Skip to content
The time has come for Congress to pass legislation to prevent pharmacy benefit managers (PBMs) from inflating drug costs, limiting patient access to drugs, and forcing independent pharmacies to close, lawmakers agreed at a Feb. 26 House hearing.
Members of Congress showed broad bipartisan support for an array of reform proposals that would hold PBM middlemen in check. The hearing focused on how quickly those proposals could pass and how they would help patients.
“We have heard directly from our constituents that the harmful and anticompetitive tactics of some PBMs have only gotten worse, and that Congressional action is desperately needed,” Subcommittee Chair Earl “Buddy” Carter (R-GA) told the Energy & Commerce Subcommittee on Health hearing to investigate “How Reining in PBMs Will Drive Competition and Lower Costs for Patients.”
Hearing participants pointed out that a Federal Trade Commission (FTC) report found three PBMs—CVS Caremark, Express Scripts, and OptumRx—control about 80% of all U.S. prescriptions and profit by marking up drug prices and limiting patient access.
The report noted these three PBMs, which are all owned by insurers, are also vertically integrated with pharmacy chains, and they use their market power to disadvantage independent pharmacies.
PBM Markups
The latest FTC report on PBMs found “the big three” reimburse their affiliate pharmacies by up to 7,736% more for specialty generic drugs than independent competitors, Rep. Carter said.
“Take the drug Pirfenidone, for example,” said Rep. Carter, a former pharmacist. “It can be purchased without insurance for $200. However, seniors on Medicare filled Pirfenidone 85,000 times in 2022 at an average cost of $8,000 per prescription.”
There are many ways PBMs abuse their market power to make money, according to Witness Dr. Hugh Chancy, a Georgia pharmacist and former president of the National Community Pharmacists Association.
“PBMs are also engaging in anticompetitive tactics like patient steering, cost inflation, spread pricing, low pharmacy reimbursements and coercive contracts for non-affiliated pharmacies,” he testified.
Chancy explained spread pricing with the story of a customer whose prescription cost $135 at the pharmacy but was billed $400 by her PBM. She queried the bill and was told the insurance plan paid $400, despite the pharmacy’s lower charge. “So that’s spread pricing,” Chancy said, “$135 is what it cost to get the prescription; $400 is what the plan paid.”
Reps. Jake Auchincloss (D-MA) and Mariannette Miller-Meeks (R-IW) focused on problems with rebates: PBMs set a price for a drug and then collect a rebate from the manufacturer in exchange for including the drug in their formulary of medicines receiving insurance coverage. Although the drugs cost less for the PBMs, patients usually don’t enjoy any of the savings. Rep. Miller-Meeks said PBMs should be legally required to pass those savings on to patients.
Patient access and pharmacy deserts
Along with impacting price, PBM decisions about what drugs will receive coverage also impact patient access, as Rep. Carter pointed out, citing “fellow Georgian, Mattie McCoy” as an example.
“Mattie, a sixteen-year-old Georgia resident, suffers from a rare genetic disorder. CVS Caremark denied Mattie’s access to a lifesaving drug that he had been on for two years. As a result, Mattie was forced back into the hospital,” Rep. Carter said. “PBMs’ greed sent a 16-year-old back to the hospital, in critical condition. While tragic, this story is far from unique.”
PBMs also impact patient access through practices that favor their own pharmacies over independent pharmacies, thereby forcing closures that create “pharmacy deserts”—neighborhoods where there is no local pharmacy.
As a result of these practices, more than 200 pharmacies have closed in Iowa since 2014, said Rep. Miller-Meeks.
Rep. Diana Harshbarger (R-TN), who owns a pharmacy, underscored the ways PBM’s vertical integration with their own networks of pharmacies harms competition and disadvantages independent pharmacies. She said it is unsustainable to reimburse pharmacies below their acquisition costs for drugs
“I believe patient steering or mandating the use of a PBM-owned pharmacy should be prohibited across all federal plans,” she said. “We’re losing access to pharmacy choice.”
Witness Chancy also spoke of how PBMs disadvantage other pharmacies by forcing independent pharmacies to sell drugs for less than what they pay to acquire them.
Meanwhile, PBMs hurt patients because they “steer patients to their own affiliate pharmacies. Many patients who are required to use the PBM-owned mail-order pharmacy receive their medications damaged or do not receive them in a timely manner,” Chancy testified.
PBM Legislation
Throughout the hearing, there was discussion of legislation to address PBMs. There was also interest in the idea of arranging a vote on PBM reform policies and other important health measures in March.
Rep. John Joyce (R-PA) pointed out that the subcommittee had approved PBM transparency legislation last year and called for further means to support drug innovation.
“There is a need to find creative solutions for coverage and payment of innovative medications to make them accessible at an affordable price,” he said. Joyce suggested that “value-based purchasing” arrangements that pay for medicines based on health outcomes would be one solution.
Subcommittee Ranking Member Diana DeGette (D-CO) also highlighted the previous work of the committee on PBM reform. She noted bipartisan reforms, as well as important legislation to promote rare disease research, were included in a proposed funding bill in December, but were ultimately cut from that bill.
“If we all agree, why haven’t we gotten PBM reform signed into law yet?” DeGette asked.
Even though Congress is currently focused on spending legislation, DeGette said it might be possible to reintroduce such reforms in March by voting on “suspension,” a procedure that allows for a quick vote with limited debate on broadly supported measures.
Rep. Carter said he was “absolutely” considering bringing up such a bill as a means for quick passage of the legislation.
