[Congressional Record Volume 169, Number 125 (Thursday, July 20, 2023)]
[Senate]
[Pages S3440-S3442]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                       Pharmacy Benefit Managers

  Mr. LANKFORD. Mr. President, I want to talk to most Oklahomans about 
pharmaceuticals, about the cost of drugs and going to the pharmacy.
  They don't think a lot about supply chain issues--though, I actually 
have a bill that is working on this, and this is an issue we have got 
to resolve.
  About 10,000 of the active pharmaceutical ingredients come from 
communist China. We are very exposed there. That is a very big risk. We 
have got to work to be able to make sure that we can get access to our 
pharmaceuticals without being dependent on China to do that. That is a 
risk that people want to solve, but it is one that they don't really 
talk about the most. Most of the time, we talk about the cost of a drug 
and its availability at their local pharmacy. Let me talk about both of 
those.
  As ironic as it sounds, they are tied up together and not in the way 
that people think about most of them. Many people think that drug 
companies produce drugs, and then they sell it to the pharmacy, and 
then the pharmacy sells the drug. They think that that is the way it 
works. It is really not, actually. Those are two elements. There are 
drug companies that do research, that develop the drugs, and do all of 
the clinical trials and get it approved, and they are ready to go, but 
then there is a wholesale network back there that actually handles the 
distribution.
  Then there is this group that almost no one has heard of called the 
pharmacy benefit manager. The pharmacy benefit manager actually, 
oftentimes, sets the real price for the drug. The drug company may 
produce it at one price, and the pharmacy is ready to be able to sell 
it at a price, but there is this group in between, the pharmacy 
benefits manager, that actually controls how it works.
  Now, if I am at the pharmacy in Atoka, OK, the patients who are 
coming into that rural, beautiful community just know what they are 
paying at the counter; but if you go behind the counter and talk to the 
pharmacist there or in any other number of communities there, they will 
tell you they are struggling as an independent pharmacy, especially in 
rural areas, because there is a game happening with the pharmacy 
benefit manager that is to the benefit of what is called a PBM and to 
the detriment of the local pharmacy and of the patient. It is an issue 
that has got to be resolved.
  About 80 percent of all of the drugs that move across the country 
right now are managed by three different pharmacy benefit managers. 
Now, I am not opposed to competition, but here is what they have 
actually done over the last several years: The insurer has purchased 
the insurance company, the pharmacy benefit manager, the group that 
actually does the purchasing of the drugs, then, often, the retail 
pharmacy as well for some of those big chain retail pharmacies. So 
they, literally, own the entire network there, and they can make money 
through the whole network.
  Again, I am a free market capitalist, and I don't have an issue with 
people doing that, but here is what is actually happening: The 
leverage, then, of the big pharmacies owning all of the rest of the 
chain there is that if you are not in their group, you are facing some 
real consequences and a real squeeze because they now set the price and 
tell you how it works.
  Let me give you a couple of examples of things that I believe we need 
to address and that I have been working on for years. Finally, the 
Finance Committee of the U.S. Senate is actually taking on this issue.
  One of them is another little code thing that most people don't know 
exists, called DIR fees. This direct and indirect remuneration fee is 
how the whole process works behind the scenes at an independent 
pharmacy. Let me give you an illustration, and try to take this off the 
top shelf.
  So let's say you are a company and you manufacture a product or that 
you are in retail and you sell a product that is out there. So you sell 
a product, whatever it may be--I don't care if it is a shirt or a 
couch, whatever it may be--and you are going to ship it out. You do the 
shipping, and you anticipate, once the shipping is done, you will be 
reimbursed for the shipping. Your job is to be able to retail sell it, 
ship it out, and then you get the reimbursement for that.
  But what would happen in your business if you sold it, shipped it, 
and then after you shipped it and paid for the shipping, someone came 
back to you and said: ``Actually, that may have cost you $50 to ship 
that. I am only going to give you $20 for the shipping because I didn't 
like the way you did the shipping. I didn't like who you did the 
shipping with. I don't like the box that you put it in. I preferred a 
different box. So you lose $30 in the shipping because you didn't put 
it in the right kind of box''?
  So here is what you do: The next month, when you are shipping, you 
make sure you put it in the box that whoever this is who is reimbursing 
you likes that certain kind of box. You put it in that box, you ship it 
out, and then you wait for the reimbursement. Instead, the company 
comes back and says: ``Oh, no. We have changed our mind. Now we would 
like a different color of box. So, yes, you put it in the right kind of 
box, but we would like it in a different color box, so we are going to 
reimburse you $10, even though it cost you $50.'' This may sound 
absurd, but welcome to the world of the DIR fees for pharmacies.
  Here is what happens: They purchase the drug and get the drug, and 
they are ready to sell it. They sell it to the consumer. The consumer 
at the counter pays them for it. They have got their money from the 
consumer. It goes out the door. Then a month or a quarter or sometimes 
even a year later, the pharmacy benefit manager sends a notification to 
the pharmacy and says: ``Oh, we didn't like the way that you did 
that.'' It wasn't a quality thing. It was just how they did it.
  Sometimes they will say: ``Well, you really should have prescribed 
two drugs to this person, and you just did one.'' Now, the pharmacist 
doesn't choose what drugs are going out to the patient

[[Page S3441]]

who is there; the doctor does. The pharmacist just fills the script. 
But the pharmacy benefit manager may say: ``Oh, you needed to have sold 
him more drugs than what you did, so we are going to reimburse you less 
for this.'' And they literally change the rules after the sale is done. 
So they will reimburse them, but sometimes they will reimburse them 
less than the actual drug costs to the pharmacist; so the pharmacist 
actually loses money on filling a prescription for this person, but 
they don't know that until months later.
  That is what is happening right now in small pharmacies across 
America because the pharmacy benefit managers are focused on how they 
can make more money, even if it closes down rural, independent 
pharmacies.
  What is interesting is that several of my rural pharmacies have told 
me they will get these change of rules where suddenly now they are 
selling drugs or sold a long time ago a drug to someone for less than 
what they are actually being reimbursed now. They will often get that 
notification and then a week later get a notification from that big 
pharmacy group saying: Hey, by the way, if you want to join our retail 
chain and close down your chain, we will buy you out.
  It is a great way to put a little pressure squeeze on them to say: We 
are going to reimburse you less than the cost of your drugs unless you 
are one of our pharmacies, and then maybe we will do a little bit 
better.
  Listen, this is the United States of America. We like competition, 
but we also like fair competition where people are actually reimbursed 
for the cost of their actual product, they are actually able to 
survive, and especially in rural areas, that independent pharmacy is 
able to thrive, because in rural areas across our country, there is not 
a lot of access to healthcare. So when people have a question about 
their drugs and about their healthcare, where do they go? The 
pharmacist in their small town, that is where they go.
  DIR fees from these pharmacy benefit managers are directly putting at 
risk the survival of rural pharmacies across America and across my 
State, and I am going to do whatever I can to make sure those companies 
don't drive out of business local, rural pharmacies in my State because 
my people in my State need that support in their local area.
  They may want to do mail-order pharmacy for some things. It is very 
convenient. It is great. If they choose to do that, it is fine. But if 
they are taking five drugs, they want to talk to somebody about this 
and what are going to be the effects. That is not going to happen with 
mail order; that is going to happen with somebody behind the counter 
who is going to talk to them and walk them through the process. That is 
what we need to be able to do.
  This is not rocket science, and it is not onerous. It is standard 
performance metrics that the rules don't change on an independent 
pharmacy. They know what the rules are, and they don't change, 
especially after the sale has already been done.
  The ability to be able to sell a product and actually at least have 
some profit, not lose money every time you are able to sell a product, 
shouldn't be a radical idea. The pharmacist is not getting to pick the 
price on this product. People think the pharmacist is the one making 
all the money. The pharmacist is not the one who picks the price on 
this product; that is set by someone else. And if they literally have 
to sell it at a price less than what they buy it for, that is not 
right. They are trying to be able to help their neighbors.
  Let me give you another example, another issue I have been working on 
for years on this. This is a game play between the pharmacy benefit 
managers and the pharmaceutical companies that actually produce the 
drugs.
  Most drugs, when they come out, are remarkable. The engineering and 
the science in modern medicine and the technology that it takes to be 
able to go through the clinical trials and get something approved that 
shows it is not only safe but effective is remarkable science.
  There are some great researchers doing that, and it is incredibly 
expensive to do. Because that is incredibly expensive in the United 
States, we protect the patent rights of that new drug. So a drug, when 
it comes out--it is really expensive when it comes out because we want 
that company to make enough money to be able to pay for all the 
research they put into producing it and make a little profit or else 
they are not going to produce more drugs and more innovation. That is 
how it works.
  But that patent is protected for a season. It is usually around a 
decade that it is protected for them. After that, then the drug can 
have drug competition. Those are called generics or biosimilars.
  Most folks know, in their pharmacy--if they get a prescription from 
their doctor and they walk in and say ``Hey, I got this script from my 
doctor,'' the pharmacist will say ``It is a brand drug,'' many people 
will say ``Is there a generic of that?'' What they are really asking is 
``Is there a cheaper version of that?''
  For almost everybody, for your plan from your insurance company, you 
have one price for the brand drug and a cheaper price for a generic. Do 
you know why? Because generic drugs are cheaper, that is why, for 
everybody in the whole value chain.
  But here is what is happening. Sometimes people will walk into a 
pharmacy, and they will say ``Is there a generic version of this,'' and 
their pharmacist will respond back to them ``There is a generic 
version, but it is the same price as the brand.''
  It makes you pause for a minute and say: Well, that is strange. Why 
is the generic the same price as the brand?
  If that has ever happened to you, here is why that is: because the 
drug company has worked with the pharmacy benefit manager to say: When 
competition comes, when the generic comes, if you will list the 
competition on the higher price what is called branded tier, we will 
give you a kickback every time our drug is sold in the brand. So you 
will make additional money if you will list the competition at a higher 
price.
  What does that do? That causes every consumer in America to have to 
pay more at their pharmacist. It also affects the U.S. budget because, 
also, Medicare is affected by that as well.
  This is a simple fix. Generic drugs should be on the generic tier. 
Branded drugs should be on the branded tier for sales. This is not 
rocket science, again; this is straightforward consumer protection.
  This is an issue I have pushed on for a long time that I get a lot of 
pushback from. As you would expect, the pharmacy benefit managers and 
the drug companies aren't big fans of this. I have nothing in 
opposition to drug companies. I want them to continue to thrive, 
produce new drugs, and to be able to make a profit on the production of 
those new drugs. But when they are doing something to the consumer to 
drive up the price when they could get a cheaper price, that is bad for 
them and bad competition. Let's fix that.
  Next week, the Finance Committee is going to take up a whole series 
of bills and options on pharmacy benefit managers. We need an 
intermediary. The drug companies aren't set up to be able to sell 
straight to the pharmacy. I don't have a problem with somebody being in 
between. I am not trying to kill that. But we do need to make sure that 
it doesn't hurt the consumer, doesn't hurt the Federal budget, and 
actually works for everybody in the process.
  I know this is stuff behind the scenes, and everyone just wants to 
say: How do we get the price of drugs cheaper?
  There are even folks who say: Let's just have the Federal Government 
take over all this pricing. The Federal Government will just set the 
price for everything. That will work beautifully.
  I always laugh and say: Listen, if you think the Federal Government 
can solve every problem, try to get your passport right now, because 
right now, it takes about 18 weeks to get a passport, and it used to 
take 4 weeks.
  The Federal Government is not the solution to everything on this. 
Protected free markets are a good solution to this. Competition will 
work if we allow the markets to actually work, but if someone is in the 
middle controlling all of that, that is something on which we need to 
intervene and to say: Let's have free and fair markets that are out 
there to get down the price of drugs, because there are generics, there

[[Page S3442]]

are biosimilars that are out there that will bring down the price if 
they are allowed to get to market. So let's make sure they can actually 
get to market and get down the price.
  Let's protect the ability for rural, independent pharmacies to still 
take care of their patients. Those are their neighbors. They care about 
them, and they want to make sure they can still be there to be able to 
care for those folks.
  We have work to do. I am glad the Senate is finally taking this up. I 
have been working on this for years. This is an area we need to 
address.
  With that, I yield the floor.
  The PRESIDING OFFICER. The Senator from North Carolina.


                    Remembering Stuart Epperson, Sr.

  Mr. BUDD. Mr. President, I would like to take a few moments to 
remember the life and the legacy of Stuart Epperson, Sr., who passed 
away this week.
  Stu was a native of Winston-Salem, NC, and he was a giant in the 
world of Christian broadcasting.
  In 1972, he cofounded Salem Communications and then expanded it to 
include Christian radio stations across the country. He served on the 
board of directors of the National Religious Broadcasters Association, 
and he was named one of the 25 most influential evangelicals in America 
by Time magazine in 2005.
  He dedicated his life to sharing the good news of Jesus Christ to as 
many people as possible, whether it be through the mediums of mass 
communication or in person or as a father to the fatherless in tough 
neighborhoods. He was a pioneer, an innovator.
  He was a dear friend to our family. We share our deepest condolences 
with his wife Nancy, his family, and his friends. He will be dearly 
missed. But because of his family's faithful Christian witness to our 
family, I personally look forward to seeing Big Stu again in Heaven.