Committee Democrats Urge Enhanced Transparency of Pharmacy Benefit Managers and Further Action to Lower Prescription Drugs Costs

Washington, D.C. (September 19, 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 for all Americans.

"In the Inflation Reduction Act, Democrats worked to lower drug costs for seniors by allowing Medicare to negotiate drug prices directly with drug manufacturers, capping out-of-pocket costs for patients covered by Medicare, and limiting the price of insulin to $35 dollars per vial for seniors. Today, we have an opportunity to build on this success," said Ranking Member Raskin in his opening statement. "This hearing will help us understand the ways that PBMs add value and improve patients' experience, as well as the ways that PBMs may not be living up to their promises and contributing to our crisis of drug affordability and accessibility."

The hearing included testimony from Professor Rena Conti, PhD, Associate Professor, Questrom School of Business, Boston University and Co-Director Technology Policy and Research Institute, Boston University; J.C. Scott, Chief Executive Officer, Pharmaceutical Care Management Association (PCMA); Dr. Hugh Chancy, President, National Community Pharmacists Association (NCPA); Craig Burton, Executive Director, Biosimilars Council and Senior Vice President, Association for Accessible Medicines (AAM); and Lori Reilly, Chief Operating Officer, Pharmaceutical Research and Manufacturers of America (PhRMA).

Committee Democrats emphasized that the health care system is set up to incentivize PBMs and drug companies to put profits over patients.

• Rep. Summer Lee highlighted how PBMs may be incentivized to put profits over patients, stating: "Every level of our health care system is being exploited to drive money straight into stockholders' pockets. For example, it appears that PBMs are leveraging their role at the center of the health care system to extract profits from players at multiple points. Reporting even suggests that the fees PBMs charge to drug manufacturers increased by 51% over a two-year period."

• In response to a question from Rep. Maxwell Alejandro Frost regarding the ways that Big Pharma takes advantage of patients to boost their bottom line, Professor Conti explained: "Certainly setting list prices and taking year-over-year price increases on those list prices is enriching themselves and harming seniors and other Americans who depend on those drugs. In addition, forestalling competition in the form of generic and biosimilar competition is again enriching themselves without providing benefit to the American public."

• Rep. Melanie Stansbury underscored the incentives in the health care system: "I think it's really important that the American people understand that there are private for-profit corporations that are getting in the middle of our family members getting life-saving care, getting access to medications that are necessary and that their doctors have prescribed. And that it's for-profit, it's to line the pockets of private corporations, this is not about health care."

Committee Democrats discussed how consolidation in the PBM market gives three companies an outsized role in the U.S. health care system and what this means for patients.

• Ranking Member Raskin detailed how market concentration and integration means three PBMs have outsized power to make decisions for millions of Americans: "The question is whether these companies use their market power to enrich themselves at the expense of the patients and other players in the health care system. And the high degree of market consolidation is intrinsically troubling but we're also seeing increasing integration of PBMs with other institutional players in the health care system. Each of the three big PBMs are owned by a parent corporation that also owns a major health insurance company, a specialty pharmacy, and a medical services provider."

• Rep. Cori Bush highlighted how market concentration means that three PBM companies have significant influence over what medications are covered by insurance plans: "Three companies play a central role in making decisions about what medications are covered by health care insurance plans and the cost of those medications. PBMs negotiate pricing with drug manufacturers and use these negotiations to determine which medications are covered on someone's insurance formulary. The difference between life or death is a series of shady contracts struck between the drug manufacturer, the PBM, the insurer, and the pharmacy. The end result of this complicated design is patients are expected to shell out thousands of dollars in out-of-pocket medical costs even for life-saving prescription medicine."

• Professor Conti explained how vertical integration between key health care players may raise prices for patients: "The competitive pressure that is potentially eroding patient access and affordability is related to vertical integration between PBMs and pharmacies or PBMs and plans. It's in those arrangements where we think premiums are not going down and potentially patients are paying more at the pharmacy counter."

Committee Democrats highlighted the successes of the Democrat-led Inflation Reduction Act (IRA) to ensure Americans have greater access to affordable medication.

• In response to question from Congresswoman Eleanor Holmes Norton, Professor Conti emphasized the IRA's drug pricing reforms and its effects on patient health outcomes: "The IRA provisions are a substantial evolution in access to prescription drugs for Americans. Right now, people—seniors—have greater access to insulin based on IRA provisions. Seniors also have better access to vaccines that prevent serious illness, and finally, Part D redesign will extend access to patients for 49 million Americans starting in the next year. This a major next step forward for population health and individual health as well."

• Rep. Shontel Brown highlighted that "Thanks to the Inflation Reduction Act, Medicare will be able to negotiate the prices of even more lifesaving drugs in subsequent years—an additional 15 drugs starting in 2027, another 15 in 2028, and another 20 each year afterwards." In response to Rep. Brown, Professor Conti further explained the benefits of the IRA: "We expect that approximately $3.4 billion in out-of-pocket costs were imposed on American seniors with the ten drugs that are slated for negotiation first this year. Lowering those costs even 20% at the pharmacy counter will expand access and hopefully lead to better individual outcomes and population health."

• Rep. Greg Casar emphasized the important gains Democrats have made to lower drug prices with the IRA: "The Inflation Reduction Act passed by Democrats in the Congress, signed by President Biden, one, empowered the executive branch to negotiate drug prices paid by Medicare, and two, used those savings to cap out-of-pocket costs. That was an important step. There is more we need to do on issues of PBMs, on issues of drug pricing, but on this important bill that was signed and has gone into effect—so many people are going to be benefitting from these sorts of changes."

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