Pharmacy Benefit Manager Accountability

Floor Speech

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Mrs. HARSHBARGER. Mr. Speaker, one of the top concerns for Americans is the high cost of prescription drugs. Congress must do something to lower these prescription drug prices. We know the American people want lower prices, but they don't want to sacrifice access to lifesaving treatments.

Prior to representing the great people of east Tennessee in Congress, I served for 35 years as a community pharmacist, so I know a thing or two about safeguarding patient access to affordable medicines and solving patient problems.

We absolutely need to reform the ways pharmaceutical manufacturers price their products and sometimes manipulate the system. But there is another part of the drug pricing equation that doesn't get nearly as much attention, and that is the role of the pharmacy benefit managers, or PBMs, their lack of transparency, their market dominance, and the effects of their business practices on drug prices and patient choices.

PBMs were created as middlemen to reduce administrative costs for insurers, validate patients' eligibility, administer plan benefits, and negotiate costs between pharmacies and health plans. But they have morphed into one of the most highly concentrated and least accountable profit centers in the healthcare industry. Over time, these PBMs have been allowed to operate and consolidate their market powers virtually unchecked.

Medicare, Medicaid, and commercial health plans all use PBMs to manage drug benefits. That is more than 260 million American lives.

These pharmacy benefit managers wield enormous power as middlemen on numerous fronts. They choose what drugs are covered and not covered by insurance; they negotiate purchasing deals with drug makers; they determine copays for consumers; they decide which pharmacies are included in prescription plans and which are not; they decide how much pharmacies are reimbursed for the drugs they sell, where, by the way, a lot of pharmacies dispense drugs to a patient, and they are reimbursed less than what they paid for the drug.

In 2020, the top six PBMs handled more than 95 percent of total U.S.- equivalent prescription claims. Curiously, this market power concentration and vertical integration with the insurance carriers was allowed by our Federal Trade Commission over the last 15 years, the very agency whose mission it is to safeguard Americans from concentrated corporate power.

What are the effects on drug spending? Between 2015 and 2018, nearly half of the increase in total brand drug spending went to payers, including PBMs, according to an analysis from Berkeley Research Group.

Such a huge slice of yearly drug spending going to middlemen has catapulted the U.S. PBM market to be valued at more than half a trillion dollars, and that is with a ``T''. Analysts see PBMs continuing to prosper in the coming years.

The virtually unchecked powers of PBMs have enabled them to: Number one, charge drug manufacturers hefty rebates for preferred placement on formularies. The higher the list price, the higher the rebates, but no one knows where these rebates go.

Number two is to impose restrictive take-it-or-leave-it contracts with community pharmacists.

Number three is charge community pharmacies outrageous clawbacks or DIR fees, often totally unpredictable, where PBMs claw back or take back moneys they have already reimbursed pharmacies, often weeks or months after a patient transaction. The typical community pharmacy now pays roughly $81,000 a year in DIR fees, making it all but impossible to set a budget for the future.

These and other business practices happen in relative secrecy with no real oversight. No one is really able to follow the dollars on how and where the money flows; not the payer, not the pharmacist, and certainly not the patient.

I have introduced bipartisan legislation, the PBM Accountability Study Act, H.R. 1829, which would have the U.S. Government Accountability Office study the roles PBMs play in drug pricing and spending, their market concentrations, and states of competition. My bill also requires GAO to make recommendations on lowering drug costs, improving transparency, and improving competition in the PBM industry. This is a commonsense, bipartisan bill, and I invite all of my colleagues to cosponsor and help with this important legislation.

I sincerely hope we can work together to include the provisions of this bill and other PBM reforms in any drug-pricing legislation that we consider this year.

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