Cloture Motion

Floor Speech

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"Ms. CANTWELL. Madam President, I thank my colleague from Rhode Island for his dedication and perseverance on these important issues, and I also appreciate his mentioning the dividend concept because, obviously, we want consumers to be kept whole here and to make a transformation that they too want to make. So I thank him for his leadership.

Madam President, I come to the floor today to call attention to the high prices Americans are paying for their prescription medication and the urgent need to pass what is called the Pharmacy Benefit Manager Transparency Act in the Senate that I have cosponsored along with my colleague from Iowa Senator Grassley.

At the beginning of this decade, the United States spent more on prescription drugs than any other country in the world, reaching an average of $1,432 per person per year.

So 6 out of every 10 adults are currently taking at least one prescription drug. More than a quarter of us take four or more prescriptions. So when drug prices go up, it really does stretch the family budget, cuts into our savings, and it puts us into health challenges if we can't afford those prescriptions.

About one in four residents in my State--the State of Washington-- have either rationed or stopped taking prescription drugs because of costs. Families should not have to make this choice.

One of the factors driving up the price of prescription drugs is pharmacy benefit managers and their profit-driven business model that is not transparent as to the price-setting and is causing pharmacies great harm. Pharmacy benefit managers operate behind the scenes but have a stake in just about every part of the drug distribution chain and exert extraordinary influence in the prices that Americans are paying for their medication.

PBMs decide which lifesaving medications most Americans will have access to through their insurance plans. They decide how much copay will be for prescriptions. They decide how much a pharmacy will be reimbursed for dispensing these drugs and whether the pharmacy will lose money when they fill a prescription.

PBMs don't actually handle or distribute the drugs, but they siphon off the profit at every step in the process, from the drug manufacturers and all the way up to the pharmacy counter. That is because the PBM market, these pharmacy benefit manager middlemen--think of them almost as the insurance company that is setting the price--are extremely consolidated, giving consumers no choice in which PBM they use. Just three PBMs control 80 percent of the market.

Can you imagine anybody controlling 80 percent of the market? But just three of these companies control 80 percent of the market. And, effectively, they have unchecked power on their ability to distort the market and engage in unfair and abusive practices.

So what are we trying to do, Senator Grassley and myself? We are trying to stop those unfair and manipulative practices.

Not only is the PBM market consolidated, but the vertical integration of PBMs, pharmacies, and insurers is worrisome. The three largest PBMs are each part of companies that include insurers and large pharmacies. So this gives them the opportunity to increase their profits by companies steering patients to pharmacies they own and then lowering the reimbursement rates to competing pharmacies.

Americans are feeling this pinch. They are seeing that they have higher drug costs, and they are seeing that PBMs are thriving. The three biggest PBMs are astoundingly profitable. Last year, Optum Rx raked in $116 billion for its owner, United Healthcare Group, contributing about 30 percent of the company's total revenue.

PBMs have leveraged their market power and lack of transparency to benefit themselves at the expense of patients and certainly-- certainly--at the expense of independent pharmacies. They are happy to try to help the pharmacies in their vertical integration but certainly not the independent pharmacies, if you will, trying to put them out of business.

PBMs enrich themselves by manipulating the market for prescription drugs at every turn. We cannot be fooled when the PBM claims to reduce the cost of drugs by negotiating rebates from the drugmakers in charge in exchange for favorable insurance coverage through an insurance company they probably own.

I have been so frustrated by this in the past. It is like our organization--take, for example, King County. Someone comes to them and says: We will negotiate for King County employees a drug benefit, and we will give you a discount. But then they pocket two-thirds of the discount themselves--the PBM. That is what is going on here.

These rebates are part of their manipulative scheme to inflate and extract the value from the prescription drug market.

In a market that is free of this kind of manipulation or competition, you would have drugmakers, and they would be setting the formulary cost. They would help drive down price by having competition.

But we know the market isn't working right when the least expensive version of a drug is the least dispensed. That is right. You can tell how a market functions or if it is a great functioning market because-- why?--when prices are too high and there is supply, people put more supply in the market. But if the least expensive drug isn't being dispensed, that means somebody is trying to artificially keep those costs high.

This happens because PBMs control which drugs are included on a formulary, and they get a bigger cut through a larger rebate and higher copays when more expensive drugs are put on the list. This incentivizes drugmakers to inflate the prices of their drugs to appeal to the PBMs.

Who bears the brunt of all these inflated costs? The American consumer.

Another way PBMs manipulate the market is through abusive practices like spread pricing or clawbacks. Spread pricing is when a PBM reimburses a pharmacy one amount for filling a prescription and then charges the health plan a higher price and keeps the difference.

That is the scheme. That is the scheme of how they are making money. They basically say: Oh, this is the price. And they then charge the plan a higher amount.

This creates two problems: One, neither the pharmacy nor the plan knows what the other paid or was charged. So both parties lack the data on what a true price for the drug is. Second, this practice allows PBMs to squeeze more money out of the supply chain without anyone knowing how much.

They also claw back reimbursements from pharmacies after a claim is settled through direct and indirect remuneration fees, or what I call DIR fees, which have generic effective rates, or GER.

So, for example, an independent pharmacy in Seattle actually had to close because the PBMs said that this independent pharmacy owed $538,000 in reimbursements in a single year from these PBMs. They just came up with a number and said this is how much you owe us. So it is not surprising that independent pharmacies can't stay open with these kinds of tactics.

In just the last 18 months, 83 pharmacies in the State of Washington have closed. These practices have contributed to the creation of pharmacy deserts. In fact, Fortune magazine just wrote a story about this particular problem in the State of Washington.

There are now 86 towns in my State that are more than 10 miles from the nearest pharmacy. That means that roughly 450,000 people in my State live in an area where they have to drive 10 miles just to go to a pharmacy.

And we now rank sixth among all States for poor access to pharmacies. According to the Washington State Pharmacy Association, there are no more 24-hour pharmacies left in the city of Seattle.

So I am very concerned about the number of independent and community pharmacy closures in my State. I am also concerned about how insurance company middlemen and their unfair business practices have contributed to these closures.

Some might ask why hasn't anyone discovered these schemes or done something about it. Well, that is because PBMs shield their practices and profits by claiming that their data that they have is considered proprietary information.

But we must have laws on the books that make sure that the legal, manipulative schemes can help stop these players in the marketplace who have too much of a concentrated power.

PBMs cannot continue to operate in the dark while Americans see their prescription drugs rise and rise year after year. And that is why Senator Grassley and I introduced the Pharmacy Benefit Manager Transparency Act, to shine light on these harmful practices, increase the transparency, and increase the accountability for pharmacy benefit managers.

The Pharmacy Benefit Manager Transparency Act directs the Federal Trade Commission to crack down on unfair and abusive schemes, such as the spread pricing or reimbursement clawbacks. It also mandates transparency for these PBMs and that they submit a report about these activities so that we can understand how they are basically moving other products that are not on the formulary placements. That is exactly how some of these schemes have operated.

It is important to have this help from the Federal Trade Commission. It is their job to stop these unfair practices. It is their job to hold PBMS accountable for manipulation of practices or prices and give the Agency more insight into this marketplace.

We cannot wait any longer to get this legislation passed. My bill has come out of the Commerce Committee with good bipartisan support, and it has bicameral support as well.

So we must keep the momentum going. I hope my colleagues here in the Senate will bring this Pharmacy Benefit Manager Transparency Act to the Senate floor when we return. Americans are hurting, and so are our pharmacists.

Our pharmacies themselves are places where information about our prescriptions are held to a high standard. I would hate to see Americans in such a concentrated market that all of our prescription drugs are bought online from one or two big suppliers, and that somehow is our delivery system.

I think pharmacists are a key part of our delivery system. Pharmacies are a key part of communities. And we shouldn't have big, concentrated players manipulating the prices of drugs and putting pharmacies out of business and raising these unbelievable prices on our consumers.

So I thank the President, and I hope our colleagues will consider getting this legislation in front of the Senate when we return. "

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