PBM execs defend role amidst bipartisan drug price scrutiny

In a recent House Oversight Committee hearing on Tuesday, July 23, executives from three of the largest pharmacy benefit managers (PBMs) — Express Scripts, CVS Caremark, and OptumRx — defended their role despite bipartisan criticism blaming their industry for high drug prices. The hearing brought to light the complex dynamics of drug pricing and the role PBMs play in the healthcare system.

The executives from Express Scripts, CVS Caremark, and OptumRx argued that PBMs are not the culprits behind high drug prices. Instead, they positioned themselves as cost-saving intermediaries who negotiate better patient prices.

“We are the connected fiber fighting to ensure access to safe, effective, and affordable medications,” emphasized Adam Kautzner, President of Express Scripts.

He highlighted that Express Scripts saved its clients $64 billion last year, maintaining patient out-of-pocket costs at $15 per prescription despite drug manufacturers raising prices on 60% of those products.

David Joyner, President of CVS Caremark, pointed to brand-name products with little or no competition as the primary drivers of rising drug costs.

“Brand-name products with little or no competition remain the chief source of rising drug costs, spurred by their high list prices,” Joyner remarked.

However, lawmakers from both sides of the aisle expressed significant concerns about PBM practices. The hearing illuminated several areas for potential reform, including the tendency of PBMs to steer patients toward higher-priced medications and their preferred pharmacies.

“We hear that you’re the problem. There’s a credibility issue with PBMs,” said Chairman James Comer (R-Ky).

PBMs play a critical role in the pharmaceutical supply chain, negotiating prices with drug companies, paying pharmacies, and determining patients' access to and cost of drugs. The Oversight Committee’s majority staff report, released during the hearing, highlighted how the largest PBMs have designed formularies that favor higher-cost drugs, which can result in larger rebates benefiting the PBMs but costing patients and taxpayers more money.

The report revealed that CVS Caremark, Express Scripts, and OptumRx, which control approximately 80% of US prescriptions, often prioritize branded drugs over cheaper, equally effective alternatives. This practice not only increases costs but also negatively impacts independent pharmacies. The report, which results from a 32-month investigation, found that PBMs force patients to pay more to use local pharmacies instead of PBM-owned mail-order ones and reduce reimbursement rates for competing pharmacies.

 “Simply put, the Committee’s investigation has found that — while PBMs’ position as middlemen should have enabled them to reduce the costs of prescription drugs and improve Americans’ health outcomes — they have not,” highlighted Chairman Comer.

The Federal Trade Commission (FTC) also released an interim report earlier this month, aligning with the Oversight Committee’s findings. The FTC’s report blamed anti-competitive PBM business practices for driving up prescription drug costs, further adding to the scrutiny PBMs are facing.

Independent pharmacists voiced their struggles, claiming PBMs drive them out of business. Represenative Raja Krishnamoorthi (D-Ill) cited federal figures showing that price concession fees pharmacies pay to PBMs increased by 107,400% between 2010 and 2020.

“It’s a rate of increase that literally staggers the imagination,” Krishnamoorthi stated.

Despite these concerns, all the PBM executives denied steering patients to their preferred pharmacies, though lawmakers remained skeptical. Chairman Comer pressed the executives to commit not to steer patients to their pharmacies, but their responses were perceived as evasive.

“I’m going to take that as an answer [that] you’re going to continue to steer patients away from independent pharmacies,” Comer concluded.

The hearing has amplified congressional pressure on PBMs, potentially catalyzing efforts to reform PBM practices in upcoming legislative sessions. While previous legislation targeting PBM practices passed the House and a Senate committee, it failed to be included in a spending deal earlier this year. Tuesday’s hearing could reignite these legislative efforts, particularly during the lame-duck session after the November elections.

The House Oversight Committee hearing underscored the contentious role of PBMs in the US healthcare system. While PBM executives defended their practices as beneficial for patients, lawmakers and independent pharmacists highlighted significant issues that could prompt legislative reforms. As the debate continues, the future of PBM practices and their impact on drug pricing remain critical issues for the pharmaceutical and healthcare industry.