January 2026, our government will
start the first 10 drugs that will be negotiated on behalf of
Medicare.
Mr. Connolly. And do you expect prices to come down with
that negotiation?
Mr. Joyner. I believe the PBM industry, and specifically
CVS Caremark, has done a really nice job of lowering the cost
of those 10 medications that are there, and our hope is that
there will be continued reduction in cost.
Mr. Connolly. Yes, we all hope for that, but I was asking
about the actual process and what the relationship is between
that process and the expectation that there will in fact be
lower drug prices. You just said our drug prices, in fact, are
higher than most of the rest of the world. Same drug. And so,
we all want to understand on behalf of our constituents and
consumers, well, why would that be? Why would that be if it is
the same drug? And I think you have answered by saying, well,
they negotiate prices, we do not. We are going to start doing
it. We have got a list of the first 10, and that would suggest
that consumers have been paying a premium simply for want of
negotiation on prices for many years. Would that be a fair
conclusion to draw?
Mr. Joyner. I can only speak to the role of the PBM and the
fact that we have done what I believe is a good job of creating
competition and lowering costs, and I will just look at the
last 5 years. We have been able to reduce the brand of
medications by 15 percent by using competition in a free market
to be able to lower the cost for our plan sponsors.
Mr. Connolly. Yes, and good for you, but when you talk
about lowering costs, it is relative to the previous price in
America. It is not relative to the cost of drugs in other
advanced, civilized places like Europe and Canada, right?
Mr. Joyner. Correct.
Mr. Connolly. All right. So, when we say lowering the cost,
you know, there is lowering the cost and then there is lowering
the cost, and hopefully PBMs will help cooperate in that
regard. You know, all of us believe that when a manufacturer
invests R&D in a development of a new drug, that manufacturer
takes risk and is entitled within reason to recoup costs. But
when you take a 100-plus-year-old drug like insulin and you
suddenly jack up the price just because you can--I am not
saying you do it; we had hearings on that--that actually puts
lives in jeopardy. And so, maximizing profits, nothing wrong
with that, but not at the expense of people's lives, not at the
expense of people's health. And I think PBMs, as well as Big
Pharma, have an absolute obligation, and so do we up here, in
protecting consumers, especially when the system does not work
for them.
Thank you. I yield back, Mr. Chairman, and thank you for
your indulgence.
Chairman Comer. The Chair recognizes Mr. Timmons from South
Carolina.
Mr. Timmons. I appreciate my colleague across the aisle's
remarks, but I think, with all due respect, you are missing the
mark entirely. You are missing the mark entirely. Our country--
--
Mr. Connolly. Well, not entirely.
Mr. Timmons. No, our country is sick. Our country is sick.
Why is Europe and Canada paying less? Because they do not have
an enormous obesity problem because half of them do not have
diabetes. I mean, all of these are preventable diseases. They
are all preventable diseases. Mr. Joyner, what percent of the
drugs that you sell treat trauma injuries, injuries of some
kind, or genetic abnormalities? What percent? Ten, 15 percent
of the drugs you sell?
Mr. Joyner. I am not sure.
Mr. Timmons. I bet it is less than 20. We can all agree.
So, everything else is purely preventable. I mean, so we have
all of these problems with drug prices, but we have a demand
issue. We have a demand issue. This country is sick. I have
seen more people getting dialysis in the last 6 years. I go to
these dialysis clinics at least once a year, and it is sad.
There is more of them, and there is more of them, and 95
percent of people that have diabetes that need insulin can
exercise and eat better and not have these problems. So, we are
here to talk about who is making more money along the supply
chain? Why do not we cut the supply chain off, cut the need
off?
People need to be healthier. They need to take
responsibility for their health. They need to exercise. They
need to eat right. Our entire healthcare system delays death
and treats sickness. We do nothing to facilitate health and
wellness, and we talk about Europe. I mean, their diabetes rate
is drastically less, so yes, insulin is less. There is less
demand. And the cost of insulin goes up because millions and
millions of Americans are increasing the demand on it. A
hundred and twenty-nine million people in this country have at
least one major chronic disease, at least one major chronic
disease. Heart disease, cancer, diabetes, obesity, hypertension
are the lead. All of those are very preventable unless you have
a genetic abnormality. I will even use myself as an example.
I owned a CrossFit gym. I worked out every day, and I went
to the doctor. I got some blood work done, and the blood work
came back. She said, William, you have a cholesterol problem. I
said, I am 10 percent body fat. I work out every day. What is
up? And she said, well, what do you eat? At the time I was
eating probably 16 ounces of steak a day. She was like, well,
there is your problem, so I reluctantly changed my diet. I ate
some fish, had some shrimp, ate some chicken. Go back, get my
blood work done, not a problem. Could I, without any penalty,
have continued eating 16 ounces of steak every day and gotten a
pill, lived on that pill for the rest of my life and received
no additional cost to me as a person? Yes, I could. That is our
healthcare system. There is no accountability.
And you know what is crazy? That cholesterol pill that I
take, after a couple years I am probably going to get a blood
pressure issue. So, there is a pill for that. And, you know,
let us just say I stop exercising, gain weight. There is a shot
for that. I mean, this is not how our country needs to be
operating. It is just outrageous. So, we are here talking about
drug prices. The way to address our healthcare system is by
accountability, personal responsibility. We have to incentivize
health and wellness and not delay death and treat sickness. So,
I realize I am on my soapbox here, but we have a major problem
in this country. We have some of the worst outcomes of any
developed country, and we spend four times more. Average
spending, what, almost $5 trillion, and we have one of the
least healthy developed population in the world?
So, I get it. We are fighting over drug prices, who along
the supply chain is getting what and how they are doing that.
We have to go to the root cause. We have to reduce the demand
for all of these drugs. I mean, even the military is having a
huge problem. We are having to constantly reduce our
standards--reduce our standards
--because we cannot field a professional military. I mean,
this is a national security threat. We have $35 trillion in
debt. We are adding $1 trillion to our debt every hundred days,
and we have workforce issues because people are unable to work
because they are at the dialysis clinic or they are too sick.
And, again, 90 percent of all of this is preventable with diet
and exercise.
So, I understand that we are fighting over drug prices and
who along the supply chain, but we have got to go to the root
cause, and we have to get serious about incentivizing health
and wellness and stop fighting over who gets what dollar as we
delay death and treat sickness. And with that I yield back.
Mr. Raskin. Would the gentleman yield for a question?
Mr. Timmons. Absolutely.
Mr. Raskin. Well, I am very drawn by your analysis, but
would you take it one step further and say that Congress and
the Federal Government should not be investing in Big Sugar and
Big Dairy and in unhealthy agriculture practices that end up
producing diabetes and unhealthy outcomes?
Mr. Timmons. I do everything in my power to eat things that
are from nature, and I will leave it at that.
Chairman Comer. All right. The Chair now recognizes Mr.
Khanna from California.
Mr. Khanna. Thank you, Mr. Chair. Dr. Conway, you are here
as CEO of Optum Rx, but before that you were a doctor, actually
a well-respected doctor, a pediatrician, as I understand it.
And so, I want to ask you, when you were a doctor, if you had a
10-year-old, for example, who came in with arthritis and you
recommended or prescribed Humira, do you believe that your
judgment would be more valuable than some of your colleagues at
Optum who may not have treated that patient?
Dr. Conway. Sir, I am still a practicing pediatrician.
Mr. Khanna. Wonderful. So, can you answer the question?
Dr. Conway. So, in terms of clinical care, I believe
clinical care should be based on evidence and the best medicine
for the populations of patients.
Mr. Khanna. But you would not privilege the doctor's
opinion in that case? I mean, if you were treating a patient,
10-year-old with juvenile arthritis, you say, OK, I think she
needs Humira, would you agree that your opinion should be given
more weight than someone at Optum, who may not actually treat
that patient?
Dr. Conway. So, I agree that prescriptions prescribed by
physicians when consistent with the clinical evidence should be
approved and given to the patient.
Mr. Khanna. But that did not happen in the case of Cassidy,
right? Are you familiar with this case where she was a 10-year-
old girl? She had juvenile arthritis, and her doctor prescribed
Humira, but for 6 months there was denial of that medicine, and
then the juvenile arthritis spread to her rib cage. Do you
agree that that denial was wrong?
Dr. Conway. So, for any individual case, we are happy to
look into it with you and get back to you. I would go----
Mr. Khanna. Do you know why that was denied?
Dr. Conway. I would go back to our process, which was an
independent Pharmacy and Therapeutics Committee----
Mr. Khanna. Are you familiar with the process called
utilization management?
Dr. Conway. We have an independent Pharmacy and
Therapeutics Committee, which has pharmacists and clinicians.
Mr. Khanna. And what happened in Cassidy's case because of
utilization management is the Committee went back to Cassidy's
doctor and said, no, do not give her Humira, even though the
disease is spreading to her rib cage and she is in pain for 6
months because you need to try cheaper drugs first. Is that
what utilization requires?
Dr. Conway. So, the vast majority of medications are
approved when prescribed.
Mr. Khanna. That is not my question, but is there a policy
that you require people to try out cheaper alternatives first
and that the doctor is overruled, as happened in Cassidy's
case?
Dr. Conway. The vast majority of medicines are approved as
prescribed. There are times when the independent P&T has
recommended criteria that be followed, where at times one
medicine is tried before another medicine.
Mr. Khanna. And is cost part of the criteria?
Dr. Conway. The criteria start with the clinical standards
and the evidence.
Mr. Khanna. Is cost one of the factors?
Dr. Conway. No, the first criteria is the clinical evidence
and criteria. If medicines are clinically equivalent, then the
lower net cost can be considered.
Mr. Khanna. So, cost is a factor, and there are times, as
in Cassidy's case, that the doctor's clinical diagnosis is
overruled because of cost. I mean, the doctor was begging for
this to be approved for this girl for 6 months as arthritis
spread from her knees and her ankles to her rib cage. And it
was denied again and again because they were saying that the
doctor needed to prescribe something cheaper. Do you believe
that that was an outrageous decision to privilege costs over
this girl's health?
Dr. Conway. As a practicing pediatrician, and I have taken
care of many children with juvenile arthritis, it is critically
important to follow the clinical evidence to prescribe
appropriately.
Mr. Khanna. But why would you not just say it is critically
important to follow the doctor's recommendation? Can you commit
to that today, that Optum Rx in the future will not have cases
like Cassidy, and if a doctor is prescribing a medicine like
Humira, will agree to fill that prescription?
Dr. Conway. For any individual case, for you or other
Member of Congress, if you want us to look into that case, we
will.
Mr. Khanna. But can you make a commitment today that you
will privilege the doctor's recommendation over the
bureaucracy's recommendation? This is the heart of why people
are so upset at the PBMs. Can you just make that commitment
that you will not override a doctor's? How about this? Can you
commit that if a doctor recommends it twice, you will not
override it?
Dr. Conway. As a physician, I hope you understand this, we
value our partnership with physicians.
Mr. Khanna. I am sure you value it, so then can you commit
to taking their recommendation? Why would you not commit to
taking their recommendation, or can you commit to not
considering cost, taking cost out of your utilization?
Dr. Conway. We are committed to the independent P&T
Committee that we have that is transparent, that includes
independent----
Mr. Khanna. It is like lawyers are writing your statements.
Dr. Conway. I am trying to answer your question, sir.
Mr. Khanna. No, you are not, with due respect, sir. You are
not committing to not having cost, and you are not committing
to having a doctor's recommendation, even if they have it
twice. If a doctor says, we need Humira, it is denied. Then the
doctor says, we need Humira. You are not even committing to
accepting that, and you are not committing today, and I will
let you have the final word, and you are not committing to
taking out cost as a consideration.
Dr. Conway. We are committed to effective clinical care for
all the people that we serve.
Mr. Khanna. Well, that does not answer my question. My time
has expired.
Chairman Comer. The Chair now recognizes Mr. Grothman from
Wisconsin.
Mr. Grothman. OK. This is for any one of you. We are at the
risk of a record number of pharmacy closures in 2024, which
will only serve to make our pharmacy deserts worse. In fact,
one-third of the independent pharmacies are currently at risk
of going out of business. This is largely due to the PBMs which
engage in patient steering and spread pricing, which charges
employers more for medications than they reimburse pharmacies.
With the role you play in prescription drug reimbursement, how
can you sit here and say that PBMs are not a major cause of
these closures, or do you agree it is a major cause of these
closures?
Dr. Kautzner. Thank you for the question, Congressman. My
20 years of experience in this industry leads me to a different
conclusion as with the data, which would show, today, we
actually in the last 5 years have grown the number of
independent pharmacies in our network from 18,000 to over
21,000. Fourteen hundred net new independent pharmacies are in
our network in the last year.
Mr. Grothman. Your network, is that nationwide or just your
network?
Dr. Kautzner. Our total network is nationwide. It has over
64,000 pharmacies in it, of which over 21,000 of them are
independent pharmacies. We also increased reimbursement to over
700 pharmacies across this country to address exactly what you
just mentioned around underserved areas and rural and urban
areas, so patients have access to care where they need it.
Mr. Grothman. There is substantial evidence that PBMs often
prioritize higher rebate medications over cheaper alternatives,
which directly drives up the cost of patients. How do you
justify these practices that seem to place profits over
affordability, and what specific actions will you take to stop
exploiting patients with unnecessary high drug prices? Could
you comment on that?
Dr. Kautzner. So, we fight every day to keep drug prices
down. There are challenges with very high-cost branded
products. There are new products that entered the market. Last
year, unfortunately, had a median cost of $300,000 annually, so
our focus is to bring down those costs. Some considerations
that we are working through and we applaud Congress for doing
is, one, reducing the patent thickets that 80 percent of the
top 100 branded drugs put in place so they have monopolies on
those drugs for much longer. That is a focus. Two is to make
the biosimilar interchangeability pathway much easier so
physicians do not have to get a new prescription for those
drugs and you can enter biosimilar competition much sooner. As
my example earlier this morning on Humira, the primary patent
expired in 2016. They kept biosimilar competition from entering
the market until 2023. When it did, the price and that cost
came down 38 percent.
Mr. Grothman. Amen, brother. Do you think the American
system of researching drugs is, to a degree, broken, not enough
emphasis on biosimilars, not enough emphasis, I guess I will
say, on drugs that make the pharmaceuticals more money? Do you
think that is true?
Dr. Kautzner. I think, as Representative Timmons mentioned,
there is less of a focus now on some of the larger chronic
disease states that so many Americans, unfortunately, have, and
there is much more of a focus in drug manufacturers on very
rare conditions. Some of those conditions they move to for
ultra-rare, ultra-orphan type products because there is less
competition, and they will have a monopoly on those drugs for
much longer, which will increase their profits.
Mr. Grothman. But in general, research overall, including
university research, are they too focused on, I guess because
the government pays for a lot of that research, are they too
focused on or not focused enough on biosimilars, not focused
enough on generics, not focused enough on things that may be
cheaper and instead are spending the research dollars,
including at the universities, on things that are going to
result in higher costs?
Dr. Kautzner. From my view and my experience, there are
times where there is not enough competition in certain cases,
and competition is where we drive savings in this competitive
market. So, whether it is biosimilars or generics and the lack
of, those competitive products in those areas, yes, that
becomes an issue in certain conditions.
Mr. Grothman. Do you feel that some of that is the
university's fault, or is it the government who is telling them
where you have to put your research dollars?
Dr. Kautzner. That question is probably outside of my scope
of expertise. We would have to get back to you on that piece.
Mr. Grothman. OK.
Mr. Grothman. I guess that takes up my time.
Chairman Comer. The gentleman yields back. The Chair now
recognizes Mr. Mfume from Maryland.
Mr. Mfume. Thank you very much, Mr. Chairman. My thanks to
both you and the Ranking Member for convening us for a third
time to talk about PBMs and to allow us the opportunity, in
this case, to have the three major players before us. I would
like to, before I begin, recognize a group of retail
pharmacists from my state of Maryland who are here and who have
been very helpful with me and others in terms of helping us to
understand their plight. They are seated in the audience here.
And I would ask, Mr. Chairman, unanimous consent to enter
into the record their letter in support of continued bipartisan
scrutiny of pharmacy benefit managers.
Chairman Comer. Without objection, so ordered.
Mr. Mfume. Mr. Chairman, I would also ask unanimous consent
to enter into the record the American Federation of State,
County, and Municipal Employees' letter advocating for
increased transparency for PBMs.
Chairman Comer. Without objection, so ordered.
Mr. Mfume. Thank you, sir, and I will pass those down and
we will get those right to you.
According to the Kaiser Family Foundation, last year, in
2023, 30 percent of Americans reported that they were unable to
take their prescribed medication as needed due to exceedingly
high costs. That is not me. That is 30 percent of the people in
this country who were asked. In fact, my office has met with
the Asthma and Allergy Network recently who conveyed that many
parents in my district in Baltimore, as I am sure is the case
in other districts around the Nation, are forced to forego
their own medical needs to ensure that they themselves as
parents are able to afford the ability to purchase medications
like inhalers and EpiPens for their children who are in pain
and who suffer and who need that sort of treatment and those
sort of medications and other things. In addition, some of
those families have multiple children, and in those instances
those children who have the same ailments must share the same
inhalers, EpiPens, or other things that are prescribed.
Gentlemen, I do not know about my colleagues here, but I find
this absolutely unacceptable, and I think, Mr. Chairman, that
we have got to find some sort of bipartisan path to bring about
regulation. Otherwise, we will be faced with the possibility of
having a fourth hearing.
Hubert Humphrey said something that bears repeating. He
said that the moral test of government is how that government
treats those who are in the dawn of life, how they treat those
who are in the twilight of life, and how that government treats
those, like the elderly and others, who are in the shadows of
life. We are not doing a good job when it comes to prescribed
medications because what we are doing is to push them further
into those shadows. Now, I know that I could be a band of one
on this, but I am never going to stop banging this drum because
people are hurting.
And I just do not understand, to the three of you who are
here, how is it that you are right and the Federal Trade
Commission is wrong. Help me to understand how you are right,
and the attorney generals of eight states, and it could be nine
as of today, are wrong. Please tell me how the analysis done by
major media outlets, like the New York Times and others,
underscore this problem, but they are wrong, and please tell me
how pharmacists and doctors say that you are the problem and
you say they are not. So, I think this begs for an approach
that is bipartisan and one that finds a way to correct this
issue. Quite frankly, I am tired of running around and playing
Ring Around the Rosie.
Now, I am not saying you should not have any sort of profit
margin, but I think those margins are exorbitant. I have yet to
see the formulas. Even though you say you are transparent, I do
not know what formulas you use to come up with the pricing. You
know, is it sleight of hand? Is it now you see me, now you do
not? This is crazy. This is absolutely crazy, and I would go so
far to say it is anti-American. And for my colleague who said
earlier that 90 percent of all of this can be corrected, that
it is preventable, there are cases of obesity that are genetic.
There are cases of cancer that go back to genetic disposition.
I could name a ton of other diseases that you cannot prevent
that are not a part of this so-called 90, and these people need
help. They need to be able to purchase the medications they
need without a lot of sleight of hand. So, I have yet to see
the transparency, with all due respect.
My time is concluding, but, Mr. Chairman, I would welcome
any opportunity that you and the Ranking Member put together
that we might be able to find a way to address this problem
once and for all for Americans all over the United States. I
yield back.
Chairman Comer. The gentleman yields back, and I agree. Mr.
Mfume, I look forward to working with you. I will remind, we
passed a PBM piece of legislation that impacted the Federal
Employee Health Plan that came through this Committee. That was
our sole jurisdiction on it, but we are going to continue to
work together, and I pledge to work with you in that endeavor
in a bipartisan way. The Chair now recognizes Mr. Burlison from
Missouri.
Mr. Burlison. Good afternoon. I guess I am part of a dying
breed. I am still a free-market, believe-in-capitalism
Republican, which is apparently rare in this town. I happen to
agree wholeheartedly with my associate, Mr. Timmons, that we
have dramatically removed all costs in any kind of, you know,
decisionmaking from patients all through the regulatory schemes
that originated here in Congress. And so, we further continue
to try to remove any kind of negotiating power, and then we
wonder why healthcare costs just continue to skyrocket year
after year, and yet we have this one example where healthcare
costs are not. Yet it seems, just from hearing this, you know,
what I have heard today, you guys are forcing yourselves on
your customers. Do you literally put a gun to the head of the
businesses that hire you, that pay you, Mr. Joyner?
Mr. Joyner. Not at all. In fact, they hire us to do a very
specific job and, as we said earlier, very high satisfaction
rates.
Mr. Burlison. And if they are not happy, they do not have
to continue to pay you, right?
Mr. Joyner. Exactly. They have choices and options.
Mr. Burlison. So, if they are not happy, if the price is
too high, just like in the normal market, they can choose
someone else. There are apparently 70 different options, and
yet we are here wanting to dig deep into your pricing
structure, get involved in your profits. That is what is
remarkable to me.
Now, look, I do have concerns about my independent retail
pharmacies, and I was pleased to hear that you guys are
engaging with them. I am going to get to that question next.
Let me ask this, and I think this will be telling. Big Pharma,
pharmaceutical companies, they obviously do not like you,
right? You guys negotiate down pricing, but do they utilize
you, Mr. Kautzner? Pharmaceutical companies have employees, and
this will be very telling. Do they use pharmacy benefit
managers to manage the insurance costs of their own employees?
Dr. Kautzner. Congressman, yes, we do have clients who are
pharmaceutical manufacturers.
Mr. Burlison. Why in the world would they choose?
Obviously, you are forcing yourself on them. You are forcing
yourself for them to purchase your services, right? The
services that they say are so egregious, and yet they choose to
purchase, to hire one of you to manage their own employees'
costs. I think that that is evidence enough, but I want to get
to what can we actually do to reduce the costs of
pharmaceuticals for patients, and I am trying to be creative.
What this place does is just add more regulations, try to get
into the lives and the businesses as much as possible. What
regulations could we look at that would actually empower
independent pharmacists and hopefully provide better access to
patients? And I would like to hear from each of you.
Mr. Joyner. So, Congressman, I think our track record
speaks for itself, which you mentioned earlier. The PBM
industry, specifically CVS Caremark, has been very successful
in creating competition to lower costs for our customers, and
if you look at the generic medication adoption rate, it is 9
out of every 10 prescriptions is a low-cost generic. The
remaining 10 that are brands, we use competition to effectively
lower the overall cost. So, between 2017 and 2022, we were
successful in lowering the brand medications by 15 percent. So,
I do think that the PBM model does work in terms of creating
competition and lowering cost.
I will add on that I think what the concern here is the
out-of-pocket cost for the members. In large part, that is what
we have delivered and introduced a new pricing model called
TrueCost because the idea now is to make sure that the member
gets exposed to the lowest net cost. In fact, what the pricing
model is inherently designed to do is make sure that it gets
closer to the acquisition cost, making it simple and easy for
the patient to access the medication.
Dr. Kautzner. So, Congressman, in regard to independent
pharmacies, you are from Missouri. I live in Missouri. There
are, unfortunately, 20 percent of Americans living in rural
America today and only 10 percent of America's physicians live
there. That creates an access-to-care challenge. Independent
pharmacies can help fill that challenge by allowing them to
work at the top of their license, expanding scope of practice
opportunity----
Mr. Burlison. I a hundred percent agree.
Dr. Kautzner [continuing]. So that they have those
opportunities and they can get to the patients that need them
most. When I was a kid, I used to go to an independent pharmacy
because it was hard to get into a doctor at the time. It is
that type of work that we need to work together on and partner
to be able to do, and that will have a real effect in
communities.
Chairman Comer. Oh, I am sorry. Go ahead and answer the
question.
Dr. Conway. I will be very brief, given the time. We agree
with your points that transparency, choice, and a competitive
market serve our customers. They value that choice, as we
described, and we continue to drive both affordability
initiatives to consumers and support for independent
pharmacies.
Mr. Burlison. I really appreciate your comments, and I
wholeheartedly agree. I am going to be pursuing an effort to
try to reevaluate what pharmacists are allowed to do to try to
increase their scope because at the end of the day, we need
more healthcare providers, we need better access to healthcare,
and we need to improve their ability to get reimbursed, and I
think this may be a win-win. Thank you.
Chairman Comer. The gentleman yields back. The Chair now
recognizes Ms. Norton from Washington, DC.
Ms. Norton. Thank you, Mr. Chairman. Today we are here for
yet another hearing on a very important topic that Democrats
have long worked to address: high drug prices. The high cost of
healthcare is a burden on individuals and families in the
United States. Prescription drugs are too expensive across the
board. A 2023 polling by the Kaiser Family Foundation found
that 3 out of 10 Americans have not taken their medicine as
prescribed because of high costs. A 2023 report from Patients
for Affordable Drugs found that for certain cancer medications,
some patients spend up to $16,500 out of pocket. I would like
to ask each of our witnesses today, Dr. Kautzner, yes or no, do
you agree that we need to do more to lower the price of
medicines for people across the country? Yes or no.
Dr. Kautzner. Congresswoman, there is always more that we
can do to lower patient out-of-pocket costs, and we would
certainly be happy to offer some recommendations on how we and
Congress can do that.
Ms. Norton. Mr. Joyner, do you agree that we need to do
more to lower the price of medicine for people across the
country?
Mr. Joyner. Congresswoman, I agree, and that is the role of
the PBM, is to continue to create competition to lower costs
for the customers on which we serve.
Ms. Norton. Thank you. Mr. Conway, do you agree that we
need to do more to lower the price of medicine for people
across the country?
Dr. Conway. Yes. We need to do more to make medicine more
affordable for the people across the country, and that is what
we work on each and every day.
Ms. Norton. I appreciate that because it seems pharmacy
benefit managers are a factor in these unacceptable high costs.
An interim report published by the Federal Trade Commission
this month and a New York Times article in June found that
pharmacy benefit managers contribute to rising out-of-pocket
drug costs, including by steering patients away from cheaper
medications like generics. The bottom line is that high costs
are harming Americans.
Fortunately, the Democratic-led Inflation Reduction Act
that President Biden signed into law in 2022 is already
addressing these high costs. The Inflation Reduction Act caps
the amount someone on Medicare has to pay out-of-pocket for
insulin at $35 per month. This is estimated to save $500 per
person per year. Capping the cost of insulin so everyone who
keeps it can afford it will save lives. Nearly 7 million
Americans rely on daily insulin, about 4 million of whom will
directly benefit from the $35 Medicare limit set by the
Inflation Reduction Act. The Biden-Harris Administration is
working to expand the $35 insulin cap to all Americans. Already
several insulin manufacturers, including the largest
manufacturer, Eli Lilly, have committed to lowering the cost of
insulin by 70 percent and capping out-of-pocket costs at $35
per patient, not just those on Medicare.
The Inflation Reduction Act also limits out-of-pocket costs
for patients covered by Medicaid Part D to $2,000 per person
beginning in 2025. Patients for Affordable Drugs has found that
99 percent of cancer patients who use brand medications will
benefit from the Inflation Reduction Act's $2,000 cap on out-
of-pocket costs. This is estimated to create annual savings at
$7,590 for those patients. Overall, the Inflation Reduction Act
will improve lives for over 1.4 million Americans covered by
Medicare. It will also lead to an estimated $7.4 million in
savings in annual out-of-pocket costs for enrollees. The
Inflation Reduction Act has and will continue to benefit
Americans who face burdensome high-cost prescription drugs.
I hope the pharmacy benefit managers here today will commit
to actions that similarly benefit American families by reducing
the cost of medications and increasing patient choice and
access to medication. Thank you, Mr. Chairman, and I yield
back.
Chairman Comer. The gentlelady yields back. The Chair now
recognizes Mr. Fallon from Texas.
Mr. Fallon. Thank you, Mr. Chairman. We all know that the
cost of healthcare has steadily increased, and it is in an
environment of already record-breaking inflation. More and more
Americans are forgoing healthcare coverage because they simply
cannot afford it. PBMs state that they exist to save people
money, yet the PBMs are seeing, quite frankly right now, sky-
high profits and healthcare costs are becoming prohibitively
expensive for the average American. According to the Federal
Trade Commission, three PBMs now control 80 percent of the
market. They have vertically integrated with suppliers of goods
and services, retail, mail-order, especially pharmacies and
large health insurers. As a result of vertical integration,
there are pharmacies owned by the same company as the PBM that
are linked to, ``affiliated pharmacies'', as well as local and
independent pharmacies, which are known as unaffiliated
pharmacies.
Each one of you here today represents a group that is
integrated, insurer, PBM, pharmacies and provider services
together. So, for the witnesses here, Mr. Conway, Joyner, and
Kautzner, what is your relationship with your respective
companies with independent and unaffiliated pharmacies? Would
you describe it as positive or negative? Mr. Joyner, is it
positive or negative because, I apologize, we have limited
time.
Mr. Joyner. No, I am just saying, Congressman, I think
independent pharmacies are a critical part of our network.
Mr. Fallon. So, you would say you would describe your
relationship with them as positive?
Mr. Joyner. I would, and we also reimburse them more money,
so I think that is one of the benefits of a relationship.
Mr. Fallon. And Dr. Kautzner?
Dr. Kautzner. Congressman, we have worked hard very
recently to make it a positive interaction with independent
pharmacists.
Mr. Fallon. And Dr. Conway?
Dr. Conway. The goal is also positive and support
independent pharmacies and pharmacists.
Mr. Fallon. OK. And the same thing I would like to start
with, Mr. Joyner, do your companies steer patients to
affiliated pharmacies? Yes or no.
Mr. Joyner. We actually establish a variety of different
network options.
Mr. Fallon. And again, at limited time, yes or no?
Mr. Joyner. So, the answer is no.
Mr. Fallon. OK. Dr. Kautzner?
Dr. Kautzner. No, sir. Our clients make the decision on
what pharmacy networks they want to use for their patients.
Mr. Fallon. Dr. Conway?
Dr. Conway. No.
Mr. Fallon. Well, it is interesting because there is a 71-
page report here from the FDC, a study found that from internal
documents and public comments, that not only do PBMs reimburse
their affiliate pharmacies at significantly higher costs than
affiliated, but it also shows that PBMs use a number of tools
to steer patients to their affiliated pharmacies, even when the
cost is higher to the patient. And when discussing that matter,
documents also show that they are more concerned about the
optics of a patient paying thousands of dollars more than the
actual patient paying thousands of dollars more. You have an
independent pharmacists coming into our office, in Congress,
repeatedly, and they say they feel they are forced into using
PBMs. So, I am assuming that you all know what a passive
contract is. Mr. Joyner, do you know what a passive contract
is?
Mr. Joyner. It would be helpful if you could describe it.
Mr. Fallon. OK. A passive contract is when a PBM sends a
proposed contract to a pharmacy, for example, by fax, with a
clause in it that says the pharmacy is in unless they opt out,
and then they are automatically signed into the contract with
the PBM. There may not even be confirmation that the proposed
contract was received. Now, I find that to be unethical, but
the FTC study showed that passive contracts make up a large
percentage of the contracts sent out by the PBMs. So, that is
what I would say a passive contract is.
Mr. Joyner. Yes.
Mr. Fallon. OK. Dr. Kautzner?
Dr. Kautzner. Sir, you are asking am I aware of what a
passive contract is, just to confirm?
Mr. Fallon. Yes.
Dr. Kautzner. Yes. Yes.
Mr. Fallon. So, you are aware. Dr. Conway?
Dr. Conway. Yes, I am aware of that term.
Mr. Fallon. OK. Dr. Conway, have you all done this, where
you are sending out unsolicited communications to pharmacies
and saying if you do not respond, you are opted in, unless you
opt out?
Dr. Conway. We do not participate in that type of
contracting, and our independent pharmacy network has grown
over the last several years. And we pay them more than retail
pharmacies and actually pay non-affiliated pharmacies, on
average, comparable or more than our affiliated pharmacies.
Mr. Fallon. So, would you say whether a pharmacy is owned
by the same company as the PBM, is that a factor in determining
reimbursement rates?
Dr. Conway. No. We pay affiliated and non-affiliated
pharmacies comparable rates. Often our own affiliated
pharmacies are actually the lowest cost options in the market,
and at the end of the day, as described, the clients,
employers, and others select the network that they want to
provide to their employees.
Mr. Fallon. I wish I had more time. Mr. Chairman, I yield
back.
Chairman Comer. Thank you. The gentleman yields back, and
before I yield to Ms. Brown, just want to remind the witnesses,
you are under oath. And the statement about having a good
relationship with pharmacists, with independent pharmacists,
that is a bit of a stretch according to dozens of pharmacists
that have texted my phone when you all said that. So, just want
to remind everyone, you are in the crowd, obviously. Just
remind you, you are under oath, and the witness that testified
yesterday, things did not turn out well for her over the past
24 hours. This is a serious issue. There is clearly a problem
with the independent pharmacies and the PBM, and to
characterize it that you have a great relationship, I believe,
is a stretch. That is my opinion, but the Chair recognizes Ms.
Brown from Ohio.
Ms. Brown. Thank you, Mr. Chairman, and thank you for
reminding our witnesses they are under oath.
Our three witnesses, the executives of top three pharmacy
benefit managers, control 80 percent of the market share in the
industry. Eighty percent. Over 270 million Americans have their
drug prices in some way controlled or affected by these three
companies sitting before us today. And yet, these companies
have failed to communicate as to how they are working to lower
the cost of prescription drugs, pass along savings to patients,
and protect local and independent pharmacies. Members of
Congress from both parties have expressed concerns about PBMs
dictating requirements to local, independent, and small
pharmacies, compelling them into your networks, and to accept
the terms or be excluded from this crucial market.
Unfortunately, many pharmacies cite untenable contract terms
from PBMs as part of the reason they must close.
Experts project nearly one-third of all independent
pharmacies will be forced to close by the end of this calendar
year. And approximately 2,200 retail pharmacies closed their
doors in the last 4 years, many of which are in low-income or
rural parts of the country where access is already a major
issue. So, I just want to get some clarity. If you do not agree
that consolidation among the pharmaceutical industry is a key
factor toward these closures, then in your opinion, what is the
cause? Any of you can feel free to jump in.
Dr. Kautzner. So, Congresswoman, the data that I have shows
a bit different of a picture around independent pharmacies and
independent pharmacists. And our data would show that in the
last 5 years, within our own network--I cannot speak to
others--that we have actually seen a net increase of about 20
percent of independent pharmacies open, net increase, and in
the last year, 1,400 net increase.
Ms. Brown. Anyone else care to dispute this accusation
claim with alternative facts, perhaps?
[No response.]
Ms. Brown. Well, thank you. Would you share the same
insight as it relates to local pharmacies rather than
independent pharmacies?
Dr. Kautzner. So, I would characterize independent and
local as being similar. So, we only track independent
pharmacies, of which they make up one-third of our pharmacy
network and account for over 21,000 pharmacies across the
country.
Ms. Brown. Similar but not the same. Reclaiming my time.
Thank you. Many people, especially in vulnerable populations,
rely on local and independent pharmacies, similar but not the
same, for their medications and important health services.
However, PBMs are forcing more and more people to specialty
pharmacies or mail-order pharmacies, which are owned by the
same parent company as PBMs. As one example, PBMs can tell
patients they can only receive an extended supply of their
medication if they go to a specific pharmacy owned by the same
parent company as the PBM, generating even greater profit for
these giant pharma corporations. So, I am just going to
dovetail into what my colleague talked about on the other side
of the aisle. How do you respond to the accusations that you
are steering patients to pharmacies owned by your parent
companies? Hello?
Dr. Conway. So, we have over 26,000 independent local
pharmacies in our network. The reimbursement rate, the volume
of prescriptions has gone up over time, the number of
pharmacies have gone up over time, and agree with you on the
importance of these pharmacies.
Ms. Brown. Anyone else with an actual answer?
Dr. Kautzner. So, one, we do not steer. Our clients make
the decision on which pharmacies they decide to put into their
network, and our data would show that in the last year, mass
retailers saw a 6 percent increase in pharmacy prescriptions.
In the last 5 years, grocers saw an increase of 23 percent,
while in the last year, our home delivery pharmacy had a
relatively flat volume.
Ms. Brown. Thank you. I would again reiterate what our
Chairman talked about at the top of my remarks, is how critical
this issue is and how important it is for you to be truthful,
because Americans deserve an affordable and accessible
healthcare. When a local pharmacy closes its doors, residents
lose access to the pharmacy they know well. And when the only
pharmacy in a community closes, patients are forced to travel
further to get medications they need, potentially delaying
their treatment and care. It is unacceptable to me that PBM
practices would harm communities in this way. And with that,
Mr. Chairman, I yield back. Thank you for indulging me.
Chairman Comer. The gentlelady yields back. The Chair now
recognize Mr. Fry from South Carolina.
Mr. Fry. Thank you, Mr. Chairman. I think Oversight is
turning over a new leaf in two hearings in 2 days and wide
bipartisan support. What do you think about that, Mr. Raskin? I
think it is good.
You know, it is interesting. For years, PBMs have quietly
assumed control of a major facet of America's pharmaceutical
industry through vertical integration and consolidation and
methods like spread pricing. Major PBMs have been able to take
control of prescription drug access, leaving little room for
transparency in an industry where the sole mission should be to
provide essential and lifesaving pharmaceuticals to patients.
This sort of control has caused an almost irreversible strain
on America's independent pharmacies. One is in my district, one
is in the Ranking Member's district, one is in the Chairman's
district, and all across this country.
An illustration of that fact, the National Community
Pharmacists Association, which represents over 19,000
pharmacies, cites that we can expect one pharmacy closure each
day in the United States. I have heard from pharmacies within
my district that it is cost-prohibitive to obtain the drugs and
dispense them, and so they just choose not to. That they make
their money or their profit on other things that they sell,
like milkshakes or T-shirts or whatever it is, in their
particular pharmacy is kind of alarming.
So, for me, I think we start at the beginning. To what
extent, you each that are here today, you each have lawyers on
your team that review contracts--is that correct--and draft
contract language. Is that correct? Yes or no.
Mr. Joyner. Correct.
Dr. Conway. Yes.
Dr. Kautzner. Yes.
Mr. Fry. How much opportunity exists for a small mom-and-
pop pharmacy in a rural area to negotiate their own contract?
Is it a boilerplate contract? Do they have any negotiating room
at all? Say I own my own pharmacy.
Dr. Kautzner. We are always open, Congressman, to
negotiating with pharmacies.
Mr. Fry. How does that look?
Dr. Kautzner. Pharmacies can always redline a contract back
to us and negotiate.
Mr. Fry. Do they? Do they?
Dr. Kautzner. They do.
Mr. Fry. How often?
Dr. Kautzner. I do not know----
Mr. Fry. How often do you actually negotiate with them?
Dr. Kautzner. As I said, I do not know an exact percentage.
We have over 64,000 pharmacies in our network today, so it is a
broad number, and there is a lot of volume that goes through.
Mr. Fry. OK. I mean, just to guess, would you say it is 20
percent of the time?
Dr. Kautzner. I would not want to speculate, sir. We could
get back to you.
Mr. Fry. I actually do not believe you, and I am curious.
If you have information on that, I would love to see it. I do
not think that they actually have any negotiating power
whatsoever. That is what we have heard. There is a wide gulf
right now between what you are saying and what I have heard
privately, so what is the disparity there?
Dr. Kautzner. Congressman, we are happy to engage and do
engage with independent pharmacies. We have, through the new
initiative that we kicked off last year, it engages with over
three dozen independent pharmacy owners that we convene. We
meet with them on how we can work better together. We have had
productive discussions in those meetings and are finding paths
forward. It is around improving patient access to care and
around providing additional services in those underserved
communities in urban and rural areas. That is what we are
focused on right now and then improving reimbursement in some
areas where access to care is really important. And we have
done that for over 700 independent pharmacies across this
country.
Mr. Fry. What exactly is the goal with community pharmacy
contracts that contain rates and terms that you know are below
acquisition costs of the pharmacies? And these, in my opinion,
unacceptable contracts, are they intended to force out
competition? What is the goal of that? We have heard that a lot
from independent pharmacies.
Dr. Kautzner. Sir, we are not focused on putting pharmacies
out of business at all, and as I have said, our data actually
is very different. We have had a net increase of 1,400
independent pharmacies in our network in the last year alone.
So, we are continuing to work hard with them to find those
paths forward for patients to have broad access to care,
whether it is an independent pharmacy, a grocer, or some other
type of mass retailer.
Mr. Fry. What about the other two on this panel that have
been pretty quiet? What do you have to say about that, that
pharmacists are at a competitive disadvantage and that often
receive the rates and terms or below what the acquisition cost
is?
Mr. Joyner. Yes. Congressman, we have more than 27,000
pharmacies. That effectively equals 40 percent of our network
are independent pharmacies today. As we have said earlier in
the testimony, we do reimburse these pharmacies at a much
higher rate. In fact, upwards of 25 percent more for generics.
If you were to apply that just across our commercial book, we
have effectively paid independent pharmacies $340 million more
than the equivalent chain pharmacies.
Mr. Fry. Mr. Conway?
Dr. Conway. We also have a similar number of independent
local pharmacies, and, also, the volume of prescriptions and
pharmacies in the network has continued to go up over time. We
also have programs where we will pay them for particular
services as options.
Mr. Fry. I am going to wrap up here, Mr. Chairman, just for
1 second. In our first hearing, we heard about TRICARE,
reimbursement of a medical facility or a pharmacy right outside
of a base, and that it was cost prohibitive for them to care
for our Nation's men and women in uniform. And so, part of this
was because the cost did not justify keeping or continuing to
serve that population. So, I would invite you, that you are all
here--you have heard the bipartisan support here--that you all
need to do more to work with these independent pharmacies
because they are closing at a rapid rate, and they are getting
sucker-punched every single day because of competitive
disadvantages that you all place in the marketplace. Thank you.
Chairman Comer. The gentleman's time has expired. The Chair
recognizes Ms. Stansbury from New Mexico.
Ms. Stansbury. Thank you, Mr. Chairman. Gentlemen, thank
you so much for being here today. I know you have taken a
beating already for many hours this morning. I am not a
healthcare policy specialist. I am not a prescription drug
specialist. I am just a New Mexican. What I know is our
healthcare system is terribly broken. In New Mexico, we have
families that still do not have access to healthcare, people
who are waiting in waiting rooms at hospitals who cannot get
emergency care. We have people who still do not have health
insurance in spite of the expansions that we have had through
the Inflation Reduction Act and, of course, the Affordable Care
Act. And we still have people who are dying of unnecessary
diseases because they cannot afford lifesaving care and
prescription drugs.
So, for me, this is really about the humanity of our health
policy, and that is why I believe healthcare is a human right.
And that is why I believe and support holistic and systemic
reforms to our healthcare system because we should not have to
have hearings like the hearing we are having here today. It
should not be so complicated that, you know, one of our
grandparents cannot afford to get the lifesaving medication
that will keep them alive and healthy for the coming years. And
it should not have to come to the reality that we have private
for-profit companies who have figured out how to game the
system so that they can generate profits while providing some
sort of service for their clients at the expense of our
communities.
So, you know, Dr. Conway, we had the opportunity to meet
yesterday in my office, and I really did appreciate you
stopping by. And one of the comments that you made in the
conversation that we had is that, well, the prescription drug
companies need to lower their costs. You know, the middlemen
are just sort of taking advantage of the system as it exists.
You did not say that. I said that. But I think what this
hearing really points to is a bigger problem, a sickness in our
healthcare system, and the fact that private for-profit
companies are able to profit at the expense of our communities,
even if you are providing a service within that ecosystem.
And a lot of my colleagues today have alluded to the
Inflation Reduction Act, and I just want to emphasize that part
of why it was so significant is it was one of the first times
that we passed Federal legislation that enabled our Federal
healthcare provider networks to negotiate prescription drug
costs, just like you do as middlemen for your clients, so that
our seniors could actually access affordable prescription
drugs. And we know it is going to save people money, we know it
is going to save lives, but there are still millions of
Americans who cannot afford medication. And I understand that
these PBMs provide rebates. My mother was in the hospital a
year ago, and when she was being discharged, she was told that
the medication she needed for her heart condition was going to
cost $400 a day. She was given a rebate.
I think in these kind of policy discussions, the humanity
gets lost, and, you know, these companies are taking advantage
of a system that is not set up for our communities. So, I think
the one question that I would ask of each of you is just a very
simple question, which is, do you believe that our system needs
systemic reform? Do you believe that drug prices should be
reduced, and would you support that, and would your company
support that, even if it meant that you could not benefit and
profit off of it? And why do we not start with Mr. Joyner?
Mr. Joyner. Congresswoman, thanks for your comments, and I
completely agree with you. I retired at the end of 2019, and I
came back a year and a half ago for the very specific reason
that you mentioned, which is I want to be a part of changing
the healthcare system in this country. In large part, we have
been successful in doing, at least within the last year, we
introduced a biosimilar into the market with a low list price--
--
Ms. Stansbury. Thank you----
Mr. Joyner [continuing]. Delivered savings to the members
at zero out of pocket and 50-percent cost reductions for our
employers. So, I think we are making headway, and especially
with the new price model, to solve exactly what you are
referencing.
Ms. Stansbury. Thank you. Dr. Kautzner?
Dr. Kautzner. Congresswoman, there is always more that we
can do, and you do point out some challenges that our
healthcare system certainly has. We believe within the
commercial market, we can move swiftly to be able to make
lower-cost products available to patients. Certainly, there is
always more that can be done.
Ms. Stansbury. Thank you, Dr. Kautzner. Dr. Conway?
Dr. Conway. First, I appreciated the meeting yesterday. We
at UnitedHealth Group do think the health system needs to
perform better for everyone. And as I said yesterday, we
believe list prices of pharmaceuticals as set by manufacturers
should come down in the United States.
Ms. Stansbury. Thank you. And I did not mean to interject,
gentlemen, but this is not a hearing for advertising your
companies. This is really about addressing the healthcare
crisis that our communities are facing, and I appreciate the
role that you are playing, but we have got to reform the system
because there are people dying in this country who should not
be because they cannot access medicine. And with that, I yield
back.
Chairman Comer. The Chair now recognizes Mr. Langworthy
from New York.
Mr. Langworthy. Thank you very much, Mr. Chairman. I really
appreciate you bringing this hearing forward, and I thank you
all for being here today to discuss this important topic for
Americans of all ages and across all communities.
Employers, unions, and even state governments that sponsor
self-insured health plans for their workers are considered
fiduciaries under Federal law. They must make decisions that
keep health plan cost low and that are in the best interests of
patients. Now, currently, PBMs are not held to the same
standard that applies to plan sponsors, despite essentially
standing in the shoes of the plan sponsor when performing
pharmacy benefit plan design and management services on their
behalf. As a result, PBMs continue to charge unreasonable and
excessive fees, steer plan participants to higher-costing
prescription drugs, and pocket rebates and discounts that
should belong to the plan. These actions are not in the best
interest of participants, and are not what the plan sponsors
would do, much less could do, given their fiduciary duty to the
plan.
Mr. Joyner, can you tell me why you think PBMs should not
be a fiduciary?
Mr. Joyner. Congressman, the role of the PBM is to serve
the customer or the clients that are managing the pharmacy
benefits, so we do not have control over the benefit design
that actually passes through to the member.
Mr. Langworthy. So, it sounds like PBMs do not want to
help. They do not want to be plan fiduciaries because there are
certain things that they do or want to do which fiduciaries
would not be permitted to do. Can you give me some examples in
ways in which PBMs' hands might be tied if they were a plan
fiduciary?
Mr. Joyner. A good example, and I will use the new price
model that we are rolling out. Today, we pass through 99-plus
percent of the rebates to our customers. And our customers then
determine how best to use those discounts in terms of reducing
either the premiums and/or reducing the other costs of the
drugs. In TrueCost, we are looking to incorporate those
discounts so that it passes through to the actual member in
getting the client alignment so that it actually aligns both
the client and the employee experience.
Mr. Langworthy. Do you think that PBMs are making decisions
that help keep plan costs low, or are they helping plan
sponsors be good stewards of benefits?
Mr. Joyner. Our first goal is to reduce and manage the
overall cost of pharmacy, and then, ultimately, that allows our
customers to become good stewards of their benefits.
Mr. Joyner. What about when Johnson & Johnson's PBM charged
patients over $10,000 for a $28 drug?
Mr. Joyner. I am not familiar with that.
Mr. Langworthy. How about when PBMs refuse to give patients
access to much cheaper alternatives to expensive drugs like
Humira?
Mr. Joyner. So, Congressman, using the Humira example, we
actually took Humira off of our formulary in April of this
year. We converted 97 percent of the medications into a lower-
cost biosimilar. Our clients' plan sponsors saved $500 million
as a result of that change, 50 percent reduction off of what
they were spending in 2022, and, importantly, the employees,
for the most part, paid zero dollars out of pocket for that
biosimilar.
Mr. Langworthy. So, it sounds like PBMs believe that they
are currently doing their best to keep costs low and act in the
interest of the patient. If that is the case, you are already
complying with fiduciary standards. So, why are PBMs so dead
set against being fiduciaries?
Mr. Joyner. Again, as I mentioned, we do not have control
over the benefit design. The clients, the employers, which is
an employer-funded healthcare system, they determine how they
are going to ask members to participate from a premium or
contribution and ultimately designing the out-of-pocket cost
for their employees. We facilitate that, but we do not make the
decisions on behalf of our customer.
Mr. Langworthy. Will your company commit to supporting
fiduciary standards for PBMs?
Mr. Joyner. We certainly support complying with the
contracts that we have with our customers, and, again, our
contract is to make sure that we are delivering the lowest net
cost and managing the overall pharmacy cost for our customers.
Mr. Langworthy. I think there is a reason PBMs do not want
to be fiduciaries. In my remaining time, I would like to pivot
and discuss a recent court ruling that CVS Caremark was
involved in. Last year, an arbitration panel required CVS
Caremark to pay over $20 million to just one oncology practice,
New York Cancer and Blood Specialists, for miscalculating these
fees. In essence, the company charged higher fees when an
oncologist did the right thing by stopping an oral cancer drug
that was not working and had side effects. CVS Caremark clearly
stood in the way of properly treating cancer patients. Mr.
Joyner, CVS Caremark fought to hide this award and not pay it
vigorously, suing the oncology practice. However, last week,
the New York Southern District Federal Court ruled in favor of
the practice and ordered CVS Caremark to pay over $20 million
in back DIR fees, interest and attorney fees.
I enter that ruling into the record with unanimous consent,
Mr. Chairman.
Chairman Comer. Without objection, so ordered.
Mr. Langworthy. I understand that other oncology practices
are in arbitration right now with CVS Caremark over the same
issue. Given the Federal Court's findings, do you intend to pay
all practices back for a clear miscalculation of DIR fees, or
do you intend to fight them like you did the New York practice?
Mr. Joyner. Congressman, as I answered the question earlier
today, we comply with all the Medicare Part D rules regarding
network adequacy as it relates to also the DIR. So, we have
consistent and standard terms and conditions, and we fully
expect to administer and support those for our customers.
Mr. Langworthy. Thank you very much. I yield back, Mr.
Chairman.
Chairman Comer. The Chair now recognizes Mr. Casar from
Texas.
Mr. Casar. Thank you, Chairman, and I would like to commend
the Ranking Member and yourself on having this bipartisan
hearing. I would like to see more of this and appreciate it.
Today we are discussing pharmacy benefit managers, or PBMs,
which, as we have talked about today, are pretty opaque
organizations that most Americans do not know very much about.
But the three leaders of these PBMs today touch or interact
with about 80 percent of the prescription drugs accessed by
Americans. And the goal of PBMs is to negotiate down the prices
of the medicine that we need, but this comes at a time when
Americans, indeed, are paying more for prescription drugs. The
25 drugs with the highest Medicare spending have tripled in
cost since entering the market. Between 2022 and 2023, 4,200
drugs have seen price increases, and our country still has the
highest per capita prescription drug spending among developed
nations.
And so, the goal that we have set for PBMs in this system,
in my view, we are far from hitting that target. In fact, we
are headed in the wrong direction. The three companies
represented before us, though, are some of the most profitable
companies in America. These three companies made a combined
$400 billion in revenue and some $18 billion in profit in 2022.
And so, to me, I think one of the core questions we are trying
to ask today is, if there is this much profit in this industry,
where are the savings for everyday Americans?
We have discussed and I have heard from colleagues about
how PBMs are connected to the same parent company as health
insurance, which can limit patient choice. We have heard about
how rebates, which are the savings negotiated by PBMs, could be
raising the cost of drugs, and we have also heard how PBMs can
shut out local pharmacies and drive profits toward pharmacies
under their umbrellas. But I want to focus on a different
issue, which is the question of group purchasing organizations,
or GPOs.
The three major PBMs have a GPO under their umbrella. If I
am right, I think CVS' is Zinc, Express Scripts' is called
Ascent, and Optum Rx's is called Emisar Pharma Services. The
goal, supposedly, is to leverage purchasing power to negotiate
greater savings from pharmaceutical manufacturers, but these
are relatively new practices. From each of the witnesses, a
quick yes or no, each of your GPOs was founded in or after
2019. Is that correct, Mr. Joyner?
Mr. Joyner. Correct.
Mr. Casar. Doctor?
Dr. Kautzner. Yes, that is correct.
Mr. Casar. Thank you.
Dr. Conway. Yes.
Mr. Casar. And my understanding is that before those GPOs
were founded relatively recently, PBMs were negotiating without
the separate company doing it on their behalf. And so, the
obvious question is, why do the PBMs need these new GPOs?
According to New York Times reporting, a former Optum Rx
executive said, ``The intention of the GPO is to create a fee
structure that can be retained and not passed on to a client.''
And that is a big deal if the value is getting discounts and
prescriptions, but now we have these totally new companies
supposedly to create fees that then could not be passed along.
In 2018, before any of the GPOs were founded, drug
manufacturers paid $3.8 billion per year in fees to PBMs. By
2022, they were paying $7.6 billion in fees to PBMs and to
their GPOs.
So, again, just here for my last minute, the point is that
PBMs are supposed to be reducing drug prices, supposed to be
reducing healthcare costs, but a 2022 study found that the
average premium for individual health insurance has gone up
$225. Two in 5 adults on employer-sponsored insurance are
having difficulty affording their medical care. So, if people
are paying more money, if the number of fees has nearly doubled
here to $7.6 billion, then why are prices not coming down?
I guess my question to you, Dr. Conway, for example, would
be, if these GPOs are generating this much more in fees, where
is the value to the American people? Why is it that annual
premiums continue to go up? Why is it that thousands of drugs
have seen price increases while billions of dollars in new fees
and profits are going to PBMs and to their GPOs? Dr. Conway,
you can take it.
Dr. Conway. The purpose of the GPO is to negotiate rebates,
larger discounts on our clients' behalf. As I said, many
clients choose 100 percent of those rebates to pass through to
them, and so we will continue to work to make medicines more
affordable and healthcare more affordable for the American
people we serve.
Mr. Casar. Since you created these GPOs in 2019, we have
gone from $3.8 billion in fees to $7.6 billion in fees, but we
continue to see the price of drugs go up. How does that add up?
Dr. Conway. So, the net prices of drugs we continue to
negotiate down. The list prices of drugs have gone up
exponentially in the U.S., and those list prices are set by
manufacturers.
Mr. Casar. Mr. Chairman, right before I yield back, I just
think through all of the acronyms and all of the opaqueness we
have been dealing within this hearing, we continue to see the
American people pay more and more. And once you take away all
of the sort of shell games, people are paying more, there is
more profit going both to Big Pharma and to the PBMs, and it is
ultimately our constituents that are left paying the price.
Thank you. I yield back.
Chairman Comer. The gentleman yields back. The Chair
recognizes Mr. Gosar from Arizona.
Mr. Gosar. Mr. Chairman, I yield my time to you.
Chairman Comer. Thank you, Mr. Gosar. I appreciate it. In
the past 5 years, the states and the Federal Government have
begun enacting PBM reforms. Each of your companies or your
parent companies created corporate entities in foreign
countries, well known for their lack of financial transparency
and low tax rates. Each of your companies has since begun
shifting PBM duties, including negotiations with manufacturers
to those foreign countries. In fact, Mr. Kautzner, Cigna
Express Scripts created Ascent Health Solutions, based in
Switzerland, to serve as a group purchasing organization,
negotiating rebates with manufacturers. Cigna Express Scripts
also created Quallent Pharmaceuticals, based in the Cayman
Islands, to buy cheap pharmaceuticals and sell them at a higher
rate in the United States. Mr. Conway, UnitedHealth Group's
Optum Rx created Emisar Pharma Services, based in Ireland, to
serve as a group purchasing organization negotiating rebates
with manufacturers. Mr. Joyner, CVS Caremark created Cordavis,
based in Ireland, to commercialize biosimilar products and
resell them in the U.S. for higher prices.
Your companies have created entities in foreign countries
that appear to be for the specific purpose of avoiding U.S.
regulation and avoiding U.S. taxes. This is simply not
acceptable, but I will give you each the opportunity to explain
why those three countries, Ireland, Switzerland and the Cayman
Islands, were better locations for these companies than the
United States. Mr. Joyner?
Mr. Joyner. Mr. Chairman, Cordavis, which is located in
Ireland, is in Europe, close to where the drug is being
manufactured today. So, the whole premise of building an
operation in Europe is to be close to where the drug is
manufactured so it helps with the logistics, and the ability
for us to bring the product into the U.S. And good news is, the
biosimilar that we brought to market was a lower list price
product. It was 82 percent below the price of Humira. As of
April 1st, by removing Humira from our formulary, we actually
pulled 97 percent of all the biosimilars through for our
customers, yielding $500 million worth of savings for our
clients. And the employees and/or the members of these firms
actually paid zero dollars out of pocket for the medication.
So, it is actually a win-win for us all.
Chairman Comer. Dr. Kautzner?
Dr. Kautzner. So, Mr. Chairman, the creation of Ascent
Health Services in Switzerland as a group purchasing
organization is delivering more value because of the
aggregation of additional entities that are also participants
within Ascent Health Services, more than what Express Scripts
could do on their own. GPOs have been used within healthcare
for decades and have been shown to lower costs for clients and
for patients ultimately.
Chairman Comer. Dr. Conway?
Dr. Conway. Emisar is incorporated in the United States. It
does have employees both in the United States and Ireland. And
as stated by others, the purpose is to negotiate rebates and
discounts on behalf of our clients, and we adhere to all laws
and regulations and do that transparently.
Chairman Comer. Mr. Joyner, in your written testimony to
the Committee, you referenced a new transparency program called
TrueCost. When did that program start?
Mr. Joyner. Congressman, we announced it last year.
Chairman Comer. Have you piloted the program to determine
if it actually enhances transparency?
Mr. Joyner. We have. In fact, we have now rolled it out to
our own employees, effective June 1st, and have a number of
customers lined up as we entered the----
Chairman Comer. So, when will it be fully implemented?
Mr. Joyner. So, our expectation is that it will be staged,
but right now, our hope is that we will have a good portion of
our business moved into 2025 and ultimately into 2026.
Chairman Comer. Dr. Kautzner, in your testimony, you
referenced the Independent Rx initiative that Express Scripts
launched in spring 2023. What tangible benefits to independent
rural pharmacies has this program produced?
Dr. Kautzner. Mr. Chairman, we increased reimbursement to
over 700 independent pharmacies out of our own pocket as part
of this initiative. In addition, we convened an Independent Rx
Committee that we have met several times already with, in-
person, 38 pharmacists, I believe, that are independent
pharmacy owners, to work on advancing the practice of
pharmacies so that pharmacist can practice at the top of their
license.
Chairman Comer. Has Independent Rx increased reimbursement
rates to independent rural pharmacies?
Dr. Kautzner. It has to over 700 that have accepted the
increased reimbursement that we are paying out of our own
pocket.
Chairman Comer. Last question. You also referenced that the
number of independent pharmacies in Express Scripts' commercial
network increased by 20 percent from 2019 to 2024. Does this
include the 15,000 pharmacies dropped from the TRICARE retail
pharmacy network in late 2022?
Dr. Kautzner. So, our broadest network had 18,000
pharmacies roughly in 2019, which expanded to over 21,000 by
2024. That is the 20 percent increase. The TRICARE network,
over two-thirds of the independent pharmacies in our network do
participate in TRICARE, but it is less than the total.
Chairman Comer. The Chair now recognizes Ms. Pressley from
Massachusetts. I want to thank the gentleman from Arizona for
yielding his time. The Chair now recognizes Ms. Pressley from
Massachusetts.
Ms. Pressley. Thank you. The discussion today speaks to an
injustice, an injustice that many of my constituents in the
Massachusetts 7th experience daily: the high cost of lifesaving
prescription medication. Pharmacy benefit managers, or PBMs,
play an outsized role in determining coverage and cost of
medication by designing lists of drugs that a health insurance
plan will never cover for a patient, known as formularies. For
some medications, PBM formularies require additional approval
before you, a patient, can pick them up at the pharmacy. For
example, prior authorization is a PBM power where a doctor must
ask the insurance company if they can prescribe the specific
medication and their so-called step therapy. That requires you
to try different medication and have a negative reaction before
being prescribed the medication that your doctor recommends.
These policies are hurting people across our Nation,
including in my district. One of my constituents, a mother,
shared her story of how she was forced to go through a step
therapy to treat her neurological condition and saw her
condition worsen as a result, to the point where she spent a
year relearning how to walk, and her story is no anomaly. Step
therapy is not just ruining people's lives, it is killing them.
Families have been robbed of their loved ones due to the
delays, the greed, and harmful policies of PBMs.
Mr. Joyner, CVS Caremark is one of the largest PBMs
operating within my district. What do you say to my
constituents who have been harmed by denying them the medical
care that they need and deserve?
Mr. Joyner. Congresswoman, I do not have the specific
details of what you are referencing, but I certainly do
understand and look specifically at ways in which we can
improve the prior authorization process.
Ms. Pressley. Are you sorry?
Mr. Joyner. No. I think it is an important part of the
healthcare system is to make sure that our customers hold us
accountable and look to make sure we have oversight for both
patient safety. They are also focusing on ways in which we can
improve adherence to the therapy, because if they are not
staying on therapy, obviously, then there is----
Ms. Pressley. OK. Reclaiming my time. I wish you were
sorry. You should be. I have not heard from a single doctor who
can justify the public health benefits of the health insurance
policies.
According to the Federal Trade Commission, the committees
responsible for determining access to medication do not just
consider clinical recommendations. PBEs also ``take into
account business considerations and make formulary
determinations to maximize profits.'' I will remind the
witnesses that you are all under oath. My next questions will
be ``yes'' or ``no''. Mr. Kautzner, does Express Scripts factor
in business considerations or potential profits when deciding
access to prescribed medication? Yes or no, and, again, you are
under oath.
Dr. Kautzner. Thank you for the question, Congresswoman. We
do a clinical-first approach, so all clinical evaluation is
done first----
Ms. Pressley [continuing]. Yes or no?
Dr. Kautzner [continuing]. Then a financial evaluation is
done after that.
Ms. Pressley. Yes? Yes or no, for the record.
Dr. Kautzner. Financial evaluation is included after the
clinical.
Ms. Pressley. Mr. Joyner, does CVS Caremark factor in
business considerations or potential profits when deciding
access to prescribed medication? Yes or no.
Mr. Joyner. Congresswoman, we have a Pharmacy and
Therapeutics Committee that assesses the clinical value of the
medication.
Ms. Pressley. You all are very smart. Can you just answer
the question? Yes or no.
Mr. Joyner. Like I said, we have a P&T Committee that
assesses the clinical----
Ms. Pressley. Reclaiming my time. Reclaiming my time. Dr.
Conway, does Optum Prescription factor in business
considerations or potential profits when deciding access to
prescribed medications? Let us see if three will be the charm.
Yes or no.
Dr. Conway. Clinical consideration and lowest net cost to
the customer, including a formulary exception process.
Ms. Pressley. Reclaiming my time. Well, my office has met
with patients, families, providers, and community pharmacists
throughout my district from East Boston to Cambridge to
Roxbury, and they all point to one conclusion: you are putting
profits over people. Your corporations are denying people
access to necessary medications, preventing them from going
elsewhere by forcing independent pharmacies to close their
doors. And that is why I am glad we are having today's hearing
to shine a bright light on your unethical practices, and I look
forward to working to Congress to rein in PBMs. Thank you, and
I yield back.
Chairman Comer. The gentlelady yields back. The Chair now
recognizes Mr. Biggs from Arizona.
Mr. Biggs. Thank you, Mr. Chairman. I associate myself with
many of the comments of Representative Casar from Texas, and
nobody will be more surprised than he, but it is true. I
thought he did a nice job. Mr. Kautzner, I want to focus on
active service members who are insured through TRICARE. The
Department of Defense just renewed their exclusive contract
with Express Scripts. Is that correct?
Dr. Kautzner. That is correct.
Mr. Biggs. It is my understanding that as part of this
renewal, in October 2022, 15,000 independent pharmacies were
removed from the TRICARE network. Were these pharmacies priced
out, or did Cigna negotiate the removal from the network as a
condition of renewal of the contract?
Dr. Kautzner. So, Congressman, all independent pharmacies
had the opportunity to continue to participate in the network,
and they made a decision not to. We have subsequently opened
back up their opportunity to participate should they want to.
Mr. Biggs. How many came back?
Dr. Kautzner. So, right now, two-thirds of the independent
pharmacies in our total broadest network participate in the
TRICARE network, and in total----
Mr. Biggs. I am sorry. I do not want to be pushy, but when
you say two-thirds of this or that, it does not do any good. I
want to know how many. What is the actual number?
Dr. Kautzner. So, roughly, if we have a network that has
over 21,000 pharmacies in total, independent pharmacies in our
network, two-thirds of those, roughly, are participating in the
TRICARE network.
Mr. Biggs. So, 14,000. Is that what you are telling me?
Two-thirds of 21,000 is 14,000, right?
Dr. Kautzner. It is an approximation, but it is in that
area.
Mr. Biggs. Did these pharmacies return in 2023 after the
renegotiations?
Dr. Kautzner. We continue to keep that open, so any
pharmacies that want to choose to participate have the ability
to.
Mr. Biggs. How many of those came back after the
renegotiation in 2023? Look, I am not playing ``gotcha.'' I
just really want to know, OK?
Mr. Kautzner. I do not have that information in front of me
today, sir. We could certainly provide it, though.
Mr. Biggs. Yes. Mr. Chairman, I want to introduce two
unanimous consent. I always have articles, as you know----
Chairman Comer. Yes.
Mr. Biggs [continuing]. Article one, ``Prescription Drug
Middleman Potentially Profiting Off Veterans'' and ``TRICARE
Removed 15,000 Independent Pharmacies from Network'' into the
record.
Chairman Comer. Without objection, so ordered.
Mr. Biggs. Thank you. I have serious concerns about how the
situation looks. What is the justification for limiting choice
and access to medication for service members, Dr. Kautzner?
Dr. Kautzner. So, Congressman, we continue to exceed the
access standards that are set by TRICARE, which, ultimately,
are set by Congress for patients. Ninety-eight percent of
patients that are TRICARE beneficiaries live within 15 minutes
of a pharmacy that is in their network today.
Mr. Biggs. It is my understanding that you are a vertically
integrated corporation. Is that right?
Dr. Kautzner. The Cigna Group has multiple different
companies, if that is what you are referring to from vertical
integration.
Mr. Biggs. Yes. I think you know what vertical integration
is. Do you ever steer patients, including service members, to
your own pharmacies or to use mail order? In other words, do
you ever steer consumers to your preference as opposed to
necessarily their preference?
Dr. Kautzner. Congressman, we carry out the benefit as
directed by TRICARE, and TRICARE makes the decision on which
pharmacies they want to have in their network and prefer.
Mr. Biggs. So, I am going to ask that question again
because you seem like a nice guy, you seem bright, so I think
you can answer this question. Do you guys ever engage in
steering patients to your preferred service provider?
Dr. Kautzner. Congressman, if we are specifically speaking
of TRICARE----
Mr. Biggs. Yes.
Dr. Kautzner [continuing]. TRICARE makes the decision on
whether they want to prefer a pharmacy or not. So, in this
instance, TRICARE does have our home delivery pharmacy as an
option as a preferred pharmacy.
Mr. Biggs. Thank you. Mr. Chairman, I am going to run out
of time, so I am going to just give you some more of these as
well. So, I think we did that one and that one. Here we go.
``Mail-Order Medications are Often Exposed to Unsafe
Temperature;'' Study Says 90-day Prescription is not for
everyone.'' ``How Chaos at Chain Pharmacies is Putting Patients
at Risk;'' ``Independent Pharmacies Continue to Face Financial
Hardships as the Clock Ticks on PBM Reform;'' ``America's
Pharmacy Deserts''----
Chairman Comer. Without objection, all those articles will
be entered into the record.
Mr. Biggs. Thank you, Mr. Chairman. I yield back.
Chairman Comer. The Chair recognizes Ms. Tlaib from
Michigan.
Ms. Tlaib. Thank you, Chairman Comer. Chairman, I do want
to help support all the text messages you got. I actually got
letters of independent pharmacists to say they do not have
great relationships with their PBM. One is from independent
pharmacies in Flint, Michigan, another who owns a number of
independent pharmacies in the Upper Peninsula in Michigan.
Chairman Comer. Without objection, so ordered.
Ms. Tlaib. Each of you have said that you have business
plans or processes and methods in place to help lower cost for
our residents, yet has been well documented there has been a
huge reduction of pharmacies in many vulnerable areas. I do
have really just a question, and it is really a yes or no, and
I promise, like, you should know this. But did you all make
more money, I mean, like, in 2023 than you did in 2022, like
profit? Did you make more money, Joyner? Did you guys make more
money? Are your profit is going up? Yes or no. Is it----
Mr. Joyner. In 2024, my profits are going down from 2023.
Ms. Tlaib. It is going down right now?
Mr. Joyner. Yes.
Ms. Tlaib. You are not making any money?
Mr. Joyner. No, we are making money. I am just saying----
Ms. Tlaib. But it is down from 2023?
Mr. Joyner. Yes.
Ms. Tlaib. Interesting. How about you, Kautzner? Kautzner,
is that how you say----
Dr. Kautzner. Yes. So, the Cigna Group's profits, as we
report, did increase from 2022 into 2023 and for the first
quarter of 2024.
Ms. Tlaib. So, you are doing good. OK. How about you?
Dr. Conway. Yes, Optum Rx earnings increased from 2022 to
2023.
Ms. Tlaib. By a lot. Is it, like, doing really well? I do
not understand how you are making money and making profit if
you are trying lower cost on our residents. I am just confused
how you can do both. I know my colleagues are not going to get
into it, but you got to be making money from somewhere if it
continues to increase. So, one of the things that I know are,
of course, the DIR fees and reimbursement, but one of the
things in the report, and I know you all saw it, but in there
it talks about the post-sale adjustments. Get this, and
Chairwoman McClain and I come from the same state, but check
this out. Post-sale adjustments can require a pharmacy to often
blindly make payments of hundreds of thousands of dollars back
to PBMs months after the relevant prescriptions are sold.
So, this is, like, one of my residents going in, and they
buy $5 worth, I do not know, dairy products or something like
that. Like, I think I used the example of a gallon of milk.
Goes in, buys a gallon of milk, later sees a charge of $5
extra, like, after they left the grocery store. So, quoted in
the report, it says we are often talking about PBMs charging
hundreds of thousands of dollars. These are not small fees,
though.
So, the FTC report noted that one of the metrics PBMs often
use is--it is really interesting--deciding whether or not to
charge pharmacies retroactive fees. These are, again, they
left, they paid for it, you all came back and charged them
more. It is crazy. I kid you not, Chairwoman, but there are
many reasons. So, they say that, basically, the post-sale
adjustment is based on whether or not, like they are punishing
them because a patient is unable to afford their medication, or
when the patient cannot pick up the medication on time, that
they have an unpredictable work schedule or something, whatever
it is. It is some weird little factor you guys are putting in,
reasons that might all of a sudden say, well, we got a post-
sale adjustment. How many of you use post-sale adjustments?
Caremark, you guys use post-sale adjustments?
Mr. Joyner. No. That program discontinued in 2023.
Ms. Tlaib. How about you, Kautzner?
Dr. Kautzner. Congresswoman, we do not engage in clawbacks.
Ms. Tlaib. Yes. How about you?
Dr. Conway. Optum Rx does not do clawbacks or charge DIR
fees.
Ms. Tlaib. So, what is this thing about you all doing the
thing about using to determine whether or not to charge
pharmacies, removing, like, the patient adherence? How many of
you use that factor, that the patient adheres? How many of you?
Kautzner, you look like you are interested in this question.
Dr. Kautzner. So, Congresswoman----
Ms. Tlaib. You guys got away----
Dr. Kautzner [continuing]. The DIR program expired last
year, so that is not----
Ms. Tlaib. But do you at all determine post-sale
adjustments or anything? You do not do any of that anymore?
Dr. Kautzner. We do not engage in clawbacks.
Ms. Tlaib. OK. You call it clawbacks. Is that what you guys
call, clawbacks, post-sale? So, if any of your independent
pharmacies, they walk out, you guys do not go back and say,
oops, you owe another $10? None of you do that?
Dr. Kautzner. That is not a practice that we are engaged
in.
Ms. Tlaib. OK. What is this about a factor using a patient
adherence from factors being used to determine whether or not?
Like, what is that about? Like, the patient is using it. I am
being serious, you guys. This is something in the FTC report,
so I am just curious. Did you guys stop it because they caught
you, or what is going on here? You guys changed the name of it?
Dr. Kautzner. The DIR program was actually removed. It was
a government decision. It was not a decision that----
Ms. Tlaib. We forced you guys to do it?
Dr. Kautzner. It was enacted by the government.
Ms. Tlaib. Yes, yes. We forced you to do it? What else
should we be forcing you guys to do, because it is still--I am
being serious. You know that you are in the practice. If you
are making profits continually, it is not reducing the cost on
our residents. Something is wrong. I mean, you hear this. I had
one in my district, Chairwoman, last thing, he paid like $100
or something right out of pocket. He never got reimbursed for
it, ever. Again, whatever you all are doing, it is putting them
out of business, and guess what? That means less access to our
residents that really depend on independent pharmacies. But
again, it sounds like we need to do some forcing them to act in
good faith.
If we stop those programs, what else do we need to stop so
they can treat everybody fairly and not monopolize as well? I
know you guys do that and you do not offer everybody the same
service, and that is ridiculous. With that, I yield.
Mrs. McClain. [Presiding.] Thank you, and I now recognize
myself for 5 minutes.
I think part of one of the biggest issues we have is the
pharmacists think there is a problem. The patients who use the
services think there is a problem. I am curious to see, do you
all think there is a problem with the PBMs? Mr. Joyner?
Mr. Joyner. Congresswoman, as I mentioned in my opening
statement, I do believe that there is an opportunity to
improve.
Mrs. McClain. So, is that a yes? The reason why I ask is
because we cannot fix a problem that we do not think exists.
Yes, there is an opportunity to improve. I am asking you, do
you think there is an issue, do you think there is a problem,
because perception is 90 percent of reality and the user thinks
there is a problem, the pharmacist thinks there is a problem. I
am wondering if you think there is a problem.
Mr. Joyner. I absolutely believe that there is an
opportunity to solve that problem through----
Mrs. McClain. So, is that a yes?
Mr. Joyner [continuing]. TrueCost.
Mrs. McClain. Is that a yes?
Mr. Joyner. So,----
Mrs. McClain. OK. Never mind. How about you, Dr. Kautzner?
Do you think there is a problem that we have an opportunity to
fix?
Dr. Kautzner. Congresswoman, healthcare is hard. So, agree
that there are challenges and continued issues that we can all
do better on, and we certainly can be part of that solution.
Mrs. McClain. OK. I want to ask it one more time before my
patience gets--do you think there is a problem?
Dr. Kautzner. Congresswoman, there are always challenges
within healthcare.
Mrs. McClain. OK.
Mr. Kautzner. And so, we all----
Mrs. McClain. I reclaim my time. Dr. Conway?
Dr. Conway. Yes, as a practicing physician, medicines need
to be of----
Mrs. McClain. Hallelujah. Do you gentlemen see how he
answered that question? Yes, there is a problem. We might be
able to get to some solutions, and I think therein lies the
problem. You all are the middlemen. You all want to make a
profit which, OK, that is good, but if you are not delivering
an outcome to the people who use it, how long do you all think
you are going to have a job? There is a problem, we got to fix
it, right? And part of the issue is prescription drug prices
have increased every single year for the past 15 years, and the
so-called middlemen in the drug market, the PBMs, clearly have
the ability to impact that cost. And I remind everybody the
reason why we put this program together was to help reduce
costs. Am I inaccurate on that?
[No response.]
Mrs. McClain. It seems to have done the opposite, yet the
most concerning thing to me is I continue to ask you all when
you come into my office because you seem to think that there is
not an issue--except for you, Dr. Conway, and I appreciate
that--is show me the data that supports your position, right?
Just show me the data because the other side that thinks there
is a problem, the end user, has the data, right?
My colleague from Michigan has testimony from our
constituents telling us that there is a problem. They have this
little thing called data. When I ask you all for data, ad
nauseam, I might say, you send me a really pretty PowerPoint,
which I would like to enter into the record, which is a sales
piece.
Mrs. McClain. I spent 35 years in sales. This is not data.
So, I am going to ask, before we go on, do you have and if
you do not, that is OK. Perhaps that is where you should start.
Do you have specific data, not a pitch book, but do you have
specific data that you could share with me and the Members of
this Committee that shows you actually are doing what the PBMs
are supposed to do and that is save costs for the patient? Do
you have specific data that you will actually send to me, Mr.
Joyner?
Mr. Joyner. Absolutely. We will send you----
Mrs. McClain. And when could I expect that?
Mr. Joyner. I will work with my staff and get it to you
ASAP.
Mrs. McClain. ASAP as in Monday perhaps?
Mr. Joyner. I will work with my staff.
Mrs. McClain. That is great. ASAP as in 2 months from now?
ASAP as in 2 years from now of which I have been asking?
Mr. Joyner. Yes.
Mrs. McClain. ASAP just as like ASAP.
Mr. Joyner. No, we do----
Mrs. McClain. OK. I will pay you as soon as I can pay you,
too. Do not you worry. I will get you your profits ASAP, yes? I
cannot define ``ASAP'' but, you know, like ASAP.
Mrs. McClain. How about you, Mr. Kautzner? When can I
expect this data, not the pitch book?
Dr. Kautzner. Congresswoman, I refer you to review the
written testimony that we submitted. It is a lengthy testimony,
and it is full of data and stats of the good work that we do
and would be happy to followup on any additional stats that----
Mrs. McClain. Good. Let us book a meeting with you and I. I
would be more than happy, OK? I would enjoy that because
therein lies your problem is you all do not think you have a
problem, and I have been asking ad nauseam for data and you
shuck and jive. ``Oh, look over here. ``Oh, it is not really
happening.'' ``Oh, it is two-thirds.'' Well, I am not really
sure how much two-thirds is. I mean, people are having
problems. You want zero transparency. I can see why. It is like
we are trying to help you. One side is saying they are hurting,
the American people who pay costs are hurting, yet you do not
have any data to show us. It is very, very frustrating, and I
will just share with you where this is going to end. This is
going to end that the PBMs being out of business and the only
people you have to blame for that is yourself.
And with that I am over. I will yield back. The Chair now
recognizes Mr. Frost for 5 minutes.
Mr. Frost. Thank you so much, Madam Chair. Patients are
paying hundreds of dollars for extra drugs, thanks to Big
Pharma and PBMs. PBMs are claiming that they are lowering
medication costs, but for many drugs they are not. PBMs, you
all are doing dirty deals, conspiring with Big Pharma to drive
up drug prices. Big Pharma says to PBMs, agree to recommend
expensive brand-name drugs to healthcare plans and we will give
you better rebates, like a recent FTC investigation brought up.
For example, Mr. Kautzner, your PBM only suggests brand-name
drugs that treat hepatitis C, even though cheaper generic
alternatives exist, according to a recent New York Times
article. Mr. Kautzner, has Express Scripts, your company, ever
entered into a rebate agreement that requires Express Scripts
to cover a brand name medication instead of a generic one?
Dr. Kautzner. So, Congressman, in terms of first hepatitis
C, we led the charge on that a decade ago and saved our clients
a billion dollars and saved American healthcare $4 billion.
Mr. Frost. But is it ``yes'' or ``no'' on the question I
asked? Has your company entered into rebate agreements that
require your company to cover brand medication instead of
generic ones? Yes or no.
Dr. Kautzner. There are times when we will prefer a brand
product over a generic----
Mr. Frost. Why?
Dr. Kautzner [continuing]. When there is limited generic
competition, and the lowest net cost is the brand is actually
cheaper, and we actually are able to put in our system so the
patient pays the generic copayment or the generic coinsurance.
So, the patient is not harmed in those situations and our
clients actually save. The reason they save is because brand
manufacturers contract and prevent generics from entering the
market, and when you have limited competition, sometimes a
brand actually can be cheaper.
Mr. Frost. Reclaiming my time. So, the answer is, yes, you
have entered into rebate agreements with these companies to
push a brand medication instead of generic. You are saying that
there is cost savings, but patients still have to pay more
since the copays are usually higher for the brand-name drugs
versus the generics.
When PBMs are not doing dirty deals and they do suggest
generic drugs to healthcare plans, they have been known to
charge massive markups. One example, Mr. Joyner, your PBM
charge some healthcare plans $138,000 a year for a generic
cancer drug that actually has a wholesale cost of just $14,000
a year, according to a recent New York Times article. That is
an 885-percent increase in price. Mr. Joyner, the cost of that
greed is passed directly on to ordinary people. Will you commit
right now to lowering the cost of generic medications like this
one on your formularies?
Mr. Joyner. So, Mr. Congressman, we have committed and I
have mentioned in my opening testimony that we are introducing
a new price model by the name of TrueCost, and we are committed
to lowering the cost of both brands and generics for members.
Mr. Frost. That is good. That is good. So, can you commit
right now that the current increase on that is 885 percent? Can
you at least commit to not going higher than 885 percent of a
markup on your generic medication?
Mr. Joyner. So, if you look at TrueCost----
Mr. Frost. Is it ``yes'' or ``no?'' Would you be able to do
it? Would TrueCost make sure that----
Mr. Joyner. Absolutely. TrueCost, which is our new
innovation, and what we believe is changing the marketplace.
Mr. Frost. That is good. So, because of TrueCost, we can
confirm today that at least the medication will be marked up
885 percent?
Mr. Joyner. No, that is not----
Mr. Frost. No? So, it could go over 885 percent?
Mr. Joyner. So, TrueCost allows us to get to the
acquisition cost of the product, which is----
Mr. Frost. Mr. Joyner, I am sorry. Just a ``yes'' or
``no.'' Sir, are you saying, no, it cannot?
Mr. Joyner [continuing]. Passed on to the member.
Mr. Frost. It could be 885 percent of the markup on the
generic medication?
Mr. Joyner. No, the way in which----
Mr. Frost. No? Now, it is no?
Mr. Joyner. The way in which the TrueCost price model will
work is that we will take 14,000----
Mr. Frost. OK. I am going to move on because I have limited
time, but it was a simple ``yes'' or ``no.'' I thought it was a
``yes,'' and you went back to ``no.'' It seems like, no, you
cannot say that you will not be having an 885 percent markup on
generic medications. PBMs and Pharma are both to blame for
these high drug prices. You guys love to point fingers at each
other, but this will not work. We are holding both of you
accountable.
I know you like to talk about this 6-percent number. Your
PBMs will talk about how they take home just 6 percent of the
cost plans and patients pay for prescription drugs while pharma
takes 64 percent. But that just tells part of the story because
that 6 percent number, that statistic comes from the cost of
drugs you cannot even negotiate for. PBM's real cut of the
profit is much higher when you look at the drugs that you
touch.
I am just curious, Dr. Conway, what was your salary this
last year?
Dr. Conway. My salary last year was a little north of $4
million.
Mr. Frost. Dr. Kautzner?
Dr. Kautzner. Sir, I would be happy to provide that
offline.
Mr. Frost. Do you like to provide it now? I just got it
from Dr. Conway.
Mr. Kautzner. Our company does publish----
Mr. Frost. OK. I am moving on. You do not want to say it.
Mr. Joyner?
Mr. Joyner. I just came back to the company, so I am now in
my first year.
Mr. Frost. What are you supposed to get this year?
Mr. Joyner. I will followup with you offline.
Mr. Frost. Followup offline. I know I am over time, but it
does not matter if you are Democrat or Republican, this is a
crisis in this country. People are dying because they cannot
afford their medication, and you all are part of the problem. I
yield back.
Chairman Comer. [Presiding.] The Chair now recognizes Mrs.
Miller-Meeks from Iowa.
Mrs. Miller-Meeks. Thank you very much, Mr. Chairman, for
allowing me to waive on to this critically important hearing,
and thank you for moving my cost saving PBM reform legislation,
The Drug Act, favorably through your Committee earlier this
year. Let me also just add on to what my colleague just said in
who is responsible for high prices in prescription drugs, and I
am going to add that government is also responsible for that in
some of the legislation that we put forward.
It is no secret that PBM middlemen artificially inflate the
cost of and limit access to prescription drugs. My first
attempt at PBM reform was as a state senator when I passed a
bill in 2019, trying to get at transparency of this
marketplace. This occurs at the expense of patients who receive
health insurance in public and private markets and impacts
patients of all ages. The PBM market has become highly
consolidated with the three largest PBMs controlling roughly 80
percent of prescriptions. The top six PBMs account for 97
percent and in Medicare Part D, four PBMs managed benefits for
a combined 90 percent of beneficiaries.
PBMs claim that they reduce drug prices by holding
pharmaceutical companies accountable. This is done by requiring
rebates on drugs, which are then passed on to the beneficiary,
but is that beneficiary the patient? While PBMs often do not
negotiate discounts from manufacturers, patients are not the
ones who benefit from them. In Medicare Part D, for example,
patient cost sharing is based off the list price of drugs which
are artificially inflated by the PBMs to extract a higher
rebate.
As a result of these practices, for 79 of the 100 most
rebated drugs in Medicare Part D, beneficiaries pay more for
the drug than their insurer, again, demonstrating that
beneficiaries--in this case, seniors--are not benefiting from
rebates. This is why I led the bipartisan Share the Savings
with Seniors Act, which would require full rebate pass through
for chronic care drugs covered under Medicare Part D plans.
Another way PBMs cut cost at the patients' expense is by
limiting the number of treatments available on formularies
despite claims by PBMS that they promote access. In 2022, 1,156
medications were excluded from at least one of the three PBMs--
CVS Caremark, Optum Rx, and Express Scripts--from their
formularies which represented a 961-percent increase and
excluded products from 2014.
This is not a partisan issue. Every American who utilizes
prescription medications experiences the impact that PBMs and
vertical integration have on our healthcare system. And let me
also say that my mother had Express Scripts, and for me, there
are some benefits that PBMs actually help to provide. However,
this is why that the Federal Trade Commission, because of this
vertical integration which currently comprises our Federal
Trade Commission, more Democrats and Republicans are
investigating the harmful impacts of middlemen and the vertical
integration.
Chair Khan of the FTC stated in recent interim report that
dominant pharmacy benefit managers can hike the cost of drugs,
including overcharging patients for cancer drugs, and that PBMs
can squeeze independent pharmacies of many Americans,
especially those in rural communities that depend on essential
care. In Iowa, for example, 25 independent pharmacies have
already closed this year, and I met with Hy-Vee, which is a
grocery retailer, that also has pharmacies. They are in seven
states. They are closing two pharmacies. And so, if you have a
multistate company or national companies that cannot keep
pharmacies open because of the cost and reimbursement or
reimbursing lower than what it cost a pharmacy to acquire the
drug, these independent community pharmacies will close and are
closing.
When the FTC testified in front of the Energy and Commerce
Committee earlier this month, the witnesses confirmed that your
companies have not been complying with document requests, and
that was true of my first bill in Iowa. We were supposed to
have data within a year. It took 3 years to get data that was
already in the possession of the PBMs. If your companies are so
convinced that they can lower drug cost and increase access to
innovative treatments for patients, you should be eager to
demonstrate and not withhold information. Patients in my
district are getting squeezed at the pharmacy counter and are
seeing access to lifesaving medications restricted. This is why
I am actually proud to lead these multiple bills to reform the
drug pricing landscape to ensure PBMs and insurers are actually
helping patients.
Questions to any of you three. Many experts recognize that
misaligned incentives in the current payment system have led to
PBMs to favor medicines with high list prices and larger
rebates or discounts. However, when your companies faced
exposure over this rebating practice, PBMs have shifted their
compensation models to focus on administrative or other fees,
which have typically remained tied to list prices. So, even in
the cases where PBMs are passing most of the rebates back to
health plans, PBMs still have an incentive to favor high list
prices and doing so the current PBM compensation model is
causing patients to face a higher financial burden for their
prescription drugs. In my view, PBMs should not tie their
compensation to the price of a medication, especially a
percentage of the medication. That seems counter to your stated
mission of lower drug costs. Do you not agree? Mr. Joyner,
agree or disagree?
Mr. Joyner. So, we have actually introduced a biosimilar at
a low list price. So, we do believe that introducing products
at a low list price is actually beneficial for our customers
and the patients and the PBM.
Mrs. Miller-Meeks. Thank you. Dr. Kautzner?
Dr. Kautzner. Congresswoman, we have been on the record for
years of employing drug manufacturers to lower their list
prices and continue to do so.
Mrs. Miller-Meeks. And Dr. Conway?
Dr. Conway. We want manufacturers to lower their list
prices.
Mrs. Miller-Meeks. I would like PBMs to have a reduction in
the amount of a drug that they are putting into the billions of
dollars that are in this marketplace and will continue on the
PBM reform that I have started on. Thank you so much, Mr.
Chair. I yield back my time.
Chairman Comer. Thank you. The Chair now recognizes Ms. Lee
from Pennsylvania.
Ms. Lee. Thank you, Mr. Chair. In Southwestern
Pennsylvania, we are deeply familiar with the consequences of
concentrated corporate power in our healthcare systems. Whether
it is the hospital system, a health insurance conglomerate, or
both combined, the consequences of healthcare monopoly are
always the same, higher costs, reduced access, and worsened
health outcomes. And with health insurance companies like
United Health, Cigna, and Aetna, it is evident that through
their monopoly power, they have been able to rig our healthcare
system to prioritize profits over patient health, capitalizing
on each level of the drug supply chain to boost shareholder
returns.
Last year, the parent companies for all three PBMs
testifying here today were incredibly successful as evidenced
by their windfall profits. And I know that some of my
colleagues before me have gotten at this, but I am still
curious. Mr. Joyner, how much total revenue did CVS Health
report in 2023?
Mr. Joyner. Just shy of $180 billion, I believe.
Ms. Lee. And how much of total amount was attributable to
Caremark?
Mr. Joyner. The question was CVS Health?
Ms. Lee. Yes, but then how much of that was attributable to
Caremark?
Mr. Joyner. The Caremark revenues were just shy of $180
billion.
Ms. Lee. Thank you. Mr. Kautzner, how much total revenue
did Evernorth Health Services report in 2023?
Dr. Kautzner. Congresswoman, I do not know the exact
amount, but it is certainly within the filings that we provide.
What I can say is----
Ms. Lee. Yes. I believe its $153.5 billion. How much of
that total was attributable to Express Scripts?
Dr. Kautzner. So, we do not report the Express Scripts'
segment on its own, so I could not provide that information.
Ms. Lee. Thank you. Dr. Conway, how much total revenue did
United Health Group report in 2023? I am sorry, can----
Dr. Conway. I am sorry. I believe it was in the high $360
billion in terms of revenue for the whole group.
Ms. Lee. How much of that amount was attributable to Optum
Rx?
Dr. Conway. A hundred 16 billion dollars was the revenue of
Optum Rx last year.
Ms. Lee. So, while your three companies earn billions,
Americans continue to pay some of the highest cost for
medications in the world. Last March, the Kaiser Family
Foundation released data showing more than a quarter of adults
said it was either somewhat or very difficult to afford
prescription drugs. For people of color, 60 percent of black
respondents and 65 percent of Hispanic respondents reported
difficulty affording healthcare, and this is despite your
claims of negotiating significant rebates from drug
manufacturers to lower drug prices.
So, to any of you, it appears that this system of rebates
actually benefits the PBMs rather than the patients as we have
been talking about. How do you explain this discrepancy?
Anyone? Dr. Conway?
Dr. Conway. So, we compete in a market that is competing on
lowest net cost to the customer, clinical programs,
transparency, and choice. It is a highly competitive market. I
have been in this role for about a year. Retention rates are
98-plus percent in Optum Rx, and within that market, we work
each and every day to make drugs more affordable. To your
point----
Ms. Lee. But they are not more affordable.
Dr. Conway. So, as I mentioned earlier, we have got over
290 drugs now in a program we rolled up that is zero-dollar or
$5 copays, so less than $35, typically zero dollars and $5. I
agree with you that we need to continue to work along with
stakeholders' processes----
Ms. Lee. Thank you. Yes, thank you, thank you for that.
Dr. Conway [continuing]. Make more affordable.
Ms. Lee. Thank you. Just stick in there. Last year, Optum
Rx's former CEO testified before the Senate Committee on
Health, Labor, Education, and Pensions. She explained that some
of your customers, ``Choose to compensate us for the savings we
generate and the services we provide by opting for us to retain
a small fraction of discounts we negotiate with pharmaceutical
manufacturers.'' For companies that choose this compensation
model, what percentage of the discount you negotiate with drug
companies does Optum Rx retain on average?
Dr. Conway. The majority of customers choose 100 percent
rebate passthrough. On average, across the entire book, it is
98 percent of rebates that are passed through to our customers.
Ms. Lee. Your former CEO stated that ``Other customers
prefer that we pass along 100 percent of the savings we
negotiate.'' So, on average, how do clients who choose this
model pay Optum Rx as an administrative fee?
Dr. Conway. They have a set of choices in how they pay us.
Some of them choose administrative fees. There is a set of
options that we provide to them transparently that they select
on how they reimburse us for our services.
Ms. Lee. It is clear that the savings you are claiming to
be providing the patients are either woefully inadequate or not
reaching them at all. I look forward to working with my
colleagues to reign in PBM monopoly power and lower drug costs
for all patients, and I thank you all for your time. I yield
back.
Chairman Comer. The Chair now recognizes Mr. Sessions from
Texas.
Mr. Sessions. Mr. Chairman, thank you very much. Thank you
to the panel that has spent a good bit of time here. I am a
strong proponent of the free enterprise system and of
capitalism, but along with that comes something which you find
yourself embroiled in today and it is not new to you, and that
is the view that a few PBMs control more than 80 percent of the
market, and part of the free enterprise system, or at least
capitalism, is opening markets up.
You and I both understand, and that is fine because I use
some of them back home, larger pharmacy chains that then have
some bit of influence about where the market goes, who, where
the drugs are given out. But as I read about what was called
spread pricing, it then disturbs me, and that is really why we
are here today, I think why the Chairman is here, why the
Ranking Member is here, why all these members are coming forth
because we think that. And it is best said here, due to PBM's
role as middlemen and their responsibility to reimburse
pharmacies for dispensing drugs, PBMs can reimburse pharmacies
that they own more than they give to competing pharmacies such
as community and independent pharmacies. But it really is a
little bit more than that as an example, and that is maybe
others are not even included in options that are available at
the time they order their drugs.
One example may be Blink that I am aware of. Blink has a
number of employees in the district that I represent, and they
are, once again, just like you are part of the free market,
part of doing things, but they are part of the free enterprise
system, part of the effort to provide competition which is a
basis of how we as Republicans think. Tell me about the ability
that companies have, perhaps their pharmacies, perhaps their
insurance company, perhaps they are you, about blocking
competitors rather than allowing what might be an opportunity
for customers to more fully get the carrier or the provider
that they want? Anyone? Mr. Joyce?
Mr. Joyner. Yes, Mr. Joyner. Thank you, Congressman.
Mr. Sessions. Joyner.
Mr. Joyner. Yes. So, the networks work differently by
market type. So, in Medicaid as an example, as in any willing
provider, which essentially means that anybody can participate
assuming that they are agreeing to the terms and conditions of
the contract. As you move to the commercial where you actually
deal with employers, employers have different needs and many of
them are looking to either open up a network because they want
to make sure it is open access, but they are also, as a result,
generally paying more money.
There are others that are looking to save money and they
want to restrict and do not narrow the network. And so, what we
do is facilitate the options to help them actually make the
decisions that are best for them, ultimately trying to cater to
the employer choice and making sure that we actually show them
options to be able to create savings and/or a better experience
for the employees they serve.
Mr. Sessions. So, preferred customer. This is not unusual.
Mr. Joyner. Correct.
Mr. Sessions. What you are describing is a part of the
system, and that is what you are saying that you and working
with the people who contract with you make the decision. At
what point then would--either, any of you three--would a person
without an employer, without, you know, where probably a vast
number of Americans are, who is looking out for them?
Mr. Joyner. So, the employer and/or those that are
providing the benefits for them are looking out. Most employers
that you talk to want to make sure that they are offering a
benefit that is attractive and is seen as a benefit because
they are spending a lot of money on healthcare for their
employees. So, they are looking out for the wellbeing and they
are expecting us to deliver best-in-class service and also
making sure that we deliver the savings to be able to provide
an affordable benefit.
Mr. Sessions. So, they would come to you and you would say
to them, by coming to us here is a benefit that we give to you,
and by a larger amount of dollars that you would spend with us
or numbers of customers, we would give you a preference. OK.
Mr. Chairman, I ask for just 30 more seconds.
Chairman Comer. Go ahead.
Mr. Sessions. So, what this group of people here are about,
Members of Congress, we do not see where that is necessarily
open to better competition, better prices, and to people who
may be left out of those equations. They may not have an
employer-provided benefit. They may not have a preferred
company that would advocate on behalf of them. And I think if
we were being realistic, we would say, and say to you, too,
that is why we are here today. We would like there to be the
same advantage for a larger number of people than is available
today and I think you can accept that and not argue with it.
Look, I spent 16 years with AT&T. Not everybody came to
AT&T. There was a more robust market. There needs to be a
robust market for people that do not have advantage. I
appreciate each of you being here today. Mr. Chairman, I yield
back my time.
Chairman Comer. The Chair now recognizes Ms. Porter from
California.
Ms. Porter. Mr. Joyner, before the COVID vaccine, what was
the highest grossing drug of all time?
Mr. Joyner. I am sorry. Before the what?
Ms. Porter. Mr. Joyner, before the COVID vaccine, what was
the highest grossing drug of all time?
Mr. Joyner. Humira.
Ms. Porter. Humira? That is because for 20 years, Humira
was the only option for rheumatoid arthritis patients. People
did not have cheaper alternatives, and they literally ended up
paying the price, and that price without insurance was a
whopping $7,000 per month. And before you decide to put all the
blame on to AbbVie, the manufacturer of Humira, I will remind
you that I had some choice words for AbbVie's CEO, so we
already know they are a big part of the problem here. But good
news, in 2023 Humira's patents finally ended and cheaper
biosimilar drugs came on the market. So, Mr. Joyner, by the end
of 2023, how much of the market did Humira's competitors
control?
Mr. Joyner. Less than 1 percent.
Ms. Porter. Wait. You are telling me that patients have the
option to get a much cheaper drug and almost everyone wanted to
pay more money to get Humira? Make it make sense, Mr. Joyner.
Were the biosimilars not as clinically effective?
Mr. Joyner. No, it is a great question, Congresswoman, and
generally speaking, the products that came to market initially
were priced more like brands. So, we were working with another
manufacturer, bringing a product to market that was actually 82
percent less than the list price of Humira. And in April of
this year, we actually removed Humira, the most successful
product in the country, from our formulary. We converted 97
percent of that volume. In fact, in just 3 weeks' time, we
built more market share than all was dispensed in 2023.
Ms. Porter. Mr. Joyner, that is remarkable. Why did it take
a year and a half?
Mr. Joyner. We believe because----
Ms. Porter. Was it because you were waiting until you could
manufacture your own version of Humira called, I believe it is
Hyrimoz?
Mr. Joyner. So, we actually brought a product to market in
April because that is when we believe that there was enough
manufacturing capacity----
Ms. Porter. April 2024?
Mr. Joyner. Correct. And we saved 50 percent off of the
2022, spent $500 million worth of savings for our customers,
and the patients basically paid zero dollars out of pocket. So,
it was a really great success story today.
Ms. Porter. Well, there is no doubt that Humira having
competition has been a good thing, but you waited over a year
from when the Humira biosimilars became available, to put them
on your drug list. Yes or no.
Mr. Joyner. So, not a year from when the Hyrimoz product
was introduced, but----
Ms. Porter. No, let me repeat the question. Let's try to
get an answer. Did CVS--yes or no--Caremark wait a year to add
Humira biosimilars to their drug list?
Mr. Joyner. No, we added biosimilars to our drug list in
2023. We did not remove Humira until April of----
Ms. Porter. So, a patient would have paid the same for
Humira and the biosimilars at that time?
Mr. Joyner. It would have also had copay support, so they
could have gotten the benefit of a zero-dollar out-of-pocket
cost.
Ms. Porter. How much did CVS receive in rebates from
Humira's manufacturer, AbbVie, in 2023?
Mr. Joyner. I am not certain.
Ms. Porter. Mr. Chairman, I ask unanimous consent to enter
into the record a Kaiser Family Foundation health news article
titled, ``Save Billions or Stick with Humira: Drug Brokers''--
that would be you all--``Steer Americans to the Costly
Choice.''
Chairman Comer. Without objection, so ordered.
Ms. Porter. So, that article says that Humira's rebates
were at least 40 to 60 percent of the drug's list price in
2023. Does that sound right to you?
Mr. Joyner. It is in the ballpark.
Ms. Porter. OK. So, let us use the low figure of 40 percent
being the rebate of the list price that you negotiated. This is
your value in the marketplace, correct, negotiating this
rebate? How much did Humira generate in sales in 2023? Do you
know?
Mr. Joyner. I do not know.
Ms. Porter. Fourteen-point-four billion. What is 40 percent
of 14.4 billion?
Mr. Joyner. So, 52?
Ms. Porter. Pretty good. Pretty good math. Five-point-six
billion dollars. Did all that money that you got as a rebate,
did it go to patients?
Mr. Joyner. The rebates were passed through to our
customers, the employers, the organizations that fund
healthcare in this country, and then they use those dollars, in
some cases to actually pass it on to the members.
Ms. Porter. You did not retain any of that rebate?
Mr. Joyner. As we have mentioned in my opening statement,
CVS Caremark passes through 99-plus percent of all the rebates
that we negotiate with the manufacturers.
Ms. Porter. Look, I think here is the problem. Pharmacy
benefit managers today are the worst kind of middlemen. You
stop competition, you prevent transparency, you manipulate
markets, and you make our healthcare system more complicated.
Dr. Kautzner, you said healthcare is hard. No, the practice of
medicine is hard. Healthcare is just a profit center in this
country. I yield back.
Chairman Comer. The gentlelady yields back. The Chair now
recognizes Mr. Buddy Carter from Georgia.
Mr. Carter. Thank you, Mr. Chairman, and thank you for you
allowing me to waive on, and, gentlemen, thank you for being
here. I want to congratulate you. You have done something that
very few people have been able to do and that is to bring
bipartisanship to Congress. I am so impressed with the
testimony and the questions that have been given here today.
They are spot on because at the end of the day, we all want the
same thing. Whether you are a Republican, whether you are a
Democrat, whether you are an Independent, you want accessible,
affordable, quality healthcare. All of us want that. This is
why we are here today.
I want to bring it to a more personal note. And the reason
I want to do that is because, as you know, I am a pharmacist,
and I practiced pharmacy for over 40 years. And patients come
to me. In fact, last week, in my office, I had a phone call
with the mother of Matty. Matty is a 15-year-old from Georgia.
Matty has a rare genetic disorder called spinal variant
neurofibromatosis type 1. Tumors grow on every single level of
his spine and his chest wall.
[Photo.]
Mr. Carter. This is a picture of Mattie behind me. The
family asked that I share this with you. Mr. Joyner, CVS
Caremark denied Matty's access to a lifesaving drug, Pulmozyme,
that he had been on for 2 years, and he almost died as a
result. In fact, he ended up in the hospital. He is still in
the hospital. He is back in the hospital for the foreseeable
future, and the rest of his life could be impacted because of
it. All of a sudden, he had been getting this drug for 2 years,
and CVS Caremark came in and said you do not have a diagnosis
for it.
What would you say to Matty's family, Mr. Joyner? As a
pharmacist, what am I supposed to say to Matty's family about
this?
Mr. Joyner. Obviously, this is a terrible situation, and I
certainly feel sorry for the way in which this case has
proceeded.
Mr. Carter. Do you feel like CVS Caremark is providing
quality care to Matty?
Mr. Joyner. I do not know the specifics of this case. I
will say that we do follow evidence-based guidelines, and so
the goal is to make sure that we are looking at each individual
case as it relates to the----
Mr. Carter. I just want to make sure, Dr. Kautzner and Dr.
Conway, that you all understand, that we are talking about real
people here. We are not talking about just a business model.
Yes, I was a business owner for 32 years. I owned three
pharmacies, institutional pharmacy, a number of businesses, but
we are talking about real people. After all, for 40 years, I
was the one who had to go to the counter and tell the patient
how much the medicine was. I was the one who watched a senior
citizen make a decision between buying groceries and buying
medicine. I was the one who watched a mother in tears as she
tried to figure out how she was going to pay for the
antibiotic. That is why, when I got up here 9 1/2 years ago,
the first thing I did was go to the FTC, will you please look
at the vertical integration that exist in the drug pricing
chain. Finally, 2 years ago, they started doing that.
All of you are familiar with the 6(b) study and familiar
with the interim report that came out? Mr. Joyner, are you
familiar with it? Did you have a chance to read it?
Mr. Joyner. I am familiar, and, yes, I have read it.
Mr. Carter. Dr. Kautzner?
Dr. Kautzner. Congressman, we----
Mr. Carter. Are you familiar with the report, and have you
read it?
Dr. Kautzner. I am familiar with it, and we strongly
disagree with it.
Mr. Carter. Have you read it?
Mr. Kautzner. I have read it.
Mr. Carter. OK. Dr. Conway?
Dr. Conway. Yes.
Mr. Carter. You have read it and you are familiar with it?
Dr. Conway. Yes.
Mr. Carter. Mr. Joyner, does CVS Caremark, in any way,
steer patients toward their own pharmacy? Yes or no.
Mr. Joyner. So, as we mentioned earlier----
Mr. Carter. Yes or no. Do they steer patients toward their
own pharmacy?
Mr. Joyner. We do not steer patients. We provide options to
our customers.
Mr. Carter. OK. Dr. Kautzner?
Dr. Kautzner. Our clients make their benefit design
decision, and they----
Mr. Carter. No. Yes or no? No. I am going to take that as a
no. Dr. Conway?
Dr. Conway. No.
Mr. Carter. No. Are you familiar with the report saying
that there is evidence that the FTC has that the three major
PBMs in this country--your three companies--are steering
patients toward their own pharmacy? Are you familiar with that
being in the interim report in a 6(b) study? Mr. Joyner?
Mr. Joyner. I certainly read that, but I do not agree with
the findings.
Mr. Carter. OK. Dr. Kautzner?
Dr. Kautzner. Congressman, the interim report is full of
prejudgments. It lacks any economic, empirical, or data
analysis.
Mr. Carter. Are you familiar with what they say and
steering?
Dr. Kautzner. I am familiar with what they said.
Mr. Carter. Yes.
Dr. Kautzner. And we have provided over 3.3 million pages
of documents and would implore the FTC to do what they
committed to do, which is a wholesome review of all the data.
Mr. Carter. And let me assure you, they are doing it. Dr.
Conway, are you familiar with it?
Dr. Conway. Yes, and we provide----
Mr. Carter. And you still deny it?
Dr. Conway. And we provide choice to our clients in their
pharmacy network design.
Mr. Carter. Look, guys, you are not talking to somebody who
does not know what is going on. I signed those contracts with
the PBMs as the owner of Carter's Pharmacy. I know what they
say. I know how I am limited. The first bill I got passed up
here was the right for the pharmacist to tell the patient if
they paid cash, that it would be cheaper than their insurance
because you had a gag clause in there that said that the
pharmacist could not tell the patient that it would be cheaper
if they paid cash for it. I was able to get legislation passed
that changed that. There is only one word I know to describe
this, and it is ``despicable.'' Mr. Chairman, I yield back.
Chairman Comer. The gentleman yields back. The Chair now
recognizes Mr. Lynch from Massachusetts.
Mr. Lynch. Thank you, Mr. Chairman. First of all, I want to
thank the Chairman and the Ranking Member for putting this
hearing together, and I want to echo, associate myself with the
remarks of Mr. Carter about the refreshing opportunity to work
across the aisle with him and others on this problem.
I am the former Chairman of the Subcommittee on Federal
Workforce on this Committee. And I can go back to the year 2005
when we looked at what was happening with pharmacy benefit
managers in prescription drug pricing under the Federal
Employees Health Benefit Program. Now, this is the gold
standard among affordable health insurance programs--it covers
8 million Federal employees and retirees and family members, so
this is one of the biggest and best funded because you have got
8 million people paying into it. Our investigation revealed
that the Federal Employee Health Benefit Plan was regularly
paying up to 45 percent more for its prescription drugs than
other Federal programs, including those administered by the
Department of Veterans Affairs and the Department of Defense.
The single primary reason for the inflated cost of
prescription drugs was that, contrary to other Federal
programs, the Federal Employee Health Benefit Plan did not
negotiate or regulate drug prices for employees and enrollees.
Instead, the programs relied on pharmacy benefit managers,
PBMs, to negotiate prescription drug benefits and maintain
affordable prices. So, here is how bad it was. At the time we
were doing this, CVS had a program where any person off the
street could come in, and for $10, they could gain access to
the CVS Caremark Program. So, someone off the street could walk
in and pay $10 and get their drugs at a fixed price. In
contrast, any of the 8 million people who were paying into the
Federal Employee Health Benefit Program was paying 45 percent
more--45 percent more--than the person with no insurance.
So, think about this. If I am one of the 8 million
employees or enrollees that are paying into their insurance
program, they would be better off putting their union card in
their shoe, walking in off the street without insurance, they
would get a better deal than the PBM was getting them for their
plan. So, in other words, the person with insurance under the
Federal Employee Plan was paying $200 more for the drug than
the person walking in off the street. That is just absolutely
ridiculous. The PBMs were harming the very people they were
meant to protect, the people that they actually had a contract
to provide affordable drugs for. This has to stop. This has to
stop.
Back when we tried this before, PBMs were spending their
money all around the Hill, and unfortunately, spinning a story
that was not factual, and that won over some of my colleagues,
and we were not able to get that bill to move. I just hope
that, Mr. Chairman, with your leadership and the Ranking
Member's leadership and my brothers and sisters across the
aisle, let us work together on behalf of America today. Let us
put all the other stuff aside and fix this problem. It is far
too long in coming. Thank you, and I yield back.
Chairman Comer. The gentleman yields back, and I agree and
will make that pledge. The Chair now recognizes Mrs.
Harshbarger from Tennessee.
Mrs. Harshbarger. Thank you, Mr. Chairman, and I thank the
gentlemen for being here today.
First of all, I want you to know, I have been a pharmacist
for 37 years, and I know firsthand how pharmacy benefit
managers maneuver, honestly, to put financial screws to
independent pharmacists and community pharmacies, and I have
worked in every area of pharmacy except nuclear. So, that
includes hospital, that includes retail, home health, hospice,
the whole nine yards, and I have lived that experience, being
an independent pharmacy owner. You know, what happens is, when
you have PBMs to do these things, it leads to increased drug
prices by steering prescription drug coverage to whatever pads
your bottom line, and the case in point is the FTC interim
report that just came out.
But before I get into that, I want to ask you a question.
This is really just a ``yes'' or ``no'' question. The Centers
for Medicare and Medicaid Services issued an FAQ during the
COVID public health emergency stating it was a Medicare Stark
violation if a medical practice delivered a drug to a patient,
and that during the public health emergency, there were Stark
waivers in place which have now expired with the end of the
public health emergency. For the record, I ask each one of you
if you have had any communications with CMS that prompted this
FAQ or related to it in any way? And if so, what was the
communication? Starting with you, Mr. Joyner.
Mr. Joyner. Yes. I am not familiar with what you asked.
Mrs. Harshbarger. OK.
Dr. Kautzner. Congresswoman, I am not aware of what you
just asked.
Mrs. Harshbarger. OK.
Dr. Conway. Not that I am aware of.
Mrs. Harshbarger. Thank you. Now, Mr. Kautzner, we have had
the findings of numerous independent studies and the findings
of the July 9 FTC interim report, and it is well documented
many times over that certain medicines get marked up by
thousands of dollars per prescription when they tend to flow
through pharmacies owned by the same parent company as the PBM
setting the prices. And per the FTC interim report, it states
PBMs are paying their affiliated pharmacies up to 40 times
average acquisition costs or more.
And there is an internal document, if you have read the FTC
interim report, that says, an executive of one PBM stated in
internal documents, ``You can get imatinib at a non-preferred
pharmacy like Costco for $97, at Walgreens, which is a
preferred pharmacy, for $9,000, and at preferred home delivery
for $19,200.'' And it goes on to say, ``We have created planned
designs to aggressively steer customers to home delivery where
the drug cost is 200 times higher.'' The optics are not good.
So, my question to you is, how can the American public
trust PBMs when they have done nothing to help with the pricing
behaviors, and then you interfere with the clinical
decisionmaking process as well with physicians, with prior
approvals and things like that, how can American public ever
trust what the pharmacy benefit managers are doing?
Dr. Kautzner. I appreciate the question, Congresswoman. So,
each and every day, we process millions of prescriptions. On
every one of those prescriptions, we perform 18,000 safety,
quality----
Mrs. Harshbarger. Well, I know that. Believe me, I have
read the report.
Dr. Kautzner. And within 1 second, we are able to do
determination. We are going to prevent 100 million potential
medication errors just this year alone.
Mrs. Harshbarger. OK. I am going to the next question. We
are going to talk about 340Bs. I would like to ask each of the
witnesses a yes or no. Does your company profit off of its
involvement in the 340B drug discount program? Yes or no. Mr.
Joyner?
Mr. Joyner. The 340B marketplace today is an issue with our
customers because the manufacturers are only paying----
Mrs. Harshbarger. Well, do you profit or not? It is a
``yes'' or ``no.''
Mr. Joyner. We do participate in the 340B program, yes.
Mrs. Harshbarger. So, I would assume you do, Mr. Kautzner?
Dr. Kautzner. So, the Cigna Group does have pharmacies that
will participate in a 340B program, as do many pharmacies
across this country.
Dr. Conway. We also have areas and customers where we
participate in 340B.
Mrs. Harshbarger. Well, this is what I would like for you
to do is report back to the Committee, give me a rough estimate
of how much money your company collects due to its involvement
in the 340B program, and we would appreciate you following up
with Chairman Comer with that information. And I or one of my
colleagues can submit a written question for the record.
Mrs. Harshbarger. Mr. Joyner, we have seen disclosures from
your company, the fourth-largest for-profit company in the
country, warning investors that any reduction in 340B contract
pharmacy arrangements could materially and adversely affect the
company. And I find this confusing and alarming because the
340B discount program is intended to support safety net clinics
and low-income patients, the underinsured or the uninsured. So,
can you please explain exactly how this Federal safety net
program became such a large part of your company's bottom line
that you felt the need to inform investors that your profit
would be negatively impacted by changes to the 340B program?
Mr. Joyner. So, Congresswoman, as you know, the 340B
program has changed over the last several years. We actively
participate with health systems to help support their 340B
programs. We do have pharmacies that participate within, as a
contract pharmacy, with those----
Mrs. Harshbarger. Well, why would an independent pharmacy
get a contract and it says this is your reimbursement rate if
the 340B stays in place, and this is your reimbursement rate if
it does not, if we negate it in Congress?
Mr. Joyner. No. I think if you look at the change in the
340B laws, the amount of or the activity of contract pharmacies
shrunk or contracted based off the interpretation of a recent
court ruling. So, as a result, the narrowing of the 340B----
Mrs. Harshbarger. Well, they found a way to rake the system
is what it amounts to, and it is not just the pharmacies. It is
some of the hospitals as well, and I think you need to relook
at the 340B program and how you are abusing that program. And I
know that my time is up, Mr. Chairman, but let me say this.
Celeste Maloy, Representative Maloy from Utah, was here and she
waited over an hour and she has a 2 p.m. hearing. And I just
want you to know that we will be working with her in finding
solutions for this. So, with that, I yield back, sir.
Chairman Comer. The gentlelady yields back. The Chair
recognizes Mr. Auchincloss from Massachusetts.
Mr. Auchincloss. Thank you, Chairman. Long day, gentlemen,
almost over. All three of your companies are part of the
Pharmaceutical Care Management Association. Is that correct?
Yes? And I see the PCMA is here today as well. The PCMA
responded to the FTC's interim report with a statement that
said, amongst other things, that the report is based on
anecdotes and comments from anonymous sources and self-
interested parties. The PCMA said the report was supported only
by two cherry-picked cases. PCMA said the report completely
overlooks the volumes of data that demonstrate the value that
PBMs provide. Do any of you three want to disassociate yourself
from those comments about the FTC report or do you stand by
those?
Mr. Joyner. We stand behind them.
Mr. Auchincloss. We stand behind them. I found the FTC
report compelling. I found it also to be supported by excellent
investigative reporting by the New York Times, by the Wall
Street Journal, by a recent report from 3 Axis Advisors
examining Washington state employer data, by a June 2023 MedPAC
report that found that payments were likely to be highest to
pharmacies that are affiliated with the PBM prescription drug
plan, while non-vertically integrated pharmacies were most
likely to receive the lowest payments. I thought that the
evidence fact pattern was quite strong.
But given the claims of PCMA, and, in particular, Mr.
Joyner, the claims that CVS has made about TrueCost, I decided
to do my own investigation in Massachusetts. I got access to a
Fortune 500 employer's data in Massachusetts and looked at
their benefits, which are administered by CVS, and this data
here is not anecdotal. This is CVS' own data for an employer
based in Massachusetts. I am going to throw out two prices for
each drug name, and I want you to guess, Mr. Joyner, which drug
is the price CVS charges the employer and which drug is the
NADAC price. And I wish that one of the pharmacists in the
audience here could help me with these drug names, but we have
got teriflunomide, which is used to treat multiple sclerosis.
It is priced at $6,229 or $16. Which one do you think is the
CVS TrueCost, and which one is NADAC?
Mr. Joyner. If it were the TrueCost price, it would be the
lower.
Mr. Auchincloss. Well, that is interesting because the
answer is the CVS price is $6,229 and NADAC is $16. That is a
38,000-percent markup. Abiraterone acetate is used to treat
cancer, and is priced out at $91 or $5,800. Which one is the
CVS price, do you think?
Mr. Joyner. If that client has adopted the TrueCost pricing
model, it would be the lower.
Mr. Auchincloss. We have the CVS price of $5,800, NADAC at
$91. That is a $6,300-percent markup. I can keep going. We have
got prostate cancer 6,000 percent above NADAC. We have got
leukemia, 13,000 percent above NADAC; chronic kidney disease,
5,000 percent above NADAC; HIV, 4,000 percent above NADAC;
heart failure, a modest 161 percent markup above NADAC. These
are not aberrations, Mr. Joyner. These are not anecdotal. This
is your data in my home state. And while specialty drugs may be
used by less than two percent of the U.S. population, they
account for over 50 percent of the drug spent.
So, if there is any cherry-picking going on, it is not by
the FTC, regardless of what PCMA says. It is by the Big PBMs.
You are cherry-picking drugs to apply them to specialty rates
at specialty formularies. There is a clear pattern of marking
up drugs used to treat the sickest patients, and you are
marking these drugs up and filling them disproportionately at
your pharmacies through steering. These kinds of markups are
anticompetitive. They should be illegal. And that is why, along
with my colleague from Tennessee, Mrs. Harshbarger, we
introduced today the Pharmacists Fight Back Act, which will
stop these markups, patient steering, the patient exploitation
in Federal healthcare plans and impose criminal violations for
such behavior. No more exploiting the sick. No more drugs being
priced thousands of percentage points above NADAC, as I just
listed here, and steered to your affiliated pharmacies. No more
underwater reimbursing independent pharmacies or imposing
point-of-sale and retroactive fees. These practices must stop.
Transparent pricing and patient choice should be our north
star.
Dr. Kautzner, in my remaining time, I do want to pivot and
ask you about Ascent, the GPO that you have domiciled in
Delaware but operating in Switzerland. Switzerland is an
interesting place to be operating. You do not have any plan
sponsors there. The Ohio attorney general thinks that you are
doing that because you are trying to engage in anticompetitive
behavior. Can you attest here under oath that every action
being undertaken in Switzerland would be legal under U.S.
competition law?
Dr. Kautzner. Congressman, Ascent Health Services is a
healthcare group purchasing organization around commercial
rebates. We have multiple owners within that organization.
Mr. Auchincloss. But can you attest that everything that is
happening in terms of sharing information about rebates,
sharing information about negotiations, everything that is
happening in Switzerland, would all of that be legal under U.S.
law?
Dr. Kautzner. Congressman, I am neither an attorney nor an
expert on Ascent Health Services, so that is not a question I
could answer.
Mr. Auchincloss. Will you commit to following up with my
office to determine whether or not every action that is taking
place in Switzerland would be legal, or whether Attorney
General Yost is correct that it is, in fact, a way to sidestep
U.S. antitrust law?
Dr. Kautzner. Congressman, we can certainly take that back
and review your question and get back to you. Thank you.
Mr. Auchincloss. I will now yield my time to Ranking Member
Raskin.
Mr. Raskin. Thank you, Congressman Auchincloss, and thank
you for your leadership on this. I am definitely getting on
your bill with Congressman Carter, and I appreciate your
joining us today. I had to leave the room before when
Congressman Frost was discussing the matter of compensation, as
Congressman Auchincloss just pointed out. There is huge profits
being raked in on this business, and we want to know where the
money is going. Dr. Conway, what was your compensation? I am
sorry, I was not in the room when this happened. Did you state
what your compensation is?
Dr. Conway. I was the only one to answer the question. My
base salary is $950,000. I believe the question was total
compensation.
Mr. Raskin. Total compensation is how much?
Dr. Conway. Total last year was a little north of $4
million.
Mr. Raskin. Four million. OK. And Dr. Kautzner, how about
you?
Dr. Kautzner. So, Ranking Member Raskin, the Cigna Group
reports our top five highest-paid executives in our annual
report. I am not one of them. I would be happy to followup with
you offline.
Mr. Raskin. That is too bad, but what was your compensation
last year? Not the top five.
Dr. Kautzner. As I said, I would be happy to followup with
you offline.
Mr. Raskin. Well, all right. Chairman Comer, what was your
compensation last year as the United States Congressman?
Chairman Comer. Same as yours, $174,000.
Mr. Raskin. A hundred seventy-four thousand dollars.
Congressman Sessions, how much did you make as a Congressman
for the U.S. House of Representatives last year?
Mr. Sessions. I am half paid. I retired and came back. So,
half is about a pension of 22 years, and then half is the
remaining. So, I am trying to be honest about that.
Mr. Raskin. Yes. I was not aware of that particular
mechanism.
Mr. Sessions. Yes. They net you. I can make no more than
$174,000, but half of it was pension from serving 22 years.
Mr. Raskin. I got you, but your take-home would be
$174,000.
Mr. Sessions. I am not allowed a penny more.
Mr. Raskin. Well, thank you for laying that all there out
in public.
Mr. Sessions. Well, you asked.
Mr. Raskin. Dr. Kautzner did not want to do that. Mr.
Joyner, how much was your compensation last year?
Mr. Joyner. So, CVS Health published the top five, and I am
not part of the top five compensated employees.
Mr. Raskin. All right. What was the bottom five of the top
five at your company?
Mr. Joyner. I am not aware.
Mr. Raskin. What was the top one of the top five?
Mr. Joyner. I think as reported earlier, I think it was
$20-plus million for our CEO.
Mr. Raskin. Twenty million dollars was the highest paid
person?
Mr. Joyner. That was what was reported earlier.
Mr. Raskin. OK.
Mr. Joyner. I can certainly confirm that.
Mr. Raskin. All right. Well, there is a lot of money being
made out there, and a lot of pain and a lot of hardship. And
your companies are taking a huge chunk of money out of an
already staggeringly expensive and inefficient system, a system
so convoluted that most people do not even know that your
companies exist. And so, a lot of people are profiting from the
opaqueness, the complexity, the convolution of this healthcare
system, and we really have got to clean it up. And I wish that
you guys would be part of the solution to help people
understand instead of part of the problem.
The FTC interim report said that not all the companies had
complied fully with their request for information and
documents. Mr. Joyner, has CVS Caremark produced all of the
responsive documents to the FTC? And you are under oath.
Mr. Joyner. We believe we are in full compliance. Multi-
terabytes of data and millions of pages of documents that we
believe were in compliance and on time with the FTC request.
Mr. Raskin. So, you have produced all responsive documents?
Everything they have asked for, you have produced?
Mr. Joyner. We believe we have produced what has been asked
and requested.
Mr. Raskin. OK. Mr. Kautzner, how about Express Scripts?
Dr. Kautzner. So, we have supplied, from what I am told, 11
billion data points, 768 million rows of data, over 3.3 million
pages.
Mr. Raskin. OK. I got you. Yes, those are all big numbers.
Dr. Kautzner. We would implore the FTC, implore them to
actually review all of that data, and we believe that----
Mr. Raskin. That is up to them, Dr. Kautzner. I have such a
simple question. Have you produced all responsive documents?
Have you turned over what they have asked for?
Dr. Kautzner. As I said, I know we have supplied 3.3
million pages of documents. I am not aware----
Mr. Raskin. Let us say it is 87 zillion. That is not my
question.
Dr. Kautzner. I am not aware----
Mr. Raskin. My question is, have you produced everything
that has been requested?
Dr. Kautzner. I am not aware of every request and was not
involved in the turning over, though, so that is a question we
would have to get back with you on.
Mr. Raskin. So, you do not know. Your answer is you do not
know. OK. And Dr. Conway, has Optum Rx produced all responsive
documents to the FTC's request?
Dr. Conway. Yes, I believe we have been fully compliant
with the FTC request.
Mr. Raskin. OK. I am over my time. Thank you, Mr. Chairman.
I will go back to you.
Chairman Comer. The gentleman yields back. I just would
like to ask unanimous consent to enter the following documents
into the record: The Committee's report of PBMs dated December
10, 2021; the Federal Trade Commission's interim staff report
on PBMs; a letter from the National Association of Chain Drug
Stores and the National Community Pharmacists Association; a
letter from the Association of Accessible Medicines, a letter
from the 60 Plus Association; a letter from the PBM
Accountability Project; a letter from a coalition of pharmacy
and pharmacist organizations; a statement from Patients Rising;
report by American Pharmacy Cooperative, Inc., a letter from
the National Association of Manufacturers; and a statement from
the National Association of Chain Drug Stores President and
CEO.
Without objection, so ordered.
I want to thank our witnesses for being here today. I know
it was a long hearing. I apologize we had to take a brief
recess for House floor votes.
Ranking Member, is there anything else you wanted to add
before the end?
Mr. Raskin. Yes, just one or two things. First of all, I
want to thank you, Mr. Chairman, for two excellent hearings in
a row, Monday and Tuesday. We have had a great week so far in
terms of our ability to try to penetrate governmental or
corporate bureaucracies that seem to be indifferent to a clear
public interest. And I learned a lot from this hearing, I have
got to say, and it is disappointing to me to learn about so
many abuses taking place inside this system, and so we should
act on this, Mr. Chairman. Again, we had clear bipartisan
consensus here, that this kind of profit taking at the expense
of patients, which is what the healthcare system should be all
about, is really unsustainable, and we hear about it from our
constituents all of the time.
I understand that is not the principal concern of our
witnesses today, despite the protestations that their goal is
to save cost. No. Their goal is to make money as corporations.
That is the way the system is really operating, and that is
fine. That is what they are doing, but we have got to protect
the American people, and I hope we can act together to really
try to reduce costs and make sure that everybody in America can
get the prescription drugs that they need at an affordable
price. I will yield back to you, Mr. Chairman.
Chairman Comer. The gentleman yields back, and I agree and
look forward to working with you on that. I have also been in
communication with Brett Guthrie, who I believe has a good
chance at being moving up in the Energy and Commerce Committee
in the future. And this is something that we are going to have
to work closely with the Energy and Commerce Committee on
because they have primary jurisdiction over a lot of what needs
to be done. We had two Members from Energy and Commerce here
today, Mrs. Harshbarger and Mr. Carter. They are both experts
on the issue, and I am sure there are some members on your side
of the aisle that are on Energy and Commerce as well.
In closing, I am a little disappointed in some of the
witness testimony today, especially the fact that you all claim
to be transparent. Instead, you have created group purchasing
organizations or rebate aggregators in foreign countries, like
Ireland and Switzerland, which I can assure you is the hardest
country on the planet. That is not a third-world country to get
any type of financial information, and pharmaceutical companies
in Ireland and the Cayman Islands to evade taxes and
congressional regulatory efforts. You refused to answer
questions posed by members on both sides of the aisle. The book
is still open about your testimony with respect to your
relationship with independent pharmacies. That one was hard to
believe. You pointed the finger at manufacturers, even though
PBMs are the center of the problem. You have taken no ownership
of your action to roll in the rise of prescription drug cost.
We get elected by our constituents. In my district, I have
740,000. How many do you have in your district, Mr. Raskin?
Mr. Raskin. Seven-hundred-and-ninety-four-thousand.
Chairman Comer. Yes, 794,000. So, we all represent probably
between 700,000 and 900,000 people, and one of the biggest
issues is the rising cost of prescription drugs, and that is a
bipartisan issue. And there are not many things that are
bipartisan in this town, unfortunately, especially on this
Committee, but this Committee is in agreement that PBMs need to
be reformed.
Now, we have passed bills in Congress and state
legislatures are passing bills increasing transparency. But as
we mentioned throughout the hearing, there are things that you
do to evade transparency, much like going to foreign countries.
We believe that some of these transparency bills are a lot like
a resolution. You pass a resolution, and when you go back and
say we did something to keep people off, but as resolution
really does not do anything.
We need real reform. I disagree with some of the things
that were stated by people across the aisle. I am a free market
guy. I am all about making a profit. I think that risk takers
should be rewarded for making a profit. Drug companies take
significant risks. They invest in research and development. I
do believe that they should be rewarded for that risk. If they
are not rewarded for the risk, I do not believe we will be ever
discovering new medicines and new vaccines because there is no
incentive to discover new medicines and new vaccine.
The PBMs were created to help drive down cost of
prescription drugs. I do not think that is working. There are
always going to be examples where you reduce the cost of
prescription drugs, but overall, we have too many horror
stories from pharmacists. We have too many horror stories from
consumers about where they were gouged by the PBMs. And that is
not what the PBMs were created for, and I do not believe the
PBMs were created to be vertically integrated. I think that is
a huge issue. And I do not know what our solution is for the
PBMs. I would certainly support busting up the PBMs. I do not
think a PBM should be owned by a health insurance company. I do
not think a PBM should own a pharmacy, at the very least.
So, I think we are going to have many more discussions. We
do a good job on this Committee of messaging. I think this
report is excellent that we released today. We are going to
continue to work and try to find a solution to the problem, and
it is a problem. It is a problem, and we represent our
constituents who demand that we do something about the problem.
So, again, I want to thank you all for being here.
With that and without objection, all Members have 5
legislative days within which to submit materials and
additional written questions for the witnesses, which will be
forwarded to the witnesses.
Chairman Comer. If there is no further business, without
objection, the Committee stands adjourned.
[Whereupon, at 2:33 p.m., the Committee was adjourned.]
[all]