Committee Democrats Fight to Lower the Cost of Prescription Drugs and Address the Role of Pharmacy Benefit Managers (PBMs)

Washington, D.C. (May 24, 2023)—Rep. Jamie Raskin, Ranking Member of the Committee on Oversight and Accountability, led Democrats in addressing the role of Pharmacy Benefit Mangers (PBMs) in high drug prices and calling for action to build on Democrats' work to lower prescription drug prices and expand access to affordable health care.

"As intermediaries between insurers, drug companies, and pharmacies, PBMs wield tremendous influence over how much a patient pays at the pharmacy counter for a medication prescribed by their doctor—and whether a patient can even afford to obtain their prescription medication at all. [...] But PBMs are just one piece of the puzzle. Drug companies are ultimately responsible for setting high prices, and in fact have poured millions of dollars into television and social media advertising, as well as lobbying efforts, to deflect attention away from their own role in high drug prices by shining a spotlight on the problematic practices of PBMs," said Ranking Member Raskin in his opening statement.

The hearing included testimony from Dr. Kevin Duane, Owner, Panama Pharmacy; Mr. Greg Baker, CEO, AffirmedRx; Dr. Miriam Atkins, Oncologist, Augusta Oncology Associates; and Frederick Isasi, Executive Director, Families USA.

Committee Democrats discussed how the three companies that control the PBM market and share parent companies with insurers and pharmacies appear to benefit financially from their market dominance.

• Rep. Cori Bush highlighted how PBMs have vertically integrated with other elements of the health care system: "This industry is dominated by three big PBMs that control about 80% of the entire market. These PBMs are also integrated with insurance companies and pharmacies to funnel business to their own pharmacies."

• Rep. Katie Porter focused on the lack of transparency around PBM pricing mechanisms and noted that PBMs, "don't reveal to either health insurance companies or patients or pharmacies exactly who's getting what deal. And they make money at every step of the process."

• In response to a question from Rep. Maxwell Alejandro Frost regarding the confusing and opaque pricing practices of PBMs, Mr. Baker said: "There is no visibility on how much of those rebate dollars are actually being paid into the system to make the cost of health care better."

• Rep. Raja Krishnamoorthi emphasized how certain PBM behaviors may have, "fattened the bottom line of PBMs" at the expense of patients and independent. Profits have risen, "from 2010 to 2022 by 97%, so almost doubling in 10 years. That's three times what the stock market has yielded."

Committee Democrats discussed how certain PBM practices drive up the cost of medication, harm independent pharmacies, and limit access to the drugs patients need.

• Rep. Alexandria Ocasio-Cortez detailed how the focus on profits within the health care system means that patients are not prioritized: "We have a vicious cycle with the PBMs because they say, ‘If you give me a rebate, I'll pass it onto the insurers.' So the drug manufacturer says, ‘Great, I'll make my price even higher. So I'll say that my list price for a drug is $5,000 so I can charge you $1,000, or even more, and I'll make you seem like you're getting a deal so you'll put me on a higher level on the formulary.' And all about this process is focused on who's making how much money instead of what people are getting the treatment that they need."

• Rep. Becca Balint highlighted the impact that PBM pharmacy networks can have on independent pharmacies, describing those pharmacies as the, "heart of the community" in rural areas, "where people get the medical attention and advice that they need." In response to a question from Rep. Becca Balint regarding, "the way PBM practices may be steering patients away from these pharmacies and making it impossible for these pharmacies to stay open," Dr. Duane stated that PBMs, "Can afford to offer themselves contracts that are poor and then they can offer me [a pharmacist] the same contract. They will happily, when they're vertically integrated, offer money out of one pocket to make sure that the money stays in another pocket."

• Rep. Daniel Goldman discussed a report Committee Democrats released last year on how some PBM practices can create a financial barrier for patients accessing certain birth control products. Dr. Atkins explained the way that some medical management techniques used by PBMs similarly affect her ability to provide oncology care: "We have the issue with anti-nausea medicines for people who are getting chemotherapy. If we want to give them one drug, they have to fail it and get really sick and then the PBM will say you can use the drug you want to use to prevent the patient from getting sick."

Committee Democrats committed to continuing to lower the cost of health care for all Americans by building on historic legislation enacted by the Biden-Harris Administration to lower prescription drug prices and cap health care costs.

• Rep. Summer Lee highlighted Committee Democrats' Drug Pricing Report that showed drug companies specifically targeted the U.S. for high prices because until the Inflation Reduction Act was passed, Medicare had been prohibited from directly negotiating the price of drugs. Mr. Isasi elaborated on this finding: "We are talking about an industry that is over a trillion-dollar industry a year. Half of their profits are coming from just the U.S. and Canada, out of that trillion-dollar industry. So they are fleecing Americans, and until we passed the Inflation Reduction Act, we had no ability to get in there and negotiate a fair price."

• When Rep. Jimmy Gomez asked how the Inflation Reduction Act's drug pricing reforms will improve long-term health outcomes for Americans, Mr. Isasi responded: "There's no question, the number one barrier right now for Americans is the price of prescription drugs, and the IRA will lower prices on some of the highest-spend drugs in Medicare. It's going to be a huge benefit for seniors. And then, importantly, it took those savings and reinvested in the Medicare program, so for the first time ever, seniors now have a cap on their annual drug expenses of $2,000. That's enormous. That's enormous . . . One of the things the law did that was so powerful was, it finally stopped price gouging by Big Pharma, and then it took those savings and made really important investments in our seniors."

• Rep. Melanie Stansbury asked what Congress can do to build on reforms made under the Inflation Reduction Act, including the provision that allows Medicare to negotiate drug prices directly with manufacturers. Mr. Isasi responded: "First and foremost, we have to extend the negotiated price to the 180 million Americans who have employer-sponsored coverage who, right now, don't get the benefit of that. Two, we have to expand the number of drugs. Right now, in 2026, we'll have ten drugs negotiated. We should have at least 50 that are subject to negotiation. So those would be two really, really important reforms."

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