6 takeaways from Senate's PBM hearing

Alia Paavola - Print  | 

Five executives from top pharmacy benefit managers in the U.S. testified before the Senate Finance Committee April 9.  

During the high-stakes hearing, lawmakers asked the top executives to explain their roles in the drug industry, answer questions about the drug rebate system and tell whether they would support a law banning spread pricing.

Derica Rice, executive vice president at CVS; John Prince, CEO of OptumRx; Steve Miller, MD, chief clinical officer at Cigna; Mike Kolar, interim president of Prime Therapeutics; and William Fleming, president of healthcare services at Humana  represented their companies at the hearing.

Six takeaways:

1. PBMs blamed Big Pharma. Executives repeatedly said that drugmakers are to blame for high drug prices and their pursuit of profits drives list prices higher, according to CNBC. Throughout the hearing, the executives blasted the drug industry for the rising cost of brand-name drugs, citing several examples, including skyrocketing insulin prices. In addition, they said the industry is anti-competitive.

2. PBMs said rebates are no secret. The companies said that the rebates drugmakers pay them are no secret. CVS said those rebates are actually a "powerful tool used to offset" high list prices set by drugmakers, according to CNBC.

3. Lawmakers urged transparency. Senators focused their criticism on the drug supply chain's opaque nature and called for more transparency among PBMs.

"The current system is so opaque that it's easy to see why there are many questions about PBMs' motives and practices," said Sen. Chuck Grassley, R-Iowa, chairman of the Senate Finance Committee, according to the StarTribune. "Some even argue that PBMs force drug companies to raise their list price."

4. PBMs emerge unscathed. PBMs recently have faced a lot of public heat  and blame from the Trump administration.. Drugmakers have blamed PBMs for the rising costs of drugs, and President Donald Trump has  blasted them as middlemen who are dishonest, according to STAT.  But they emerged from this hearing largely unscathed, according to another STAT news report.

5. PBMs cited drugmakers' tactics to thwart competition. During the hearing, PBMs attacked anticompetitive behavior of pharma companies, including "pay for delay" tactics, which are used by brand-name drugmakers to delay generic manufacturers from introducing their cheaper product. Additionally, executives denounced "evergreening," a tactic used to extend patent protection. They suggested lawmakers look into bills to ban the practices.

6. PBMs defended spread-pricing. The finance committee's ranking member Sen. Ron Wyden D-Oregon, took issue with a tactic known as spread-pricing, where PBMs charge health plan customers a higher price for a medication than they reimburse pharmacies. "In my view, it's as clear a middleman rip-off as you're going to find," he said, according to the StarTribune. The executives said it is simply a way customers can elect to pay them for their services.

More articles on pharmacy:
PBM hearing should prompt bill to ban 'secrecy' in drug industry, senator says
Republicans tell drugmakers that complying with House probe could hurt their stock prices
Hawaii primary care network opens in-house pharmacy

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