Last week, the U.S. House Ways and Means Committee Health Subcommittee held a hearing on “Why Health Care is Unaffordable: Anticompetitive and Consolidated Markets.”

During the hearing, Congressman Kevin Hern (R-OK) shared that, as a former business owner, he was able to secure savings for his employees by contracting with pharmacy benefit companies. He said:

“As a former business owner, my perspective on the drug supply chain is different from some, having experienced working with PBMs long before I got into running for Congress and hearing from the independent pharmacies. But as the McDonald’s franchisee with over a thousand associates for 24 years, we contracted with a large PBM through our national insurance company and saved a significant amount of money on prescriptions. And the PBM’s customer is the employer and their employees. I’ve yet to come across an employer — an employer that’s expressed concerns to me about the PBMs.” 

Ranking Member Lloyd Doggett (D-TX) highlighted how big drug companies are setting out-of-control prescription drug prices and pharmacy benefit companies are the only real check against them. Representative Doggett also explained how drug companies are pushing an agenda that targets pharmacy benefit companies so they can avoid taking responsibility. He said:

“Recognizing that many drug prices are effectively non-negotiable because of Pharma monopolies, we need policies that ensure reasonable prices from the moment a drug is launched and timely generic competition to further reduce costs…By one estimate, about $40 billion in taxpayer dollars were wasted in 2019 alone on drugs for which Big Pharma was able to delay competition. Thanks to this anti-competitive behavior and monopoly prices, 30 percent of American adults report not picking up prescriptions or skipping doses because they couldn’t afford the prescription. Last year, one single pharmaceutical manufacturer made over $100 billion in revenue. Where are those profits going? Well, we like to think they are directed toward new cures, but in fact, Big Pharma pours millions into lobbying this Congress to block even the smallest reform. And after years of denying that there was a drug pricing problem, they’ve begun almost daily pointing their finger at their favorite boogeyman: pharmacy benefit managers. I can’t open a Capitol Hill newspaper without seeing a colorful Pharma-funded ad attacking PBMs. And there’s a reason for that because, despite their limitations and restrictions, PBMs are the only part of the supply chain that is pushing back on monopoly drug prices.” 

Expert witness, Dr. Benjamin N. Rome, M.D., M.P.H., an instructor in medicine at Harvard Medical School, reinforced that big drug companies are to blame for high drug costs saying, “The main driver of high drug prices in the U.S. is simple: we grant drug makers patents and other government protections that prevent competition during periods of market exclusivity. During this time, we let drug makers freely set and raise prices as high as the market will bear. As a result, we have seen prices for new drugs skyrocket. The average price for a year’s supply of a new drug entering the market has soared from $2,000 in 2008 to more than $180,000 in 2021. The most important actions that Congress can take to make prescription drugs more affordable is to address the high prices set by manufacturers.”

Dr. Rome also explained how pharmacy benefit companies use their tools to negotiate with big drug companies to secure lower prescription drug costs for patients and encourage competition, and how restricting pharmacy benefit companies could actually increase prices. He said:

“PBMs use these formulary tools to negotiate discounts from drug manufacturers, and enacting policies that restrict PBMs’ ability to manage formularies will impede their ability to negotiate lower prices for some drugs. To avoid this, such policies need to be paired with other policies that directly address the root problem: high prices set by manufacturers.

“…Now, those list prices are set by drug manufacturers, and to your point, PBMs are negotiating lower prices for some drugs. Now, for brand-name drugs, there is no direct competition. Drug manufacturers do as much as they can to extend the period during which there’s no competition. In some cases, PBMs have the ability to leverage competition between different brand-name drugs. And if you do impose restrictions on their ability to do that, such as, you know, sort of just restricting their ability to use tools to do that, you do risk prices going up. But ultimately, they’re negotiating off the price set by the manufacturers…To be clear, competition exists within the pharmaceutical industry for generic drugs, whereas brand-name drugs remain unchallenged for a duration of 12 to 17 years.” 

Rather than limiting options for employers to design their drug benefits and restricting choices to achieve savings, Congress should address the root cause of high prescription drug prices – big drug companies’ abuse of the patent system to keep more affordable alternatives from entering the market – and focus on legislation that strengthen competition in the market.

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Learn more about public policy solutions that would promote competition in the prescription drug market and effectively lower prices for patients HERE.

PCMA’s recent Policy Forum, held on April 25, 2023, featured policymakers – including key Administration officials and Congressional staffers – and PBM executives to discuss how the public and private sectors are tackling drug costs and improving both the affordability and quality of care for patients. View the PCMA Policy Forum HERE.

The Hill recently hosted and PCMA sponsored an event titled, “Prescription for Change: Improving Competition to Lower Drug Prices,” where lawmakers and a panel of drug pricing and economic experts discussed the importance of promoting competition as the most effective way to lower prescription drug costs. Watch the event HERE.

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PCMA is the national association representing America’s pharmacy benefit companies. Pharmacy benefit companies are working every day to secure savings, enable better health outcomes, and support access to quality prescription drug coverage for more than 275 million patients. Learn more at www.pcmanet.org