Hearing of the House Oversight and Government Reform Committee - Healthcare

Hearing

Thank you, Mr. Chairman and Members of the Committee, for holding this important oversight hearing addressing Developments in the Prescription Drug Market. Given the state of healthcare in this country, Congress' responsibility to conduct oversight of all areas of the healthcare ecosystem, including the prescription drug market, is more important than ever.

I appreciate the opportunity to submit this statement for the record. As a former Member of the Oversight and Government Reform Committee, I have great respect for the work of this Committee and the leadership of Chairman Chaffetz. While there are a number of topics related to the prescription drug market that are of great importance to Northeast Georgia, I will focus on one in particular: the role of Pharmacy Benefit Managers (PBMs) in negotiating drug prices, and the need for transparency in pricing contracts.

Independent community pharmacies dispense more than 40 percent of prescriptions nationwide and are a crucial part of the healthcare system. They provide invaluable support and guidance, particularly to seniors. There is a pressing need for transparency and openness in the federal government's substantial business partnership with PBMs and their reimbursement practices. As you well know, PBMs serve as the mediator between health plans and all pharmacies - some chains and all independents. They play a vital role in the system, but over time, PBMs have transformed far beyond their original form. Many large PBMs also own mail order pharmacies and are therefore are in direct competition with their clients -- the pharmacies. The PBMs negotiate two things with pharmacists the total amount that the pharmacy can charge a customer for a given drug, and the amount the pharmacy will be reimbursed by the PBM for that same drug.

Today, community pharmacists routinely incur losses of approximately $100 - in some cases, much more - on individual prescriptions because it is not uncommon for PBMs to reimburse pharmacies well below their cost to acquire and dispense generic prescription drugs that have skyrocketed in price. PBMs may wait weeks or months to update the reimbursement benchmarks they use to compensate pharmacies while drug prices increase virtually overnight. This situation jeopardizes community pharmacists' ability to continue serving patients because it leaves these small businesses with unsustainable losses.

PBMs like to talk about making healthcare affordable. But in doing so, they fail to realize that we must also make healthcare accessible. Unlike my local pharmacist in Hall County, and those across the nation, PBMs do not have a real relationship with patients. In fact, it is not uncommon for them to secretly retain most manufacturer payments -- rebates, discounts and other fees -- instead of passing the savings on to patients. Additionally, PBMs have been known to switch plan members from low-to-high cost drugs and manipulate generic pricing. This is why I support strong PBM transparency requirements. I believe these policies are the key to delivering real savings to patients.

Community pharmacies should have access to up-to-date pricing information so when they dispense a drug, they know their reimbursement rate reflects current market prices. PBMs have been padding their bottom lines at the expense of our local pharmacies. Predictability and transparency should exist in every industry, for every company, regardless of their size or market power. In Northeast Georgia and across the nation, many pharmacists have to choose between keeping their business open, or giving their patients the services and care they need. This isn't a choice they should be forced to make.

The American Antitrust Institute notes that, "considering the substantial number of enforcement actions and the severity of the PBM conduct, we believe these efforts at regulating PBMs are well founded and that the FTC's advocacy has been ill-advised." Many states have acted where the federal government has failed to, and we should learn from them. Most recently, we've seen state laws enacted to increase transparency and reform within the generic drug pricing and reimbursement system. To date, 24 states have enacted such laws. The goal of these laws is to increase transparency and provide structure around the generic drug pricing and reimbursement system. But when community pharmacies speak out in support of these reasonable reforms, the PBM community has retaliated through baseless lawsuits against the states.

If PBMs were truly acting in the best interests of consumers, as they claim, then why do they oppose virtually every transparency reform effort at the state and federal level? PBMs come to Congress and say one thing to Members, then turn around and behave however they wish in the pharmacy marketplace without fear of enforcement or oversight. It's time for that to change. We must preserve pharmacy access for patients - especially those in rural areas like Northeast Georgia.

Supporting strong PBM transparency requirements is the cornerstone to delivering real savings to patients. To achieve this goal and return the focus of the prescription drug industry to patients, I introduced H.R. 244, the MAC Transparency Act. H.R. 244 would preserve pharmacy access for patients by requiring PBMs to update their "maximum allowable cost" (MAC) benchmarks every seven days to better reflect market costs and allow pharmacists to know the source by which PBMs set reimbursement for his or her community pharmacy. My legislation will also give patients greater choice of pharmacy, as patients would not be forced by PBMs to use a PBM-owned pharmacy -- an obvious conflict of interest. According to Medicare data, PBM-owned mail order pharmacies may charge plans more -- as much as 83 percent more -- to fill prescriptions than community pharmacies. Operating within the law and operating transparently are two very different things. The behavior that several large PBMs have been able to get away with in the marketplace has left me with no option but to pursue a legislative solution in the form of H.R. 244. With soaring healthcare costs at the forefront of everyone's minds, we need to make sure small pharmacies have the tools they need to appropriately deal with large PBMs.

I thank the Chairman for holding this hearing and urge prompt congressional consideration of H.R. 244, the MAC Transparency Act, and other PBM reform legislation.

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