[Congressional Record Volume 163, Number 36 (Wednesday, March 1, 2017)]
[House]
[Pages H1449-H1456]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE IMPORTANCE OF COMMUNITY PHARMACIES
The SPEAKER pro tempore. Under the Speaker's announced policy of
January 3, 2017, the gentleman from Georgia (Mr. Collins) is recognized
for 60 minutes as the designee of the majority leader.
Mr. COLLINS of Georgia. Mr. Speaker, it is good to be back. It is
good to be back on the floor, as we have been now, for the last few
weeks doing the people's business, and we will continue to move
forward.
I appreciate the last speaker discussing pharmaceutical prices. I
think it is another issue, but we are going to go straight to really
what I believe is the bigger cause of problems in our communities, and
that is the pharmacy benefit managers and their monopolistic, terrorist
kind of ways that they are dealing with our community pharmacies and
independent pharmacies and actually causing problems in health care.
General Leave
Mr. COLLINS of Georgia. Mr. Speaker, I ask unanimous consent that all
Members have 5 legislative days to revise and extend their remarks and
to include any extraneous material in the Record on this Special Order
hour.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Georgia?
There was no objection.
Mr. COLLINS of Georgia. Mr. Speaker, as we get started now, we have a
lot of speakers. This is something that has been on my heart for a
while, and I know that it is something we have been getting more and
more comments and questions about, especially when you are dealing with
the pharmaceutical prices and the Pharma industry.
When they begin to look into it, they began to see that there was
actually a bigger issue. It was not just big pharmacy and the problems
that we do see in drug pricing. It was the end delivery that is going
to the pharmacies and how the independent community pharmacists are
being beaten down in a way that is really unseemly in our society. They
are taking that healthcare line tonight.
I have a lot of speakers, and I have a lot of stuff that I am going
to be talking about.
Just as an important reminder: A community pharmacist is an important
niche in our healthcare system, serving as the primary healthcare
provider for over 62 million people. Especially in our rural and
suburban areas, this is a vital lifeline. Roughly 40 percent of the
prescriptions nationwide and a higher percentage in rural Georgia--
especially in northeast Georgia--are filled by our friends in the
independent community pharmacy system.
Look, the problems that we have and we are going to be discussing
even further tonight, we are going to delve into some issues that we
want to see taken care of. We want to see this industry, especially in
dealing with pharmacy benefit managers, put into proper perspective so
that we can actually take care of our constituents.
A gentleman who has been a fighter and a leader with me on this from
day one since I have been in Congress and dealing with this issue,
especially with transparency, is the gentleman from Iowa (Mr.
Loebsack). This is a fight that we are going to continue to keep
fighting. I know he is as well, and we have a lot of friends tonight to
help us out.
I yield to the gentleman from Iowa (Mr. Loebsack) as he continues to
try
[[Page H1450]]
to tell the story that we have been trying to tell here for a long
time.
Mr. LOEBSACK. Mr. Speaker, I really appreciate Representative Collins
of Georgia's leadership on this issue. There is really no one in this
body--maybe with the exception of Representative Carter of Georgia--who
can tell the story of community pharmacists the way Representative Doug
Collins does.
I thank Representative Collins of Georgia for putting this Special
Order hour together. He has been such a strong leader on pharmacy
issues. He has been a great partner on the legislation that we will be
discussing this evening.
I am proud to say that this is a bipartisan issue, one of the few in
this Congress at this point. It is one of the few in Washington, D.C.,
at this point. We have been able to find a consensus on this, at least
with respect to one bill, and I think we are probably going to be able
to do it with respect to others as well.
We know for a fact that pharmacists across the country serve as the
first line of healthcare services for so many patients around this
country.
{time} 1845
People count on pharmacists' training and expertise to stay healthy
and to stay informed and, most importantly, to stay out of urgent care
centers and out of hospitals. That is why I am proud to stand here
today with my colleagues to recognize the quality and the affordable
and the personal care that pharmacists provide every day.
Within that group of pharmacists, we have got a subset of
pharmacists, and that is the community pharmacists and their
pharmacies. They are also a great source not only of the expertise they
provide, but economic growth in rural communities like those in my
district and across the State of Iowa.
As Mr. Collins mentioned, rural areas are very important in this as
well. I am a member of the Small Business Caucus. I recognize how
challenging it can be for some of these small pharmacists to compete
with the bigger companies. I appreciate their hard work to serve our
communities.
Like most small-business owners, community pharmacists, they have to
face challenges to compete and negotiate on a day-to-day basis with
large entities as far as their business transactions are concerned. I
frequently visit community pharmacists and I see the great job they are
doing.
One pressing challenge facing many of our community pharmacists in
particular that will be discussed tonight is the ambiguity and the
uncertainty surrounding the reimbursement of generic drugs. Generic
prescription drugs account for the majority of drugs dispensed by
pharmacists, making transparency in reimbursement absolutely critical
to the financial health of these small pharmacies.
But we know that pharmacists are reimbursed for generic drugs through
what is called maximum allowable cost, or MAC. And this is a price list
that outlines the upper limit or the maximum amount that an insurance
plan will pay for a generic drug. These lists are created by pharmacy
benefit managers, as Mr. Collins mentions, PBMs. This is the drug
middleman.
There are lot of problems, but one of the problems is that the
methodology used to create these lists are not disclosed. There is no
transparency.
Further, they are not updated on a regular basis either, resulting
often in pharmacists being reimbursed below what it costs them to
acquire the drugs themselves. It is a major problem, because when PBMs
aren't keeping the cost of generic drugs consistent, those price
differentials can be a serious financial burden for local pharmacies.
And we know when they have a financial burden, that will affect their
business, that will affect the economy in the area, and that is going
to affect their patients as well. And we can't have that as we are
moving forward, especially in this country, doing what we can to reform
health care.
When we talk about reimbursement uncertainty for pharmacies, we are
talking about uncertainty for those patients, as I just said.
So, look, when we deal with this issue, I think we have to be very
transparent about it. We are going to be introducing later this week,
on a bipartisan basis, this Prescription Drug Price Transparency Act.
Specifically, what this act will do, it will increase transparency of
generic drug payments in Medicare part D, in Medicare Advantage, the
Federal Employees Health Benefits Program, and TRICARE pharmacy
programs, by requiring that PBMs do three things; and Mr. Collins will
flesh this out, and I think Mr. Carter will as well.
First, provide pricing updates at least once every 7 days. Second,
disclose the sources used to update maximum allowable cost--or MAC--
prices. Third, notify pharmacies of any changes in individual drug
prices before these prices can be used as a basis of reimbursement.
This is commonsense, bipartisan legislation. We are going to hear
more about that in just a couple of minutes, but I am very thankful to
be here to talk about these issues.
There is one more I want to talk about, if I might, Mr. Collins, and
that is the importance of access to local pharmacies and Medicaid
beneficiaries in particular. We know that Medicaid beneficiaries depend
on their pharmacies as a provider of convenient, trusted care in their
communities.
In addition to dispensing vital prescription drugs, pharmacies
provide additional services to Medicaid enrollees, including
immunizations, medication therapy management--a really big issue--and
point-of-care testing like flu or strep tests. These are preventive and
maintenance care services that help to fill in the gaps where provider
shortages exist.
I know we are looking at reform and maybe replacing the Affordable
Care Act, but we have to be very careful, too. We all recognize the
importance of Medicaid, I think, going forward, and it is really
important, certainly, for these pharmacies and these community
pharmacists, and for their patients as well.
I thank the gentleman from Georgia. I really appreciate him including
me in this process. This is bipartisan. It is important to so many
communities, so many patients around America, and I am just happy to be
here to say a few words.
Mr. COLLINS of Georgia. I appreciate the gentleman being here. I know
there are others from across the aisle that are joining us in this
fight, and we are looking forward to continuing.
Mr. Speaker, I am just going to highlight a few things as we go
through, and we are going to move through some of our speakers.
Mr. Speaker, I want to highlight something that pharmacy benefit
managers, PBMs, for those watching, may not know about, and they don't
want you to know about it, and it is called spread pricing. Really,
what happens there is PBMs have the maximum allowable cost, which is
what Mr. Loebsack was just talking about, that determine the maximum
amount a pharmacy will be reimbursed for certain generic drugs.
However, the PBMs' reimbursement price determinations are hidden.
There is no transparency in the process. That is the bill that we are
going to be putting out.
PBMs commonly manipulate the pricing by something called spread
pricing. PBMs charge employers a higher price for drugs than necessary,
and reimburse pharmacies at the MAC, or the maximum allowable cost,
which is typically lower.
Spread pricing allows PBMs to skim money from the difference between
the high rate they charge for a prescription and the low rate they
reimburse pharmacies. Spread pricing is artificially raising the
acquisition cost of pharmacy drugs by overcharging at the expense of
retail pharmacies, consumers, and health plans. And that is probably
one of the better things they do. This gets worse. We are going to
continue to talk about it.
Tonight I look forward to hearing some more from my friend. I yield
to the gentleman from Texas (Mr. Babin). Welcome to the show.
Mr. BABIN. Mr. Speaker, I thank Congressman Doug Collins for leading
this very Special Order on a topic that is very near and dear to my
heart, the invaluable role of community pharmacists in our society.
As a rural dentist who practiced for 35 years, I can relate to the
plight of community pharmacists who must overcome all of the challenges
involved in running a small business while serving their patients and
serving their customers and doing their job as a medical professional.
[[Page H1451]]
Just like my small hometown of Woodville, Texas, where I practice,
many of the areas in which community pharmacies are located are rural
and have underserved, low-income and elderly populations. This can
present unique challenges and, oftentimes, results in community
pharmacists performing a lot of services, such as face-to-face
counseling and planning services for patients' medication regimen at no
charge, care that is uncompensated by Medicare and not typically
reimbursed by private insurance companies as well.
What is even more challenging is the uphill battle that community
pharmacists continually face in just getting adequate payment for the
lifesaving medications that they dispense on a daily basis and still be
able to earn a small profit.
Community pharmacists rely on pharmacy benefit managers, or PBMs, who
negotiate directly with payors, including private insurance companies,
as well as Medicare part D and other government plans, for
reimbursement levels for medications. The problem is that the payment
levels that make it up to the community pharmacists after the PBMs have
``skimmed off the top'' are well below the pharmacists' acquisition
costs and fail to be delivered in a timely manner in many
circumstances, in many instances.
Simply put, there is a dire need for more transparency throughout
this process and for more accountability for PBMs. I proudly
cosponsored legislation that would do just this last year. It was
called the MAC Transparency Act, and I now proudly support this bill
again in this 115th Congress. Now is the time to act on this bill.
As a dentist, it was my goal to treat each patient to the highest
standard of care, a goal that I share with all of the community
pharmacists that I know. Sadly, if there is no change in the conditions
that community pharmacists are facing, many of these providers will
have to close their doors. Many already have, and our patients suffer.
For the sake of many rural communities that I serve, I hope to see
the MAC Transparency Act and other similar pieces of legislation move
forward, as well as a greater spotlight put on the actions of the PBMs
so that community pharmacists can get the relief that they so
desperately need to continue practicing.
I thank Congressman Collins for his leadership on this issue.
Mr. COLLINS of Georgia. I think the gentleman is hitting on something
and, Mr. Speaker, I think this is really something we need to discuss.
We are not discussing simply a business model that was designed in a
vacuum, that was designed to help.
Early on I stated this, and I state it every time we have this. PBMs,
in their first iteration, as they first came about, were a good
mechanism to provide pricing and between the pharmacies and the
wholesalers.
The problem was when they became vertically integrated, when they
started owning distribution chains, when they started owning their
actual end-result pharmacies. When they started doing this, it became
then that they are negotiating for themselves. And this is where the
end-user--at the end of the day, the person who pays is the Federal
Government, but also the customer, our constituents. This is what
happens here, and we are losing community and independent pharmacists
every day. This is just not right.
When three companies control 80 percent of the market and they use
tactics like gag orders and other things, where they don't want their
pharmacists to talk about it, where they send out letters saying that
the pharmacist is not on their plan anymore when clearly the pharmacist
is, but then refuse to send a retraction letter, this is just--I have
said this, and I have had people call me after we have talked about
this, Mr. Speaker, where they basically said it is amazing this is
happening. And all I say is it is true, and it has never really been
refuted.
Mr. Speaker, I yield to the gentleman from Tennessee (Mr. Duncan) and
welcome him here to the floor to talk more about this important issue
for our communities.
Mr. DUNCAN of Tennessee. Mr. Speaker, I thank the gentleman from
Georgia for yielding, and I want to say that, in a short time in the
Congress, he has become one of our greatest Members, and I appreciate
him leading this effort tonight.
It is sad, it is unfortunate that, with any big government program, a
small number of individuals or companies find ways to manipulate the
system and become wealthy. That is why 6 or 7 of the 10 wealthiest
counties in the U.S. are suburban counties to Washington, D.C., and
that is wrong.
I have read for years about the revolving door at the Pentagon, about
the defense contractors hiring all the retired admirals and generals.
The same thing has happened with the Food and Drug Administration, that
the big drug giants have hired all the former top people at the FDA,
and we have a drug price crisis in this country today. There are many
parts of it, but we want to talk tonight about one that most don't know
about and you almost have to be a pharmacist to really understand what
is going on.
But I rise tonight, Mr. Speaker, to join my colleagues in exposing,
as I say, an almost unknown culprit in our Nation's drug price crisis,
pharmacy benefits managers, also known as PBMs.
PBMs are essentially middlemen between pharmacies and drug
manufacturers, but the legal relationships among PBMs, pharmacies, and
drug and insurance companies have become increasingly entangled and
complex.
For instance, one of the largest pharmacy chains also operates its
own PBM, and one of the largest medical insurance companies also
operates its own PBM.
PBMs are supposed to be helping keep down the costs of drugs by
negotiating discounts and helping pharmacies with managing drug plans,
as they often claim to do. Despite these PBM promises, though, I have
heard from several pharmacy owners in my district who say that many
PBMs are, in reality, ripping them off by drastically raising drug
costs.
PBMs have tricks of the trade that include retroactively charging
pharmacies more for drugs that they have already sold and processed. I
am also told that PBMs also take too long to update the market value of
the drugs on their covered drug lists. But these tricks are just two.
PBMs use many more.
According to one expert and pharmacy owner in my district, he has
seen three primary causes for recent increases in prescription drugs:
one, FDA involvement, including requiring ``modern clinical trials'' of
old drugs that have worked for decades; two, drug manufacturers
needlessly hiking the price of generic drugs; and three, PBMs charging
ridiculous prices for drugs and pocketing the profits.
According to my constituents, PBMs are the main culprit of the three.
This pharmacist recently met with me and shared an eye-opening example.
One of his senior customers came in with a prescription for a fairly
common drug. The prescription had a real or actual cost of $23.40, but
the pharmacist found that the PBM was charging a copay of $250, over 10
times the actual cost of the drug. The pharmacist chose to just absorb
the PBM's ridiculous copay, and only charged his customer the actual
cost of the drug.
Another pharmacist in my district emailed me, describing how PBM
practices are accelerating seniors into the Medicare part D coverage
gap, or doughnut hole. He said: ``All of these PBMs have these types of
unfair compensations . . . This is not fair, and it hurts our
seniors.''
Even more pharmacists in my district have also reached out to me,
saying that they only get pennies on the dollar for the drugs they
sell. PBM actions are forcing pharmacies to deny patients access to
critical medications, or to give drugs away for free.
The Daily Times in Blount County, in my district, recently ran a
story on PBMs called ``Sworn to Secrecy.''
{time} 1900
The article cites a pharmacist in Pennsylvania, Eric Pusey, who says
that his patients' copays for drugs are often higher than out-of-pocket
costs. Why? Because of PBM clawbacks. Mr. Pusey says that if he
explains clawbacks to his customers, some get fired up and don't even
believe what we are telling them is accurate.
Another pharmacist in Houston says: We look at it as theft--another
way for the PBMs to steal. Most people don't
[[Page H1452]]
understand. If their copay is high, then they care.
Susan Hayes, a pharmacist in Illinois, says that these PBM clawbacks
are like crack cocaine, the PBMs just can't get enough.
Some PBMs are facing lawsuits with accusations such as defrauding
patients, racketeering, breach of contract, and violating insurance
laws. Since 1987, when the first of the three largest PBMs
incorporated, drug prices have increased 1,100 percent, Mr. Speaker,
and per capita expenditures have jumped by 756 percent.
The three largest PBMs make up about 80 percent of the drug market,
which includes about 180 million patients. These PBMs often conduct
business through mail order practices. They sometimes will
automatically fill prescriptions month after month even if the patient
no longer needs the medication, resulting in terrible waste. Patients
include veterans and Medicare beneficiaries--endangering them, wasting
their benefits and taxpayer dollars, and driving up the cost of drugs.
As we heard President Trump say in his address last night, we need to
look into the artificially high drug prices right away. A good place to
start is PBMs. Mr. Speaker, PBMs must be more transparent in their
operations so that they can be held to their promises and to the law.
I will just close by saying that PBMs must no longer be able to get
away with conducting their business with such unethical methods that
they are using now. In short, PBMs must be held accountable for their
roles in the Nation's drug price crisis. I join in supporting our
community pharmacists.
Mr. COLLINS of Georgia. The gentleman couldn't have laid it out any
better. That is exactly what we are talking about. If every Member of
our body would go home and just go to their community pharmacy, they
would hear this all over the country. This is not new.
I have been on this floor now for almost 2\1/2\ years talking about
this, and I have not had PBMs come to me and say: Well, no, that's not
really true.
Because they do it. So I thank the gentleman for being a part and
lending your voice in your community.
We are also very blessed in this body to have someone who doesn't
have to come to it like I did in having to deal with it from a family
perspective or from my community. We have someone who has actually done
this for a living. He is my friend from southeast Georgia. He is a
pharmacist. He has made this his life.
I saw he was up at his alma mater the other day, and, President Cathy
Cox, I would have to say he is a Young Harris man.
Mr. Speaker, I yield to the gentleman from Georgia (Mr. Carter).
Mr. CARTER of Georgia. First of all, Mr. Speaker, I want to thank
Representative Collins for holding this tonight, for organizing this,
also for his advocacy, and for what he has done to bring about
attention to this very important subject. This, of course, is something
that is very dear to my heart. As the only pharmacist currently serving
in Congress, I take this very seriously. I take that responsibility
very seriously.
But it is more than that because, you see, in my professional life,
for over 30 years, I had the honor of practicing pharmacy. I have built
up relationships over that time, relationships with families and with
patients. When I see what is happening in pharmacy now, it is an
affront. It is an affront to me, and it should be an affront to all
Americans. My heart is in this, truly in this.
In over 30 years of practice, I have built up relationships with
patients and with families. I have served grandparents, I have served
parents, I have served children, and total families. You can only
imagine the hurt that it brings whenever I see these people suffering
because of what has been mentioned here tonight.
Right now, in our country, prescription drug prices are something
that is in the forefront, in the news. There is a problem, a real big
problem, and that problem--yes, the pharmaceutical manufacturers have a
concern here, and they have responsibility. But there is a bigger
problem. It is what I refer to as the man behind the curtain. I wrote
an op-ed about this and talked about the man behind the curtain. That
is the PBMs, the pharmacy benefit managers. I am going to call them out
tonight.
Before I do that, I want to just say something about community
pharmacists because they play such an important and vital role in our
communities. They directly interface and build relationships with
neighbors and friends. I have been there, I have done that, and I
understand how important it is. Representative Collins has spoken about
it, and Representative Loebsack, a friend of pharmacy, has spoken so
many times. He has spoken about it as well. Representative Babin and
Representative Duncan understand how important the community pharmacies
are and how important they are to the healthcare system.
But beneficiaries are facing increased costs for prescription drugs
without much of a basis or notification on why these costs are
skyrocketing. So, very quickly, I want to talk about why these costs
are skyrocketing. Yes, as I said earlier, some of the pharmaceutical
manufacturers need to be held accountable. They do.
I say that, but I also say that I am a big fan of the pharmaceutical
manufacturers. You see, in my over 30 years of practicing pharmacy, I
have seen nothing short of miracles. I can remember when I started
practicing in 1980. I can remember that people would come in to get an
antibiotic and that we would have to dispense 40 capsules and have them
take four a day for 10 days. Now I can give them one capsule, and they
can take it and be done with it. People were going into the hospital
back then to be treated for infections. Now we can treat then. The
advances that we have seen are phenomenal.
We talk about the price of some of these drugs, for instance, the
drug that is used for hepatitis C. Yes, it is too expensive, and that
price has come down significantly. It is only as good as it is
affordable. If it is not accessible, if it is not affordable, then it
is no good. But stop for just one minute, and think about it. We cured
a deadly disease through research and development. The pharmaceutical
manufacturers put some of their profits back into research and
development, which I applaud.
We cured a deadly disease, hepatitis C, that was killing people.
Again, that price needs to come down so that it is more accessible to
people. But, again, we cured it. So I am going to cut the
pharmaceutical manufacturers a little bit of leeway there.
I think it is interesting that the President, in his first month in
office, called the pharmaceutical manufacturers to the White House. He
told them: You got to do something about these escalating drug prices.
He also talked about those people who are on the other side of R&D,
who are on the other side of research and development. He put a notice
out, and he said: You better beware because we're going to be watching
you.
The next day, the stocks of two of the major pharmacy benefit
managers went down. They went down significantly, almost 2 percent,
because they knew what was coming, and they know what is coming now.
First of all, let's talk about the profits of the PBMs. A quick
history, PBMs came about kind of in the mid 1960s, and all they were
was a processor. Their goal and their charge was just to keep up and to
process insurance claims as insurance came about and became more and
more popular to pay for medications. That is all they did.
But over time, they have evolved into more than that. If you look at
what has happened over the past decade, the profits of the three major
PBMs--and Representative Collins alluded to this earlier--you have got
three companies who control almost 80 percent of the market. That is
not good. That is not competition, and that is what we have to have in
health care in order to decrease healthcare costs. It is competition.
When you have three companies that account for almost 80 percent of the
market, that is never good.
But if you look at those three companies and you look at their
profits over the last decade, you will see that they have increased
some 600 percent--billions of dollars. Now, you can make the argument,
well, the pharmaceutical manufacturers, their profits have increased,
too. Yes, they have; and, yes, they should be accountable for that.
However, at least they are bringing value to the system by investing
into research and development.
[[Page H1453]]
PBMs bring no value to the healthcare system at all. They put no
money into research and development. All they do is skim it off the
top. As medications go up in price, they make more. Representative
Collins alluded to spread pricing. That is exactly what he is talking
about, and that is exactly how they are making their money. The more
expensive a drug, the more money the PBM is going to make. That's all
there is to it.
I served on the Oversight and Government Reform Committee for the
past session in the 114th Congress. We had a problem with Mylan
Pharmaceuticals and a drug that they had, EpiPen. It went up to $600.
Unbelievable. Here was a drug that is a lifesaving drug that people
have to have for anaphylactic shock. We in Congress actually passed
legislation that required that drug to be on hand in gyms and in
schools in case there was a problem. Yet, they went up to $600.
It was really interesting because, during the time that we were
asking questions of the CEO, she mentioned, well, when it leaves us, it
is this price right here--I am just going to use round figures--it is
$150. By the time it gets to the pharmacist and by the time it is
dispensed to the patient, it is $600.
I asked her: What is that difference there? Where is that coming
from?
I don't know.
I don't know either.
Now, there is the beginning and the end. The beginning is the
pharmaceutical manufacturer. She doesn't know. The end is me, the
dispensing pharmacist, and I don't know.
That is what I'm referring to when I talk about the man behind the
curtain. That is where the PBMs come in.
Now, they will tell you: Well, we are taking that money, and we are
giving it back to the companies, to the insurance.
Well, if they are, and they're not keeping any of it, then why are
their profits going up so much? Why have their profits gone up over 600
percent? It's because they're keeping it. They're keeping it, and
they're adding no value whatsoever to the system.
Now, they will argue the fact, they will say: Well, we are keeping
drug prices down.
Oh, yeah? Well, how is that working out for you? It ain't working out
very well at all because drug prices are going up.
I mentioned the competition, the fact that we have got three
companies that control over 80 percent of the market. That decreases
choices.
We are talking about community pharmacies, and I know that is what
Representative Collins is really wanting to focus on here tonight, and
it is so very important because we have to have community pharmacies.
They are vital to the healthcare system. In many areas, the most
accessible healthcare professional is the pharmacist, particularly in
rural areas. As they go, and as they are eliminated, we are losing a
vital part of the healthcare system.
But PBMs are shutting out a lot of these community pharmacies. I
alluded earlier to the fact that I have served grandparents, parents,
and grandchildren. I've built up those relationships. One of the
toughest things that I have ever faced is for a family member to come
in to me literally in tears and say: I have got to change pharmacies.
I say: Why?
Because my insurance company, because my PBM says that I have to get
it from them through mail order.
Well, why would you have to get it through them through mail order?
Because they own the pharmacy.
Representative Collins alluded earlier about vertical integration,
and that is what we see. The PBM owns the pharmacy that they are
requiring the patient to go to. Well, guess what? That means they are
padding their pocket even more. That is the kind of thing that we
should be protected from.
I will give you a quick story, a true story. Back when I was still
practicing pharmacy and owned my pharmacy, my wife had insurance
through her employer. She had a different insurance plan than I had.
She got her insurance, and she got a prescription filled at my
pharmacy--at my pharmacy. Now, this is the pharmacy benefit manager who
owns the pharmacy. That night when I got home, I got a phone call from
the insurance company saying: Well, your wife got a prescription filled
here at this pharmacy, but if she gets it filled at our pharmacy, we
can give her a lower copay. We can give her a discount.
Now, supposedly there is a firewall in between the PBM and the
pharmacy. Well, guess what? There wasn't that firewall there that
night, not when I got that phone call.
{time} 1915
Can you imagine? What is that doing? That is taking patients away
from the community pharmacist. That is unfair business practices. So,
that is what we talk about. Ultimately, who suffers?
I don't want to give the impression I am just here to try to make
sure that community pharmacies stay profitable and make sure that they
stay in business, although it is important. If they don't stay in
business, who is going to suffer? It is going to be the patient. It is
going to be the healthcare system.
Folks, the only thing that is going to bring down costs in our
healthcare system is more competition and free market principles. That
is what we are trying to do now in Congress, through the repeal and the
replacement of the Affordable Care Act.
We understand that we have got to get free market principles back
into the healthcare system. We have got to get competition in order to
drive healthcare costs down. We understand that. This is a big problem,
a big problem.
Very quickly, I want to talk about three bills that are being
proposed. First of all, I want to talk about Representative Collins'
MAC Transparency bill.
Transparency, that means give us an opportunity to see exactly what
is going on. If you mention transparency to a PBM, they go berserk: My
gosh, no, we can't have that. We can't have transparency.
But Representative Collins' bill, the MAC Transparency bill, which I
am proud to be an original cosponsor of, brings about greater
transparency in generic pricing--drug pricing, in general, but
particularly generic.
Many of the recipients don't understand the cost structure. They
don't understand how that works, where the original fees are
originating from, which are often a direct result of the fees that are
leveraged by the PBMs, the prescription drug plan sponsors.
Congressman Collins' bill addresses this issue, and it addresses
more. Under his legislation, a process would be established to help
mediate disputes in drug pricing. It would establish new criteria for
PBMs to adhere to when managing the costs of prescription drug
coverage.
This MAC Transparency bill is a step forward not only for the
industry, but for the beneficiary, and that is what is so very, very
important. It is no surprise that costs are going up. No surprise at
all. With the lack of transparency, that is what is going to happen.
We have got to have greater transparency in the drug pricing system.
And, yes, that includes pharmacy. Yes, that includes the pharmacy; yes,
it includes the pharmaceutical manufacturer; but mostly, it has got to
be with the PBMs.
If we have a CEO of a medication--a pharmaceutical company like Mylan
which we had come up and testify before us here in Congress, and I ask
her about that gap there and where that money is going, if she doesn't
know and I don't know, there is a problem. That means we need more
transparency. And that is exactly what happened.
Now I want to talk about another problem that is called DIR fees,
direct and indirect remuneration. Let me tell you, this will be the
death of community pharmacies.
DIR fees are what they refer to as clawback fees. What happens is,
when you go into a pharmacy, you get a prescription filled, the
pharmacy's computer calls the insurance company's computer, the PBM's
computer, and it tells us how much to charge the patient in a copay and
tells us how much we are going to get paid. However, with these DIR
fees, months later, after we have already been promised how much we are
going to be paid, pharmacists are getting bills from these PBMs that
are saying: Well, we didn't make quite as much that quarter as we
should have, so we are going to have to claw back this much.
[[Page H1454]]
I met with pharmacists from the New York State pharmacy association
and they were telling me, literally, horror stories about getting bills
for $85,000, $110,000 in clawback fees. Folks, that is not a
sustainable business model. When you are trying to run a business, a
community pharmacy, and you get a bill months later in the hundreds of
thousands of dollars, that is not sustainable. You can't stay in
business that way.
We have got to do something about DIR fees. Thankfully,
Representative Morgan Griffith from Virginia has a bill addressing
this. I am supporting him on that bill.
In fact, in a recent survey, nearly 70 percent of community
pharmacists indicated that they don't receive any information about
when those fees will be collected or how large they will be. Again,
ultimately, who ends up being penalized? Who ends up being penalized is
the patient. The patient ends up being penalized.
Understand, this is not a partisan issue. These PBMs don't care
whether you are Republican or Democrat. They care about one thing, and
that is profit. That is all.
Now, let's talk about one other. Let's talk about a bill that
Representative Brett Guthrie from Kentucky has, H.R. 592, Pharmacies
and Medically Underserved Areas Enhancement Act. Under this bill, many
of the individuals who seek consultation, especially seniors, can
continue to receive that quality input and expertise.
This bill is known as the pharmacy provider status. Simply, what this
will do is make sure that the pharmacists who give consultations are
being reimbursed for that. That is vitally important.
Pharmacies are the front line in health care. There are so many
diseases. The pharmacists who are graduating today are so clinically
superior to when I graduated. Their expertise is beyond anything that I
ever imagined it would be. We need to make sure that we are utilizing
that. That is going to be a key in helping us control healthcare costs:
utilizing all these allied health fields and making sure we are using
them to their fullest potential. This bill will help us do that.
So there are just three bills that are being introduced right now
with community pharmacists that impact pharmacy but, more importantly,
that impact health care and that are going to help us have a great
healthcare system and to continue to have a great healthcare system.
There are a couple other things that I wanted to mention. I am going
to hold off on those because, again, I want to make sure that everybody
understands the point that I am trying to make, and that is just how
important, how vital the community pharmacies are and just how bad the
PBMs are and how they are ripping off the public. They are ripping off
the public. Look at their balance sheets. Look at the profits. Again,
they want to argue, and they want to say: We are holding down drug
prices.
Again, how is that working for you? It is not working. It is not
working because they are pocketing the profits. If they were truly
doing what they said they set out to do, we wouldn't see escalating
drug prices like we are seeing.
Yes, there are some bad actors out there, as there are in every
profession. Yes, we had Turing Pharmaceuticals and Martin Shkreli, the
``pharma bro.'' This guy was a crook, no question about it. We had
Valeant Pharmaceuticals and what they did with Isuprel and Nitropress.
Just recently, Marathon Pharmaceuticals bought a drug that was
available over in Europe. They brought it over here and got it approved
in America. It is a very important drug for muscular dystrophy. Now
they want to increase the price to an enormous amount that won't be
affordable for patients.
Those are bad actors. As my daddy used to say, you are going to have
that, and we understand that. We have Valeant and Turing and Marathon.
We are calling them out, too. They need to be called out.
But we also need to focus on what one of the biggest problems is in
escalating prescription drug prices, and that is the PBMs. They bring
no value whatsoever to the system. They put no profit back into
research and development.
Communities' pharmacists play an important role in our healthcare
system. I am proud to support our community pharmacists. I am proud to
have been able to practice in a profession for over 30 years that I
know brings a great deal of value to patients and to their families.
Again, I want to thank Representative Collins, and I want to commend
him for his hard work.
Representative Austin Scott is here, also. He has been a champion of
this as well. They understand. They get it. I appreciate their efforts
on that, and I appreciate everyone who has been here tonight. I thank
Representative Collins for hosting us here tonight. I appreciate his
support.
Mr. COLLINS of Georgia. Before the gentleman goes, you told the story
about getting a call from your own pharmacist. You and I were here
together, I think, sometime 6 months ago. We were doing this and
talking about this issue of mail order. We were talking about this.
I had a Member who was watching us on the floor talk about the
pharmacy and the PBM problem and got a call from the PBM because they
had gotten a prescription for their child. Yes, the day before they are
getting a call in their office from the PBM saying: If you just switch
from your local pharmacist, we will do it better. That is why we are
sitting here.
An interesting thing you brought up on DIR fees. What we have right
here sort of describes what you were talking about. I am putting it
here so people can see it.
There is an interesting part of this DIR fee issue. It forces
Medicare part D beneficiaries to pay inflated prices at the point of
sale that are higher in actual cost than the drugs. The cost of the
drug will be recouped in DIR fees, which is retroactively assessed
later.
Many beneficiaries are moving past their part D benefit faster and
hitting the doughnut hole sooner, forcing them to pay out-of-pocket
costs. This is particularly true with lifesaving or specialty drugs.
These are things that we are seeing.
Patients forced to pay out of pocket might be forced to cut back or
abandon treatment. According to the Community Oncology Alliance,
pharmacists lose $58,000 per practice, on average, to DIR fees each
year. This makes it difficult for independent community pharmacists to
keep up.
When patients pass through the doughnut hole into catastrophic
coverage, guess who picks it up? CMS takes on the cost-sharing burden.
This is why this matter is in Congress. These costs have increased from
$10 billion in 2010 to $33 billion in 2015. This is just dealing with
this issue.
We have got to have greater transparency on this. This is why Morgan
Griffith's bill is good and we are going to continue to fight about
this.
Again, I have yet to have a PBM tell me I am wrong here. I know from
your experience you are seeing it as well.
I yield to the gentleman from Georgia (Mr. Austin Scott), our other
friend from south Georgia who has been outspoken on this. He comes to
the floor to talk about his experiences with this as well.
Mr. AUSTIN SCOTT of Georgia. Mr. Collins, I had several parents in my
office today. I thought I would talk about a couple of the meetings
that I had.
I had a father there talking about his son Gabe. He had a T-shirt on
with ``H4G,'' which stands for ``Hope for Gabe.'' I listened to him
talk about his son and the life-threatening disease that his son has
and the threat that his son is under because of a U.S. pharmaceutical
manufacturer named Marathon. I would like to read part of an email that
I have from him:
Hope you are well. I just wanted to let you know that my
son Gabe takes a drug called Deflazacort. He has since he was
5 years old. He is now 11. We currently pay $116 for a 3-
month supply of 15-milligram dose for Deflazacort. We were
getting this drug from Europe, as it was not available here
in the United States, and have had no problem with access to
date.
Now, many of you heard about this story. The FDA approved the same
drug for sale in the United States. What did the drug manufacturer do
with the price of it? Well, Marathon took the price from $116 a quarter
to approximately $87,000 a year.
Now, this is what is happening. For drugs that are available
everywhere
[[Page H1455]]
else in the world, it is not that they are being developed with
extensive research and expensive research in our country. People are
simply buying the right to sell the drug in the United States. As soon
as approved and available in the U.S. marketplace, it is no longer
legal for people to import that drug from Europe. Marathon priced the
drug at $89,000 per year.
Reading again from his email, in bold letters:
It is the same drug we are getting today from Europe for
$450 per year, the exact same drug. We need your help here.
The Duchenne community needs your help, and specifically Gabe
needs your help.
{time} 1930
As I sit here and look at the American flag, you know, there is no
other country in the world that allows their citizens to be treated
like this. None. I am embarrassed that this Congress hasn't done
anything about this abuse to the American citizens from the
pharmaceutical and the PBM industry.
I know our President, and I am glad that we have a President with the
courage and the boldness that our President has, had the executives to
the White House. I would suggest that a good meeting also would be to
have the parents--have the father of Gabe, have the mother of Gabe come
to the White House. Sit down in the same room with the TVs on with the
executives from those companies that are cheating these people. Let's
let the executives explain on TV in front of the parents, in front of
the child who needs that lifesaving drug why it costs $450 in another
country but should cost $87,000 in America.
Another group of parents that was in my office today was there
representing juvenile diabetes. I had a heart-wrenching discussion with
a mother in my office in Warner Robins about her daughter, insulin-
dependent. She has got to have it or she dies. This mother had a job,
actually, in another country and talked about what she paid in another
country to receive that same drug, insulin, for her child. It cost a
fraction of what it cost in America.
I think it would be great for our President to have that mother and
that daughter or the mother who was in my office today talking about
her daughter come and sit down at the White House, and maybe the
president of Eli Lilly could come and sit down. Maybe we could put the
TV on, the cameras on so everybody in America could see the CEO explain
why insulin, which has been around for decades, costs as much in this
country as it does when it doesn't cost anywhere near that in any other
country.
Something has got to give. Something has got to give. The American
families have given enough. I am hopeful that we will move sooner
rather than later. American families can't take it anymore. A drug that
costs $450, that can be imported from Europe, shouldn't cost $87,000 in
America.
On top of the issues with what is happening with the manufacturers,
we have got the issue with the PBMs.
Why shouldn't you know what the PBMs are getting in a kickback?
Everywhere else you go, you get a price sticker. You know what the
rebates are when you go to your local car dealer. They are readily
advertised.
Why shouldn't you know as the American citizen?
My friend Mr. Collins and I have been working on it for years. We
worked on it back in the State legislature. In fact, we passed a bill
back in, I think, 1987, the first transparency act that we passed in
the State legislature in Georgia. I hope that governors and members of
the State legislatures will go back and address this issue as well. The
transparency issues can be done at the State level. That bill came to
the Georgia House floor, and it passed 150-0. Not a single Democrat,
not a single Republican voted against that bill. Every single member
who was there that day voted for the bill.
Mr. Speaker, we know something has got to be done. I just hope that
we take action sooner rather than later.
I would just like to make one last request. Mr. President, I hope you
will invite these parents and their children to the White House. I hope
you will invite the CEOs of these companies to come and sit down at the
same table, and I hope you will even invite the press to come and
publicize the meeting.
I thank Mr. Collins so much for standing up for the American
citizens. I am honored to be a friend of his, and I thank him for
allowing me to be in the fight.
Mr. COLLINS of Georgia. Representative Scott brings out this issue
with passion. That is exactly what we need as we go forward in this
discussion.
This is exactly what the PBMs don't want to have. They don't want to
have transparency. They don't want to talk about it. We have been
talking about it now for years on this floor. It just continues to get
worse.
In fact, the Prescription Drug Price Transparency Act that we are
getting ready to introduce--and Mr. Scott and others are part of it--
just the other day they were trying to undercut this bill.
I recently saw an interview with Mark Merritt. He is the CEO of PCMA,
the trade group for PBMs. The article misrepresented PBMs' role in the
marketplace. Now, that is a shocker, really. Distorting the facts to
protect PBMs' ability to continue profiting at the expense of
beneficiaries and taxpayers.
So tonight let's have a little fact check. Let's look at the claims
by Mr. Merritt versus the truth.
First, Mr. Merritt claimed that PBMs play an important role in
negotiating price discounts in order to pass those savings along to
customers. In fact, what he said was:
We have an interest in lower price or bigger discounts . .
. and we're going to negotiate the most aggressive discounts
we can.
Well, it is true that PBMs do effectively negotiate huge discounts.
However, the patients never see this discount or rebates reflected in
their prices or out-of-pocket costs. These rebates and discounts merely
pad PBMs' profit margins. They do not increase patients' well-being.
This lack of transparency allows PBMs to receive massive rebates and
refuse to pass those savings along to consumers or customers.
In fact, what is interesting, there is proof that transparency in MAC
pricing saves more money than the PBMs are willing to admit.
You want an example?
Let's look to Texas. Texas has one of the oldest MAC-style laws.
Texas passed MAC transparency legislation similar to the Prescription
Drug Price Transparency Act in June of 2013.
Now, here we go, Mark, explain this one.
Since Texas passed their law, their Medicaid fee-for-service
prescription drug expenditures for the top 100 drugs fell from $219.54
per prescription to $91.32. Yep, you are doing a good job negotiating
for your bottom line.
What else does he say?
Number two, Merritt tries to distort the purposes of the Prescription
Drug Transparency Act by drawing concern to transparency in the drug
marketplace. Let's see what he says. He says:
The kind of transparency to be concerned about is where
competing drug companies and competing drugstores can see the
detailed arrangements that we have with all of their
competitors.
Well, seeing as how they own part of the competitors, not really a
lot of things going on there.
Our legislation simply would not allow competing drug companies to
see detailed arrangements that PBMs have with competitors.
Mark, quit lying.
This statement is a misrepresentation of what the Prescription Drug
Transparency Act does. Competing pharmacies would not be able to see
the arrangements their opponents have with PBMs because they would not
be publicly disclosed. Transparency measures and contractual agreements
include confidentiality clauses preventing public disclosure.
May I remind Mark that he has gag orders in some States where the
pharmacists can't even talk about these issues.
By the way, they send letters to pharmacists saying: Oh, don't go
talk to your elected officials, because if you do, we will cut your
contract off.
Wow, that is concern, Mark.
Furthermore, the disclosure of sources of drug pricing determinations
remains confidential and is only disclosed to pharmacies and their
contracting entities. PBMs distort transparency to mean only public
transparency in an attempt to protect the profitability that comes with
keeping their corrupt business practices in the dark. I wish he would
have stopped there. He didn't.
[[Page H1456]]
Let's go on to the third. Mark Merritt says:
We want to make sure that wholesalers who sell to the
drugstore aren't trying to sell the most expensive thing and
pass the cost onto consumers.
All right. Here we go again. This is getting familiar. It has little
to do with wholesalers. PBMs design the formularies--yes, we understand
this, Mark--that dictate what drugs are covered by insurers. Because
there is no transparency, PBMs are able to receive drugs at discounted
prices but refuse to tell employers. PBMs are then able to still charge
employers the full amount for the drug, even though they are receiving
it cheaper. PBMs often receive large rebates to incentivize them to
include expensive brand name drugs in their formularies, even though
cheaper generics are available.
Mr. Speaker, listen. They receive large rebates to incentivize them
to include the expensive brand name drugs on their formularies. I had
an issue just like that with my own mother just recently. She needed
medication. She had been on it for 8 months. They had to reauthorize it
after the first of the year.
I asked: Well, is there another issue she could have?
They said: Well, this is the only one on the formulary.
PBMs don't control pricing; PBMs don't control what drugs come to
market. Another falsehood. PBMs substitute expensive drugs and
overcharge Medicare part D, TRICARE, and FEHB programs. This means they
are lining their pockets with money from the taxpayers.
Fourth thing:
If drugstores like those terms, they can sign a contract;
and if they don't, they can join with some other plan or PBM.
Oh, I love this. This is classic, Mr. Speaker. PBMs hold a
disproportionate share of the marketplace. We have already talked about
three of the largest PBMs own 80 percent of the market--80 percent.
Because PBMs have a stranglehold on the market, community pharmacists
cannot stay in business without being forced to contract with them. It
forces community pharmacists to sign take-it-or-leave-it contracts with
anticompetitive and unfair provisions, and from transmitting it without
written consent. These are just crazy.
I had--one of my pharmacists who was on their plan actually had a
letter sent to their customers who said: You are no longer on the plan.
He called the PBM. The PBM said: No, you are still on the plan.
He said: Then why did you send a letter out?
PBM said: Oops, must have been a mistake.
He said: Well, why don't you send a letter out telling them that they
are wrong?
PBM said: Oh, we don't do that. That is on you.
Yeah, because all you want to do is keep the money, follow the money.
Mark, it is easy. I understand running a trade association is tough,
but at least be honest about it.
The last thing. Community pharmacists typically get paid more by
plans because there is not as much competition. Well, five for five.
Community pharmacists in northeast Georgia and across the United States
are under constant threat of going out of business because of PBMs.
PBMs exploit the market, prey upon community pharmacists, using spread
pricing and retroactive DIR fees. PBMs also use a disproportionate
share of the market to steer patients to pharmacies they own
themselves.
The Prescription Drug Price Transparency Act is vitally important to
improving fairness and transparency in the healthcare system. Community
pharmacists must be kept in business and patients should have the
choice to receive care from their local pharmacists. Community
pharmacists might be afraid to stand up to PBMs. Community pharmacists
many times are basically scared into submission.
I have stood on the floor of this House many times. My pharmacists
can't speak, but I can, and I will remind the PBMs one more time: You
can't audit me. You can go audit for profit, which you do every day.
You can go hit them, but you can't hit me.
I will continue to be a voice for community pharmacists. These
Members are being a voice for community pharmacists. Our numbers are
rising every day. The President himself has actually begun to look at
those middlemen and those pricing.
Tonight ends another night of telling the truth when the truth needs
to be told. Mr. Speaker, we end another time of standing up for the
American people and the community pharmacists.
I yield back the balance of my time.
____________________