House Republicans open investigation into role of intermediaries in prescription drug prices

Rep. James Comer (R-Ky.), chairman of the House Committee on Oversight and Accountability, announced Wednesday that he is launching an investigation into pharmacy benefit managers (PBM) and actions that increase health care costs for patients.

“Pharmacy Benefit Managers’ anticompetitive tactics are driving up health care costs for Americans and harming patient care,” Comer said in a statement. “Federal agencies administering health care programs for seniors, active-duty military, and federal employees rely on PBMs as middlemen to set drug prices, which opens the door to government waste at the expense of American taxpayers.”

Comer called for enhanced transparency in the PBM industry in order to better ascertain the impact it has on the pharmaceutical market and health care programs run by the federal government.

The chairman requested that the Office of Personnel Management, Centers for Medicare and Medicaid Services and the Defense Health Agency provide documents and communication to determine how PBMs impact those programs.

PBMs are third-party companies that operate between pharmaceutical manufacturers and insurance providers. These companies negotiate drug spending with manufacturers and play a large part in how much medications cost for insurers.

PBMs generate profits through administrative fees and spread pricing, when insurers and health plan customers are charged more for prescriptions than what a pharmacy is reimbursed for and the companies keep the difference.

The majority of the PBM industry is dominated by only a few companies, which Comer noted in his announcement. He has requested that three major PBMs — Express Scripts, CVS Caremark and OptumRx — provide documents and communications relating to their practices.

PBMs have regularly been criticized for lacking transparency, particularly when it comes to rebates they receive from drug manufacturers. Drug makers provide rebates to PBMs to ensure their medications are included on the list of drugs that insurance companies will cover.

These rebates may help lower the cost that customers pay at the pharmacy, but this does not always occur and does not directly affect the price of the drug itself. In his letters to the PBMs, Comer demanded to know all the rebates and fees the companies had received over the years.

The Pharmaceutical Care Management Association (PCMA), a national group that represents PBMs, sought to bring attention to other drug cost-lowering measure in response to Comer’s announcement.

“Pharmacy benefit companies have a proven track record of reducing prescription drug costs in federal programs, ultimately for patients and taxpayers,” PCMA CEO J.C. Scott said in a statement. “While we appreciate — and share — the Committee’s concern around drug pricing and existing gaps in affordability, we strongly urge members of the committee and Congress to stay focused on real solutions that are proven to reduce prescription drug costs.”

“Increasing competition in the prescription drug market is the most effective way to lower costs — and is achievable if lawmakers hold big drug companies accountable for common and egregious abuses of the drug patent system, which block competition and keep drug prices high, and of their pricing power, which is the root cause of high drug prices,” added Scott.

Other organizations expressed their support of Comer’s investigation.

David Mitchell, founder of the Patients For Affordable Drugs NOW organization, praised Comer’s announcement, writing, “We have consistently supported investigations into the practices of secret PBMs to ensure they are serving patients first and foremost to produce lower prices and better health.”