Lawmakers slam PBMs for hurting patients, independent pharmacies

Leaders of the three largest pharmacy benefit managers in the nation stand to take their oaths before testimony in a hearing of the House Oversight Committee on July 23, 2024. From left are David Joyner, executive vice president of CVS Health and president of CVS Caremark; Adam Kautzner, PharmD, president of Evernorth Care Management & Express Scripts; and Patrick Conway, MD, chief executive officer of OptumRx.

Leaders of the three largest pharmacy benefit managers (PBMs) say they are working hard to keep prescription drugs affordable for Americans.

Many members of the House Committee on Oversight and Accountability aren’t buying it.

On July 23, the Committee convened “The Role of Pharmacy Benefit Managers in Prescription Drug Markets Part III: Transparency and Accountability.” Witnesses were David Joyner, executive vice president of CVS Health and president of CVS Caremark; Adam Kautzner, PharmD, president of Evernorth Care Management & Express Scripts; and Patrick Conway, MD, chief executive officer of OptumRx. Those three PBMS now control 80% of the market, according to a Committee analysis published the same day.

In theory, PBMs are positioned to negotiate lower drug prices as they connect pharmaceutical makers and health insurance companies. But that’s not happening, according to the representatives who spoke and the report published by Committee Chair Rep. James Comer (R-Kentucky).

“The anticompetitive policies of the largest PBMs have cost taxpayers and reduced patient choice,” said Comer, who opened the hearing with a list of problematic practices:

• PBMs share patient information and data to steer patients to PBM-owned pharmacies.
• PBMs tout savings to payers and patients, but their drug utilization and spread pricing programs increase costs.
• PBMs force drug manufacturers pay rebates to be placed on favorable tiers of PBM drug formularies, making it difficult for competing generics or biosimilars to get on the formularies.
• PBMs have begun creating foreign corporate entities and moving operations abroad to avoid transparency and state and federal reforms.

At patients’ expense

PBMs operate “way outside of public consciousness,” but they have immense power over patients, said Committee Ranking Member Rep. Jamie Raskin (D-Maryland). He cited a New York Times report and offered anecdotes about people paying hundreds of dollars to PBMs for drugs that cost far less through online or retail sources.

“Who do these policies benefit? Well, obviously not the patients,” Raskin said. “It seems they benefit the PBMs, which get reimbursed by the health insurer for that higher price.”

PBMs serve some patients, but many others are falling through the cracks, experiencing delays in care or overpaying in a for-profit health care system. “We know companies are going to seek profits, but it’s 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.”

PBM leaders make their case

PBMs are working to ensure prescription drugs are affordable for patients, the PBM leaders said.

At CVS Caremark, 90% of prescriptions have been converted to generic drugs, driving costs to historic lows. Patients pay an average of $8 out of pocket, Joyner said. Brand drugs with little to no competition remain the chief source of rising drug prices, he said.

In April, CVS Caremark dropped the drug Humira (adalimumab) from its major formularies, but covers biosimilars, saving $500 million for employers, unions and health plans working with the PBM, Joyner said.

Last year, patients spent less out of pocket on prescription drugs than they did in 2022 because of PBM negotiating as drug manufacturers raise prices, Kautzner said. “We are the connective fiber fighting to ensure access to safe, effective and affordable medications,” he said.

Kautzner described himself as a pharmacist who grew up in a rural area, so he shares concerns about the viability of independent and rural pharmacies, but in the last five years, the number of independent pharmacies in Express Scripts’ network has increased by 20%.

Meanwhile, pharmaceutical makers exploit the patent system to maintain high prices for years beyond the dates generics and biosimilars, Kautzner said. He also cited Humira, the best-selling drug in the world; its primary patent expired in 2016 but biosimilar competition could not launch until 2023 due to the patent thicket created by the manufacturer.

Conway cited his experience as a pediatrician, describing a child patient hospitalized because her mother could not afford a $200 antibiotic. More than 90% of prescriptions are for low-cost generics without rebates, so PBMs’ negotiated discounts on the remaining 10% of expensive branded drugs are the only check on manufacturers’ pricing power, he said.

Congress should support a holistic approach that preserves and expands health insurance, while reining in drug manufacturer patents that delay generic and biosimilar launches, thus hurting market competition that would drive down prices, Conway said.

Representatives speak

The hearing lasted more than three hours as representatives at times became passionate describing experiences of patients and independent pharmacists who say PBMs’ practices are hurting their medical care or businesses. Questions ranged from the complexity of drug pricing to executive pay. At times the representatives’ comments were harsh.

Rep. Raja Krishnamoorthi (D-Illinois) speaks as an aide holds a copy of a New York Times citation about pharmacy benefit managers during a hearing of the House Committee on Oversight and Accountability on July 23, 2024.

Rep. Raja Krishnamoorthi (D-Illinois) cited reports by the Federal Trade Commission and New York Times, a lawsuit by Ohio Attorney General Dave Yost and statements by at least seven other state attorneys general, “who all say the PBMs are inflating drug costs. I wonder whom the American people should believe.”

Rep. William Timmons (R-South Carolina) said prices are rising because the nation has a demand issue as Americans become ill with preventable diseases, including Type 2 diabetes. Rep. Kweisi Mfume (D-Maryland) later bristled at that notion, noting that a number of conditions ranging from obesity to cancer cannot be prevented. “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,” Mfume said.

Rep. Maxwell Frost (D-Florida) said PBMs “are doing dirty deals, conspiring with Big Pharma to drive up drug prices.”

Whether Democrat or Republican, “this is a crisis in this country,” Frost said. “People are dying because they can’t afford their medication and you all are part of the problem.”

Two pharmacists in Congress, Rep. Buddy Carter (R-Georgia) and Rep. Diana Harshbarger (R-Tennessee), said they were skeptical about PBMs, having worked with them for years. “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,” Harshbarger said. Carter congratulated the PBM executives for inspiring bipartisanship in Congress.

Regarding PBMs, pharmacists and patients think there’s a problem, said Rep. Lisa McClain (R-Michigan).

“I'm curious to see. Do you all think there's a problem with the PBMs?” she asked the executives.

“Congresswoman, as I mentioned in my opening statement, I do believe that there is an opportunity to improve,” Joyner said.

“So, is that a yes? Because the reason why I ask is because we can't fix a problem that we don't think exists,” McClain said.

“Congresswoman, health care 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,” Kautzner said.

“OK, I'm gonna ask it one more time before – do you think there's a problem?” McClain said. “Dr. Conway?”

“Yes, as a practicing physician, that is –" Conway said.

“Hallelujah. You gentlemen, see how he answered that question? Yes, there's a problem,” McClain said, and she added the PBMs were elusive with any data that could support their claims.

Later, Rep. Katie Porter (D-California) latched on to Kautzner’s comment.

“Here's 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 health care system more complicated,” she said. “Doctor (Kautzner) said, health care is hard. No, the practice of medicine is hard. Health care is just a profit center in this country.”

Comer concluded the hearing by saying the Committee will continue working toward a solution to the problems with PBMs. “And it is a problem,” he said.