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▶ 0:08:14subcommittee will come to order the chair recognizes himself for five minutes for an opening statement let me Begin by welcoming everyone to today's hearing on how reigning in Pharmacy benefit managers or pbms will drive competition and lower cost for patients before I dive into the policy I want to take a moment to address the true reason why we're having this hearing today and that is patience patience like Matthew Matthew is a 16-year-old Georgia resident who
▶ 0:08:44suffers from a rare genetic disorder CVS Kart denied Matthews access to a life-saving drug that he had been on for two years and as a result of that Matthew was forced back into the hospital let me be clear pbn greed greed sent a 16-year-old back to the hospital in critical condition while tragic this story is far from unique so how did we get here pbms are the pharmaceutical Supply Chain's hidden middleman
▶ 0:09:14that are driving up cost for prescription medications delaying access to necessary treatments adding Hoops for patients to jump through and robbing Hope from patients they have only created perverse incentives throughout the drug supply their extensive Market control has only grown due to consolidation and vertical integration leading to less competition and decreased patient Choice after nearly two decades of consolidation the PBM industry is now dominated by three companies
▶ 0:09:45that control over 80% of the market three companies that control over 80% of the market they own or owned by insurers and have vertically and horizontally horizontally Consolidated their businesses to own doctors pharmacies group purchasing organizations and more one of them even owns a bank we have heard directly from our constituents that the harmful and anti-competitive tactics of some pbms have only gotten worse and that congressional action is dep
▶ 0:10:15desperately needed we've heard a constant stream of reports that some pbms are reimbursing Independent Pharmacies less than thees they own for example a Mississippi audit revealed that opum pays its own stores up to 22 times 22 times what it pays Independent Pharmacies for the same drug how are you supposed to stay in business when your competitor makes 2,200 per more than you do for the EXA the exact same service the answer
▶ 0:10:45is you don't unfortunately you don't in 2023 there were over 300 Independent Pharmacy net closures almost one per day unfortunately that Trend continued in 2024 pharmacists are some of the most accessible and highly TR trusted healthc Care Professionals yet pbms are putting pharmacies out of business and removing patients access to care we now have Pharmacy deserts and Rural and underserved communities that's affecting the accessibility
▶ 0:11:15affordability and quality of health care for all Americans as I say all the time whether you're Republican Democrat or independent we all want the same thing we want accessible affordable quality Health Care recently the Federal Trade Commission released its second intering report which found that pbms charg significant markups for cancer HIV and other critical specialty generic drugs by thousands of percent and many others by hundreds of percent another egregious example of pbms abusive taxpayer funded
▶ 0:11:46programs is the United States Postal Service Health Plan in an audit released in March of 2024 that the inspector general of the US office of personnel management found that Express Scripts overcharge the health plan and the Federal ederal government nearly $45 million $45 million thankfully president Trump has committed to holding pbms accountable I commend him and I look forward to working with this Administration to drive solutions at lower cost for patients at the pharmacy counter the house
▶ 0:12:16Energy and Commerce Committee has made Common Sense PBM reform policies a bipartisan process last Congress this committee Advanced bipartisan legislation that saved significant taxpayer dollars in Medicaid Managed Care programs and for the first time in Medicare Part D enforces reasonable and relevant contract terms that support Pharmacy's ability to serve patients in addition to delinking PBM compensation from list price further this committee championed reporting requirements which
▶ 0:12:46would increase transparency by shining the light on the opaque drug pricing system that is driving up drug spending for patients and Employers in addition to harming pharmacies Americans deserve and expect protection from inflated prescription drug Cost forc Pharmacy closures and barriers to Health Care access I look forward to working with my colleagues on both sides the a to enact these meaningful PBM reforms for patients like Matthew who are suffering at the at the expense of pbms abusive
▶ 0:13:16tactics want to nail recognized the general lady from Colorado representative deette for five minutes for an opening statement thank you so much Mr chairman and here's something that we can agree on Republic Republicans and Democrats agree we must rein in PBM abuses we know how pbms play games to pad their bottom lines at the expense of consumers we know how they take money out of state and federal taxpayers Pockets when they charge a Medicaid plan more than a drug they pay for in a pharmacy this
▶ 0:13:46isn't news um I see a number of Pharmacists here in the audience and I want to welcome all of you to our Committee hearing U thank you for being here you put a face on this for us so you might be wondering if we all agree why haven't we gotten PBM reform signed into law yet last Congress Democrats and Republicans held more than a dozen hearings in committees in the House and Senate including three in this committee to discuss pbms so to me this feels like deja
▶ 0:14:17vu all over again the need to reform the prescription drug system is clear including how cleaning up how pbms operate and stopping abuses of their market system at the cost of consumers so that's why this committee passed PBM reforms last Congress and that's why we took the work this committee did and folded it into December's Government funding bill we were on the brink of passing historic reforms and then at the behest of Elon
▶ 0:14:47Musk Republicans balked so let me be really clear Donald Trump and Elon Musk ordering Congressional Republicans to reneg on a bipartisan bicameral agreement is the the reason PBM reforms are not law today this agreement includes P included PBM reforms but it also included bipartisan wins like reauthorizing and adding new funding to the special diabetes programs encouraging innovation in pediatric rare disease
▶ 0:15:17drugs and reauthorizing CDC support for maternal mortality review committees Mr chairman I have here in my hand a 17-page list of the um of the policies that the Democrats and the Republicans in the House and Senate agreed upon last year that have not yet been signed into law because Elon Musk and Donald Trump forced everybody to or forced the Republicans to remove them from
▶ 0:15:47the continuing resolution last year and I'd ask unanimous consent to place this in the record without objection thank you um so here we are again we're just talking in a topical hearing yet again about reforms that we all agree upon rather than just passing those reforms and moving on to other pressing business instead of this reiteration of previous work this subcommittee could be examining what effect indiscriminate Mass layoffs at HHS will have including slowing down drug and
▶ 0:16:17device approvals and hindering our ability to assure the safety of nursing home residents we could be talking about the thre threat of Aven flu which grows every day and what this administ Administration is doing to prevent it from becoming a pandemic but also getting eggs back on our shelves we could be talking about the impact gutting Medicaid for Working Families to pay for tax cuts for the wealthy would have and we could be looking ahead to oversight of the PBM reforms that should have
▶ 0:16:47been law last December thousands of my constituents have contacted my office worried about these issues in the last few weeks and I'm sure everybody in this room has been hearing this same but the majority knows all these questions are that are important to our constituents are embarrassing to the administration and so we're not talking about them which is very frustrating to me so Mr chairman I I want to ask you um what if you don't mind what
▶ 0:17:17is the plan of the majority to get that bipartisan plan including PBM reform and also all of these other important Healthcare extenders that we agreed on last year to the floor at this point we are uncertain whether we're going to excuse me at this point we're uncertain as to exactly what we're going to do but I can assure you that it will be cleared up soon one of one of my concerns is the PB some of the some of the parts of your PBM
▶ 0:17:48Bill some of the important parts will not be your will not be bable in in budget reconciliation and so I think and you and I have discussed Mr chairman the idea of bringing up a bill that would be the PBM reform and all of these Medicaid extenders and putting it on suspension and so I I hope you're considering that Mr oh absolutely absolutely and and as I told you and I'm going to say this publicly for the record if you did that I'm going to guarantee you every Democrat
▶ 0:18:18would vote for that on suspension thank you so uh I'm going to urge you to bring it up before March 15th because that's when these Provisions all expire understood thank you I yeld back G lady yields I now recognize the chairman of the full committee chairman Guthrie for five minutes for an opening statement thank you and and I appreciate the ranking member's comments on that you know to be able to move these outside of reconciliation we're going to have to work together we have to do it in a bipartisan way and hopefully we're going to
▶ 0:18:48find that pathway to do it in a bipartisan way um I just want to thank the chairman and the ranking member for this hearing today our first Health subcommittee hearing was discussed the elicit drug threats ravaging our communities in particular the continued threat of fentanyl I'm happy to report that after that hearing concluded we're able to pass the hall fentel act and strong B bipartisan support on the house floor and today we're continuing our fight to lower health care costs for everyday Americans and especially our seniors last Congress the committee on Energy and Commerce worked
▶ 0:19:19to advance legislation solutions to make our health system more transparent that's what the general Eddie was just referring to to empower patients because of this work included holy holding Pharmacy benefit managers accountable by making uh their business practice transparent and passing legislation to cut unnecessary spending on prescription medications in Medicare and Medicaid as chairman of the full committee I've heard from many of our members of this committee loud and clear and I can tell you it is a priority of mine to ensure these common sense and bipartisan
▶ 0:19:49policies become law today over 80% of prescription drug benefits are managed by just a few vertically integrated pbms as a result patients have less Choice when they fill their prescriptions and oftentimes have less access to Affordable prescription medications data shows pharmacies that are not affiliated with the largest pbms are frequently reimbursed less than their Affiliated competitors I remain concerned by pbms using their Market power to hurt our independent pharmacies and restrict patients
▶ 0:20:19access to far to pharmacies I want to remind members of the committee that over 26,000 local retail and Community pharmacies have closed in the past 15 years the government accountability office recently studied how the current system of rebate negotiation is working for beneficiaries they characterize the problem by stating that rebates do not lower beneficiary payments in that higher cost drugs General result in higher beneficiary payments in gao's analysis of the top
▶ 0:20:49100 mostly High most high highly rebated drugs in Medicare for 79 of these out of a 100 drug seniors ultimately paid substantially more than their part D plans paid for the drugs today I hope we're able to come together again and focus on our bipartisan solutions to reain and spending at the pharmacy counter for America's families I appreciate uh the health subcommittee for holding this hearing and I will yield the remainder of my time to Vice chair my friend from Florida Mr Dunn
▶ 0:21:20Dr Dunn thank you very much Mr chairman and let me just say thank you to our Witnesses for being here today it's aent to me that the PBM reform is right for it to address last Congress this subcommittee did excellent work to advance policies that would shed light on the inner workings of pbms and provide transparency into their practices prohibiting spread pricing and Medicaid and delinking PBM compensation from the list of price of drugs are simply Common
▶ 0:21:50Sense reforms that I'm confident enjoy bipartisan support as you've heard today I'm excited to continue that work and thank chairman for his commitment to ensuring that the PBM reform remains a priority for this subcommittee with that I Y back gentleman yields I now recognize the ranking member of the full committee my friend from New Jersey Mr palone for five minutes for an opening statement thank you chairman Carter today committee Republicans are holding a hearing on
▶ 0:22:20Pharmacy benefit managers pbms at the same time they're trying to take Health Care away from millions of Americans bottom line is if people don't have health care they're not going to get drugs at all and PBM reform won't even matter to them Republicans continue to push a budget resolution that would direct this committee to cut at least $880 billion do from programs within this committee's jurisdiction and we all know the vast majority of these Cuts will come out of the Medicaid Program Republicans are also hiding the true
▶ 0:22:50price tag of their Medicaid Cuts since their budget resolution is over 9 years rather than 10 now the size of the medic Cuts will actually be closer to a trillion dollars over 10 years and that is hundreds of billions of dollars more than an entire year of federal Medicaid funding and we have the freedom caucus demanding that the house find an additional 500 billion in spending cuts which will almost certainly come from Medicaid if they Prevail and once again Republicans are showing they are willing to rip Health Care coverage out of the hands of everyday
▶ 0:23:21Americans to provide tax cuts to Elon Musk and his billionaire friends the people who will suffer are children seniors and people with disab abilities pregnant women and families trying to get by the shocking part is that many of these people live in Republican districts for instance representative overal has one of the highest percentages of Medicaid beneficiaries in the country with 47% of the people living in its District relying on Medicaid over 31% of the good people living in chair Guthrie's District rely on Med rely
▶ 0:23:51on Medicaid as a vital Lifeline with 42% of kids in his district relying on Medicaid and Chip now Republicans look claim that they want to cut the Medicaid Program because they want to address fraud waste and abuse and that no one's going to get hurt but that's absurd you simply cannot take that amount of money out of the Medicaid Program and not hurt the people who rely on it Medicaid is in fact a lean program despite picking up the tab for cost of care that no other payer covers per person spending is a fraction of the cost
▶ 0:24:21of private insurance or even Medicare the reality is that gutting State Medicaid budgets will lead to fewer people with coverage fewer benefits for the people who manage to keep their coverage worse access to care higher health care cost for everyone and more medical debt and hospitals and community health centers will be forced to close and Republicans are turning the backs on the American people to hand out giant tax breaks to their billionaire friends now turning to the topic of pbms I believe we should be working together to bring greater transparency
▶ 0:24:52to PBM practices so we can lower the cost of prescription drugs for consumers increasing transparency of PBM practices can help employers consumers and the American people better understand how drug prices are ultimately determined at the pharmacy counter last December we had a bipartisan byic Camal agreement on a number of policies to reform pbms and to address the lack of transparency within the market but as you know speaker Johnson riged on the agreement after Elon Musk voiced his opposition
▶ 0:25:22to it the agreement he walked away from would have helped lower prescription drugs for consumers Reign and abuse of practices that lead to higher drug costs and help employers better understand drug price information in order to effectively reduce healthc care costs the package also included a number of other critical components such as funding for community health centers teaching Health Centers and two years of teleah health and Medicare but again at Elon musk's Direction House Republicans pulled the bipartisan agreement leaving these important bipartisan Solutions on The Cutting Room
▶ 0:25:52floor and now we're two weeks away we're two weeks away from the continuing resolution expiring and my chairman Carter who I respect says he's going to have a plan soon to bring up the package with the pbms again but I have to be honest I'm only going to believe it when I see it right it's more likely in my opinion that you have some plan and Elon mus just waves the magic musk Wan and once again and that's the end of PBM reform uh I might sound cynical
▶ 0:26:22but I saw it happen and I've see it every day with musk and that's what I think's going to happen but we're ready with you to work on PBM reform and try to pass this entire package again but I'll believe it when I see it and with that Mr chairman I you'll back the balance of my time the gentleman yields this concludes member opening statements the chair would like to remind members that pursuant to committee rules all members opening statements will be made part of the record we want to thank
▶ 0:26:52all of our Witnesses for being here today and taking the time to testify before the our Witnesses today are first of all my good friend Mr Hugh chansy a pharmacist in honor of chansy drugs Mr sha excuse me Mr Shan um G Geringer Geringer did is that okay griminger griminger okay griminger everybody Mr Sean griminger a president and CEO
▶ 0:27:22of the National Alliance of healthcare purchaser coalitions Mr Anthony Wright executive director ctor of families USA and Miss and Dr Matthew feedler senior fellow in economic studies at the Brookings Institute on the center of Health policy thank all of you for being here today per committee custom each witness will have the opportunity for a five minute opening statement followed by a round of questions from Members the light on the timer in front of you will turn from green to Yellow when you have one minute
▶ 0:27:53left I now recognize Mr chansy for five minutes to give an opening statement chairman Guthrie ranking member palone subcommittee chairman Carter Vice chairman Dunn ranking member nette and members of the committee my name is Hugh chany I'm a pharmacist and co-owner of chansy drugs and former president of the national Community pharmacist Association I greatly appreciate the opportunity to share with you my
▶ 0:28:23experience as a pharmacist and a small business Pharmacy owner about how pbms have negatively impacted my ability to care for my community my family has been in the pharmacy services in south Georgia since 1966 when my father Hubert chansy opened our original chansy drugs location chansy drugs specializes in compounding in specialty packaging and enhanced Clinical Services and we employe over a hundred people I'm proud of the work that chansy
▶ 0:28:53drugs has done over the decades offering Essential Health Care to patients but this important work is being jeopardized by the pbms that determine which patients have access to our Pharmacy the prices that they pay and with uh reimbursement pharmacies receive and the medications that are on formulary the top three pbms control over 80% of the market due to vertical integration they steer patients to their own affiliate phes many patients who
▶ 0:29:23are required to use PBM on mail order uh Pharmacy receive their medications late or sometimes not at all recent reports from the Federal Trade Commission found PBM steer patients to use specialty drugs at their Affiliated pharmacies allowing the pbms to generate more than $7.3 billion dollar in Revenue pbms are also engaging in anti-competitive tactics like cost inflation spread pricing low faracy reimbursements coercive
▶ 0:29:54contracts for non-affiliated pharmacies leading to higher cost for government limited patient choices and increasing Pharmacy deserts pbms claim that they save money for the state funded health plans like Medicaid Managed Care yet numerous reports show something very different excessive amounts of taxpayer dollars funnel to pbms eliminating spread pricing and moving to a transparent cost-based reimbursement saved West Virginia and North Dakota 54
▶ 0:30:2554.4 million and 17 million respectively in their Medicaid Program Kentucky identified 123 million of spread pricing annually precipitating a wholeale change to their Medicaid Pharmacy model meanwhile Ohio's attorney general or auditor general found over 224 million of spread pricing likewise Illinois Virginia and Maryland have all found egregious sums of spread pricing
▶ 0:30:55in their states do you see a theme that's why Congress must pass Medicaid Managed Care Pharmacy payment reform and ban spread pricing by requiring a 100% pass through to the pharmacy of the ingredient cost and the professional dispensing fee which the CBO has scored a savings of $2 billion on top of this our contracts with pbms are take it or leave it especially in Medicare Part D pharmacists are not able to negotiate better terms in our contracts
▶ 0:31:26in direct opposition to what the pbms have sworn in Congress some of the most basic yet most life- sustaining medications are often under reimbursed and we are rarely paid for the actual cost to dispense Georgia's professional dispensing fee for Medicaid pays 1063 but it's not unusual for me to get paid only a nickel and oftentimes receive no dispensing fee at all for Part D patients in addition to the Medicaid Managed Care reform I support the leg
▶ 0:31:56legislative provision reasonable and relevant contracts between pbms Andes and Medicare Part D quelling PBM exploitation both policies were included in the negotiated healthc care package at the end of last year altogether the PBM reform policies included in that package saved nearly $5 billion and a huge step forward in protecting pharmacist and patients from PBM greed it is critical
▶ 0:32:26these bipartisan B Ral policies get past and as quickly as possible because of the pbms we have lost nearly 2700 retail pharmacies in the last four years if the PBM industry continues to go unchecked thousands more like chansy drugs could go out of business further reducing access and increasing cost in conclusion I want to end with a personal story that gets to the heart of Independent Pharmacy my community was devastated by Hurricane Helen
▶ 0:32:57and our town was without power for days in this time my Pharmacy in vasta served as a disaster relief Hub to collect and deliver vital supplies like water baby wipes formula and toiletries now you tell me can a PBM do that I implore you to take immediate action and pass Common Sense legislation to reign in harmful PBM practices to pharmacies and patients alike we are not asking for favorable treatment
▶ 0:33:27we're asking asking for a Level Playing Field I encourage lawmakers on both sides to continue to work in bipartisan manner to pass these reforms that save5 billion if not we will see more deserts Pharmacy deserts and less access to care I applaud this committee for its bipartisan efforts to shine light on the pbms and I'm happy to answer any questions thank you thank you Mr Chancey chair now recognizes Mr griminger for five minutes
▶ 0:33:58thank you chairman Carter ranking member to getet and members of the subcommittee it's an honor to speak to youday today on behalf of the National Alliance of healthcare purchaser coalitions We're The Voice uh voice for more than 40 regional and local purchaser coalitions which together represent employers private companies public entities labor union trust funds and others covering more than 45 million covered Americans I'm here to provide the perspective of self-funded employers and purchasers on the immediate and pressing need for PBM reform in particular I'm here to voice our strong support
▶ 0:34:28for sections 9901 and 902 of Title 9 of HR 10445 the original version of the continuing resolution released in December those two Provisions provide for real the initial purchase of the drug by their wholly owned goo all the way down to the sale to the final purchaser over 100 million people receed their Healthcare through self uh funded employer Health Plans governed under orisa self-funded employers directly contract with pbms to manage their Pharmacy benefit given
▶ 0:34:58that self-funded employers directly pay for the cost of their Pharmacy and medical benefits and hold the risk of variation in plan spending employers essentially hand pbms their credit card and say go out and spend our wisely since orisa's Creation in 1974 self-insured employers and purchasers have been held to a fiduciary standard to oversee plan assets set aside by their employer on behalf of covered individuals the Consolidated Appropriations Act of 2020 raises the bar for self-funded health plans requiring them to pay fair prices for
▶ 0:35:28goods and services unfortunately over the past several decades the PBM Market has become highly dysfunctional to the detriment of employers purchasers and Working Families I want to focus on two key Market distortions wasteful formulary placement and deeply rooted opacity while clearly against the best interest of employers purchasers and patients pbms will often Place drugs with limited clinical value and higher net cost at preferred tiers on an employer's formulary waste of formulary placement occurs when a PBM is able to extract higher discounts or fees
▶ 0:35:59not passed on to employers from manufacturers seeking to expand market to the overpriced or low value drug section 901 of the bill in front of you requires pbms to disclose and provide a rationale for formulary placement and disclose when formularies are changed perhaps the most pernicious flaw in the PBM Market is the level of opacity between pbms and their plan sponsor clients in general plan sponsors are unable to determine the initial price of a drug paid by the gopo the extent to which negotiated rebates are passed to them and whether there is a differential
▶ 0:36:29in pricing between wholly owned pharmacies and those by other entities section 901 provides Vital Information to employers to answer those key questions let me say this very clearly most self funded employers to this day do not know how much money they are spending on any specific drug given that how can employers act as prudent fiduciaries under Arisa I want to give you a specific example of one of the challenges employers face earlier this week I spoke to the benefits leader of a large self-funded plan
▶ 0:36:59with more than 200,000 covered lives they are currently conducting an RFP on a new PBM this benefit leader asked the applicant pbms if they would be willing to provide claims level rebate information all of the big pbms refuse to do so the legislation before you would mandate it before I end I want to address some of the claims we'll hear from the big pbms the PBM industry will tell you that employers are happy with their vendors and don't want reforms if that's the case I'll ask you why 89% of the Employers in the National Alliance survey of 188
▶ 0:37:30large and mid-market employers said they support PBM reform if employers are happy with their pbms then why are the nation's leading employer Representatives ourselves the orisa industry committee the American benefits Council the HR polic policy Association and many others on record supporting this legislation the PBM industry will say tell you that employers are able to engage in real negotiations with employers to design their contracts the way they want them if so then why is one of the largest most sophisticated most aggressive purchasers in our Network unable to get answers to a simple question
▶ 0:38:00how much am I paying for each drug the pbms will tell you they already pass on all or nearly all rebates and discounts if so then why are they so dogged in opposing a bill mandating they do what they already claim to do there's a reason that big pbms are willing to make false claims to you they cannot stand the thought of a functional Market in which empowered employers and purchasers can demand better prices the legislation before you represents the most significant reform to the PBM industry in history it is fundamentally
▶ 0:38:31rooted in establishing a more transparent Freer fairer Market the big big pbms will do everything in their power to stop that from happening thank you again for holding this hearing and I look forward to your questions thank you Mr Grier chair now recognizes Mr Wright for five minutes for an opening statement thank you uh chairman Guthrie and Carter ranking members palon to getet on behalf of families USA the longtime Healthcare consumer Advocate thank you for the opportunity to discuss the need for transparency
▶ 0:39:01and oversight of Pharmacy benefit managers as part of broader efforts to advance affordability and access for families seeking life-saving medications and Care in last year's election Americans made it clear their concerns about costs and while they've talked about the eggs of the price of eggs for months they've been screaming about the price of prescription drugs and health care for decades nearly three in 10 adults report rationing skipping doses or not filling their prescriptions at all because they can't afford it an estimated 125,000 people die each year as a result
▶ 0:39:31of not taking their medications as prescribed in part due to cost inflated prescription drug prices affect everyone as they contribute to Rising insurance premiums higher deductibles and stagnant wages for workers drug companies seek to shift the scrutiny and blame but ultimately they are the ones who take advantage of our system to set High initial prices and in routinely increase them far faster than inflation to counter these ever increasing costs Congress should continue bipartisan efforts to stop the gaming of patents and also to protect and expand
▶ 0:40:01medicare's ability to negotiate drug prices in the absence of broader government regulation or negotiation of drug prices payers like insurers employers and Union trusts turned to Pharmacy benefit managers as an important tool to help them bargain for the best value yet the PBM solution has sometimes become part of the problem building a business model where their own Revenue depends on high drug prices many of the these middleman's operations are opaque as was stated not even employers who
▶ 0:40:31hire pbms know the actual drug prices they are paying or what rebates the pbms are receiving this leaves patients and plans wondering if the pbms are negotiating for the best cost quality and value of the prescription drugs or just simply try to rake the most money off the top these issues get mer bigger as mergers lead to more consolidation of pbms insurers Andes as was stated by the chair not the now the top three pbms control 80% of the market making it less competitive allowing prices to
▶ 0:41:02rise undercutting Independent Pharmacies reducing patient choice and access for families in many Rural and underserved communities this impacts people like my mom who until her passing recently was a diabetic and breast cancer survivor who took 10 different drugs not unlike many seniors with a burgeoning bill she benefited from a small pharmacy around the corner from her home in the Bronx glad not to have a to Trek to the chain store in the next neighborhood over I was grateful for that Community pharmacist who sometimes checked in on her and hand delivered her medications
▶ 0:41:33but such options are unfairly undercut by pbms seeking to steer patients to not necessarily the most affordable or convenient Choice which might make sense but to the Big Chain that they own families USA recommends that this committee take action to address PBM abuses and reduce prices in four ways one reduce uh I mean sorry require greater transparency of PBM negotiations their operations and their ownership structure two increase oversight and regulation of PBM consolidation
▶ 0:42:03at the FTC and other agencies three explore ways to eliminate perverse incentives for pbms to prioritize higher price drugs and four seek to ensure all savings paid to pbms are passed through to payers and consumers we strongly support PBM reform as part of the broader affordability agenda on drug prices and healthcare costs however we must also convey the context that any benefits of PBM reform would be exponentially overwhelmed by negative impacts
▶ 0:42:33of massive Medicaid cuts that this Congress is currently considering from the loss of coverage to health impacts to increase in costs the uninsured don't have a PBM or a plan or anyone to negotiate drug discounts as a result the uninsured pay more for prescription drugs than anyone else in the entire world and are twice as likely to forego meds as those with Medicaid coverage and that neighborhood pharmacist in the Bron who might be undercut by PBM practices May likely go under if Medicaid faces major Cuts as contempla
▶ 0:43:03and that would be true in rural areas as well rather than taking a chain Shaw to healthcare programs the PBM policies discussed today represent a careful common sense and consumer oriented approach and would yield some initial savings and provide transparency to inform further reform like the laudable lower cost more transparency act in the last Congress that this committee worked on PBM reform is a way the policy makers can work together to advance well-vetted bipartisan reforms to the healthcare system that improve transparency fix misalign
▶ 0:43:34Financial incentives and lower the cost for the American people and the federal government Americans are asking policy makers to make care more affordable not less PBM reform can and should be passed as part of a broader affordability agenda to provide real relief for on healthcare costs that Americans are demanding thank you for your time and effort holding this hearing thank you Mr r chair now recognizes Dr fedler for five minutes for an opening statement chairman Carter ranking member to get members of the subcommittee my name is Matthew
▶ 0:44:04feedler and I'm a health Economist and a senior fellow at the Brookings institution I'm grateful to be here to discuss how the market for PBM Services is working as well as the potential and limits of recent reform proposals a core problem with the PBM Market is that competition is weak by some estimates the three largest pbms control almost four fifths of the market various frictions in this market also dampen competition the complexity of the contracts between pbms and their clients who may be insurers or self-insured employers can make comparison shopping hard
▶ 0:44:34this may be particularly true for self-insured employers whose core expertise typically lies outside of healthcare switching pbms is also challenging since it requires a plans and Ro EAS to adapt to new formulary rules and Pharmacy networks as a result pbms wield Market power that they can use to demand prices and excess of their costs of delivering services and in turn earn excessive profits one way that policy makers have considered addressing this problem is by requiring pbms to give their clients additional information about how the plans they manage are operating
▶ 0:45:05greater transparency would likely reduce the price of PBM Services by making easy it easier for payers to comparison shop enforce existing contracts or press their pbms for better terms it is important to recognize however that the savings would likely be relatively modest the Congressional budget office has estimated that transparency Provisions like the ones this committee considered last year would reduce PBM Revenue by around 00 million per year with that effect fading over time as a comparison Point pbms pre-tax profits total about $18 billion in
▶ 0:45:352022 another strategy that policymakers have considered is changing how payers compensate pbms such as by borrowing pbms from uh retaining manufacturer rebates delinking PBM compensation from drug prices or prohibiting pbms from using spread pricing importantly these types of restrictions are unlikely to directly reduce the price of PBM Services barring pbms from collecting certain forms of compensation such as manufacturer rebates would likely just lead pbms to collect more compensation in other forms such as administrative fees changing the structure
▶ 0:46:05of PB PBM payer contracts could affect payers by changing how pbms manage the underlying drug effect drug benefit although these effects could be both positive and negative consider as an example barring pbms from retaining rebates this change would eliminate pbms incentives to prefer drugs with large rebates over the drugs with the lowest net prices when they construct formularies which would reduce drug spending but it could also reduce pvm's incentives to negotiate aggressively for larger rebates which could increase spending dinking and spread pricing proposals can
▶ 0:46:36present tradeoffs before I move on I want to make two caveats first even where reforming pbms how pbms are compensated doesn't benefit payers it might still benefit whoever ultimately pays a plan's premium via interactions with medical loss ratio requirements but this would depend on the circumstances and on how payers is adjusted to the new rules second reforming PBM payer relationships is unlikely to have much effect at all in settings where the PBM and the payer are part of the same company notably that's now the typical scenario outside the
▶ 0:47:06self-insured employer Market in closing I want to make one broader point if the goal is to make prescription drug coverage cost less or work better PBM reform is one piece of the puzzle but it may not be the most important one PBM profits amount to only several per of overall drug spending so even eliminating those profits would only moderately reduce the overall cost of drug coverage if policy makers want to achieve larger cost reductions that would require reducing the prices received by other actors in the supply chain especially drug manufacturers policy makers
▶ 0:47:36may also be concerned that high cost sharing and onerous utilization management protocols make it hard for patients to get the drugs they need but where this occurs that's often not because pbms are failing payers but instead because payers incentives are poorly aligned with patients interest this may be because payers have incentives to avoid high cost and R leas or because it can be hard for consumers to access a Health pl's Quality when they pick a plan or choose an employer or for other reasons but addressing these types of problems requires reforms to how Insurance markets operate such as improvements to
▶ 0:48:06risk adjustment systems or direct regulation of planed benefits not reforms to PBM payer relationships thank you again for the opportunity to testify I look forward to your questions thank you Dr Baylor I thank all of you for your testimony today we'll now begin questioning and I recognize myself for minutes let me Begin by asking unanimous consent to submit letters from organizations representing patients providers
▶ 0:48:36pharmacists small businesses and advocates in support of PBM reforms no objection without objection the big three pbms vertical integration with health insurance conglomerates enables them to exploit conflicts of interest to drive prices up quality down and independent pharmacies out of business for instance the top PBM to your patients and the most lucrative prescriptions to their Affiliated pharmacies and away from independent competitors the ftc's latest interim staff report on pbms
▶ 0:49:07found that the big three reimbursed their Affiliated pharmacies by up to 7,736 per more for specialty generic drugs compared with independent competitors unbelievable take the drug peradon for example it can be purchased without insurance for $200 however seniors on Medicare filled 85,000 times in
▶ 0:49:382022 at an average cost of $88,000 per prescription you can buy it for $200 they were charging $8,000 per prescription $85,000 times they did that if you do the math on that you see that is a big number Mr Chancey I want to start with you after all um like you I stood behind that Pharmacy Counter for many years and I was the one who had to tell the patient who how much the medication was I was the one who watched
▶ 0:50:08a senior citizen try to make a decision between buying groceries and buying drugs I was the one who watched the mother in tears as she tried to figure out how she was going to pay for her child's medication and you do that as well I want to hear from the person that's standing behind the Pharmacy Counter like yourself can you highlight other barers of inefficiencies in our health care System where pbms have impacted Independent Pharmacies and therefore harm patient care yes there there's several things that come to mind
▶ 0:50:38uh one of the things that they're doing now is they're requiring brand when there's a generic available and they're making Part D uh recipients pay the the brand co-pay um uh you know another area um we we have a we have a they're they're controlling access uh to to the pharmacy we have one patient she um she's 92 years old and her husband is 95 and uh they're blind she's legally blind and
▶ 0:51:08uh we do specialty packaging so that she knows what kind what time to take her dose and her meds and um she wants to be as independent as possible because she's afraid that her husband's going to die and she's going to be left alone well uh tracker actually took that away from us they took they narrowed the the net work removed us from it and now they're making him drive like 20 minutes to a pharmacy when he's 95 so we were giving them a great deal of of of Health Care and they took that opportunity
▶ 0:51:39away from us and put it to one of the big box chains but the unfortunate thing is this is a patient that needed care um I think there's also a waste that we see in mail order as you've already mentioned we had one patient that we were filling specialty drugs they demanded it go to mail order we later found out that mail order was charging $300 over what they were paying us I had a a colleague that reached out with to me with some information yesterday and this is still bothering me
▶ 0:52:09um he accidentally his Pharmacy got turned on to a mail order reimbursement rate in the 1 of January this year so we compared the first six weeks of this year were the first six weeks of last year and on average he was getting 17 times more more profit on the maale order pharmacy reimbursement you know that's something you just you hope that it's not right but it is because it's proven by the FTC and also by the uh three a of study in in Washington state
▶ 0:52:39well thank you for that and thank you for that information these are real people these are real examples that you deal with every day and we thank you for that you know I want to tell you about my drug transparency and Medicaid act it's part of the original continuing resolution that you had mentioned representative to get in December that includes a band to prevent pbms from retaining revenue from spread pricing so are you familiar with spread pricing Mr chy can you talk about that for just a second yes I am I I I think that uh
▶ 0:53:10it's it's really interesting and I still don't understand it why they actually pay um themsel pay the chains more than they pay us and then they pay themselves more than they pay the chains but um recently I think it was in January the we had a lady her insurance rolled over into a new plan but she didn't tell us so we filled it on her old plan and she was uh charged 1335 her insurance paid $135 on her plan well a
▶ 0:53:40few weeks later she gets a bill from the PBM saying that she owes $400 and um so our Pharmacy said well we only got paid $ 135 so she got on a three-way call with the pharmacist and the PBM and they said well you owe $400 and she said the pharmacist said well you we only paid you only paid us 135 and well this is what the plan got charged so that spread pricing 135 is what it cost to get the prescription 400 is what the plan paid
▶ 0:54:10thank you Mr chany for that for that um testimony at this time I recognize the ranking member representative deette for five minutes of questioning thank you so much Mr chairman and I want to thank all of our Witnesses for coming today Mr chansy I hear very similar stories from my my community pharmacist in Colorado and I'll just say the reason why they're um uh forcing people to go to the chains is because in many cases they own the chains so they can get more money um
▶ 0:54:41m i I want to um talk with you for a minute Mr Wright about some of the things that mentioned because last last Congress we really worked and now our first Hearing in this subcommittee it's on PB M reform because we're trying to make reforms that will make a difference in people's lives but it's these reforms are only going to work for people who have health care coverage and so I I made up a little chart and the chart
▶ 0:55:11I made up say shows that Republicans who are on this subcommittee have 3,359 524 people in their districts who are on Medicaid right now and so so I I want to I want to ask you Mr Wright do you know how many people nationally are covered under the aca's Medicaid expansion option roughly around 21 million 21 million
▶ 0:55:41now what would happen if uh those folks didn't have Medicaid if the expansion was eliminated what would happen to those folks ability to afford insurance I mean by definition the folks that we're talking about are make less than $22,000 as an individual 44,000 as a family of four and so uh private coverage would largely be uh dramatically unaffordable for them they would be become uninsured and as a result live sicker die younger
▶ 0:56:12one be one emergency away from Financial ruin both health and economic so these people make less than $22,000 a year you as as individual and so if they didn't have either private insurance because they couldn't afford it or Medicaid what would that do to their prescription drug cost if they had to just buy it without insurance um they would be paying the the rack rate the list price which often is the most expensive price in the world do you have an do you have an example and hundreds or thousands or I mean if you're an
▶ 0:56:42MS patient those drugs cost tens of thousands of dollars if you're if you're like my mom who had a list of 10 drugs that adds up real quick and like to what I mean give me an example hundred I mean it depends on the person but hundreds or thousand thousands of dollars and as I said the the people who are uninsured uh take their their drugs like adhere to their drugs less than half of what people un Medicaid yeah I you know I'm the co-chair of the diabetes caucus with Congressman Bill AR rockus
▶ 0:57:12and it's the same thing with insulin if people have insurance or Medicaid then their insulin is covered but if they have to pry pay private costs it could be it could be $300 or $400 a bottle and and they die if they don't take it now yesterday my colleagues on the other side said it's not fair for the federal government to pick up a greater part of the tab for the expansion population than for other Medicaid eligible individuals but so what would happen if the
▶ 0:57:42government ended that commitment to the current federal assistance for the Medicaid expansion if the federal government reduced how much it uh its share of any population and there's lots of populations that are at different match rates uh depending on state depending on Aid category but uh that that is just basically a cut to the state and then the state basically has to make a Sophie's Choice about whether they raise taxes or cut services but what what if you have a state like Colorado that constitutionally precludes us from raising taxes exactly
▶ 0:58:13and so then you are in a choice and I was a state a state health and consumer advocate for for three decades and there is no other choice you either in healthcare you either cut people you cut benefits or you cut provider rates and had that impct I want you to talk about one last thing because we keep hearing that the way we're going to save $880 billion is we're going to cut waste Fraud and Abuse so I want I want you to talk about how much fraud there is in Medicaid um I mean it's a very lean
▶ 0:58:43program probably your best bang for buck within the the Health Care System um in terms of beneficiary fraud it's been estimated at less than one one tenth of 1% um so that does that equal 880 billion dollars no what is what is roughly that I mean it would be it would be fraction it would be fractional and again that's uh that's not there's other ways to get it fraud but $880 billion requires massive cuts to coverage to benefits and to direct payments
▶ 0:59:13to their providers thank you I yield back General lady yields back and uh chairman Guthrie the full committee is recognized yeah he said beneficiary waste and fraud doesn't mean provider Wast and for all we give a lot of examples of that and uh someone doesn't understand that you don't have to cut that those kind of benefits that's not accurate statement um so I'll start with Mr griminger um much of the conversation on pbms has been focused on the rebate model and I question whether this model
▶ 0:59:43creates perverse pricing incentives do you believe this model has the unintended consequence of artificially inflating the cost of prescription medications unquestionably uh the rebate model which is sort of deeply embedded in the way that we pay for drugs in the United States um is uh provides all the incentives toward higher list prices and higher overall prices uh and very no very little incentive to actually creating a lower list price and lower rebates um
▶ 1:00:13ultimately I think on this is would be very challenging but ultimately I think we need to actually move completely away from rebate model in which we are paying a set price not a government set price but a market-based price on a drug that's based on its clinical value over what else is in the market as opposed to you know something that incentivizes very high list and then large rebates to try to get on formularies okay thank you and how can PBM transparency legislation this committee marked up how can the how can the PBM Transportation transparency legislation this committee marked up and passed
▶ 1:00:44the house representative less Congress help patience yeah it's going to um allow employers for the first time to actually understand exactly how much they're paying for each drug right so right now we have no idea um at this point you know there's one of the big concerns in the PBM industry is we only have three big ones that represent 75 80% of the market they often have pretty similar offerings um but the biggest problem is we can't even tell if you can't tell how much you're paying for each drug you can't tell which PBM is better for you you can't tell what other model is better for you um the kind of transparency that we're going to be able to see
▶ 1:01:14is going to give us a better indication of where we're getting real value and where we're not it's going to give us a better idea of whether there are alternative PBM bottles or alternative uh contracts that we that employers can drive toward it's going to actually create something closer to a fair market uh which we believe will actually reduce ultimately the price of drugs Mr feedler made the suggestion that uh that the this particular bill would have a sort of marginal impact on the overall price of drugs I actually think the CBO and uh and economists are underestimating what the impact could be
▶ 1:01:44because you're going to start creating real competition in a market that really lacks any now which we think actually will end up reducing the overall price of drugs because ppms will actually start competing on getting better deals rather than competing on getting bigger rebates thank you you uh Mr chansy um the government accountability office recently found that 79 of the most highly rebated drugs in Medicare seniors are required to pay more out of pocket by more than 15 billion than their planned sponsors for these drugs how do you believe the legislation to to dink PBM compensation from list price
▶ 1:02:14and Medicare Part D can help to alleviate the pressure seniors are facing resulting from the current rebate model well I think through transparency we're able to follow the numbers and realize where where the waste is I think think that that's going to um help us to to bring those prices back down but the dinking do you think that the dinking pbn compensation from uh the list price how's that going to specifically help um I'm not sure okay uh in some cases a generic Mr Chancey a generic medication is
▶ 1:02:44placed on a specially drug tier does this mean that the generic medication is more clinically effective than a branded competitor uh no and if not what are the the implications of this generic medication being placed on a specialty tier from the perspective of PTI patient cost sharing uh that's a good question it's not always clear why it's done you think there's a difference no so thank you on that and on that and so we talk about we had some questions on Medicaid
▶ 1:03:14so waste Fraud and Abuse sometimes it's not always fraud sometimes our our system allows uh systems to move this is not quite specifically to you you but people seem to think that it's just less than one ten percent that that people maybe if you say fraud then you have providers that we know that have fraud and and so it's not fraud but is it waste or abuse if uh if uh if a state and I was in state government before and we tried to figure this out figured out ways to match the federal match by
▶ 1:03:45taxing providers getting the federal match and giving it back to them you know 1% of that is $55 billion so we're not talking about small money and we're talk talking about drawing down the federal government so when everybody thinks it's just uh it we're not talking about small numbers and there's o opportunities to take care of waste Fraud and Abuse and Medicaid and and I think we all should want to take care of waste Fraud and Abuse and Medicaid so I will yield back thank you gentleman yields the chair now recognizes
▶ 1:04:15the ranking member of the full committee representative palone for five minutes of questioning thank you chairman Carter I'm obviously deeply concerned about the Medicaid cuts that Republicans are considering and yesterday at our oversight plan markup you know I repeatedly heard Republicans on the committee refer to so-called waste forood and abuse and Medicaid chairman Guthrie just mentioned it actually but as they provide this misinformation which I think is what it is Republicans
▶ 1:04:45are seemingly trying to convince even themselves that they can somehow cut a trillion dollars for Medicaid and the American people won't suffer that's just not the case and I I I want to stress to everybody and maybe to the public you know you can't just say oh we're going to cut waste Fraud and Abuse and and that's going to save us $880 trillion do right you have to actually get into what you're going to do you have to say I'm going to uh cut back on 90% for Medicaid expansion I'm going
▶ 1:05:15to reduce the fmap I'm going to do X Y and Z you just can't say oh uh will'll cut waste for an abuse when they actually do the bill they're going to have to say what they're cutting so in many proposals uh on the house budget committee's list of options this is for Dr feedler if you will on the many proposals on the house budget committee's list of options to cut Medicaid funding do any of these Medicaid proposals you know like the Chairman's uh per capita or the other things I mentioned with fmap do any of those
▶ 1:05:45things if you just do those things actually cut down on actual waste fraud abuse in my view these types of proposals are not targeting Fraud and Abuse use there are broad changes in who's eligible for Medicaid or how costs are shared between the federal government and the states not proposals aimed at targeting particular problematic expenditures you know what's wasteful is ultimately value judgment but the policies being targeted Federal support for Medicaid expansion policy changes that make it easier for um low-income seniors to
▶ 1:06:16get help paying their medicare premiums or support for Medicaid generally are in my view fairly high value use of public dollars so Dr feder if they do cut the matching rate to States for Medicaid expansion or just the fmat you know for States even for regular Medicaid how is what's the effect of that how's that going to impact State budgets for example so if you take this specific example of expansion um if the enhanced match for expansion were to go away
▶ 1:06:46uh the current expansion States would need to come up with 40 to 50 billion a year to fill in that budget hole and so the question is what are they going to do um you know in principle states could raise taxes they could cut other spending you know education is typically the largest light light em in state budgets but transportation Public Safety those things could be on the table but in practice my expectation is many states would conclude they can't make the math work and instead they would conclude they have to drop expansion um and you know the expansion population is 14
▶ 1:07:16million people so it's hard to imagine that there we aren't talk talking at the end of this about many million people becoming uninsured well thank you now let me go to Mr R can you describe cribe who is covered by the affordable Carex Medicaid expansion for example how does Medicaid expansion support parents and families how does losing health coverage affect the health and economic security of these families um and and and I guess well let me issue that and then the next question I'll get you I mean the the AC expansion allowed for
▶ 1:07:46of basically every American under 133% of the poverty level again that 22,000 a year 44 for th000 for a family of four to to be able to access basic coverage primary preventative care it includes parents it includ um from it was a patchwork before this now includes parents includes adults without kids at home and uh and it's essential for having access to care otherwise uh those folks simply did not have the means to find coverage in other ways and were were relying on basically
▶ 1:08:17getting care in the most inefficient expensive ways in the emergency room or through other me means if if they did at all and and you know I I don't want to I I want everyone to understand the reason that I'm not focusing on PBM reform it's not because I don't agree with it I'm totally in favor of the bipartisan issue that we we OB obviously put together on a bipartisan basis but if you don't have health insurance you don't have health care you're not going to have prescription drugs and you know you're going to talk about PBM reform and they're going to say congress what are you talking about I don't
▶ 1:08:47even have health insurance so last question how will Medicaid Cuts affect the bottom line of small businesses whether they're employees are without Healthcare and looking to them well first of all there's a lot of act a lot of small businesses who are who have Medicaid coverage a lot of small businesses um you know they may do the next big thing but until then they actually have very limited income and are and so Medicaid actually provides a a a basine a foundation for our entrepreneurial folks if you're a diabetic you can't take the leap to try to
▶ 1:09:17do something um without coverage uh to get that life-saving care the and again a lot of small businesses have their own their workers are are tend to be uninsured tend to be lower income and and it's desperately needed those workers can't come to work if they're sick can't can't uh be productive members of their Workforce if they're uninsured thank you thank you chairman Carter gentleman yiel the chair now recognizes the vice chair of the full commit of the
▶ 1:09:47subcommittee representative dun for five minutes of questioning thank you again Mr chair and thank you to our Witnesses for being here today I want to focus on the Medicare Part D linking to do this I'm going to highlight a common medication GAC GAC is a drug that's used to treat a number of different cancers including forms of leukemia in children and adults the generic for GIC became available in 2016 and according to data public available through data.cms.gov in 2022
▶ 1:10:18CMS spent over 90 million on the Branded version of glec in the part D program that's 6 years after the generic was available in 2022 CMS purchased over 455,000 doses of branded glec and spent $249.58 per dose per dose however a one- Monon Supply 30 pills of the generic can be purchased online for
▶ 1:10:48$34 50 that's $115 per dose compared to 250 $50 per dose that CMS was paying this means CMS could have saved $113 million in one year alone on glec add that together with the perone that uh chairman Carter mentioned you've got an $800 million plus savings on Two drugs in one year I understand that over the last several years pbms have moved away from compensation based
▶ 1:11:19on rebate retention to compensation based on administrative fees this merely renames the same same sin it's not different despite the shift the fees that pbms charge are often still tied to Medicine list prices and are certainly motivated by fee income breaking the link between PBM compensation and the price of medicines will help fix misaligned PBM incentives to drive up the cost for patients employers and CMS but we must also make sure
▶ 1:11:49these sins don't simply migrate into other areas of the supply chain fixing pbms misaligned incentives to prefer higher pric medicines higher price medicines could increase the coverage fixing this could increase the coverage of lower cost and Alternatives including generics and bio symbols and generate savings for employers plan sponsors and CMS also want to mention concerns that I have pbms are using the system to steer patients to their Affiliated specialty pharmacies
▶ 1:12:19the first FTC interim staff report also looked at CAC as a case study on PBM abuse es and the report found that 2022 for the PBM Affiliated pharmacies commercial reimb reimbursement rates for the generic glec were 40 times higher than the National Drug acquisition cost average and Medicare Part D reimbursement rates were 36 Times Higher when the same drug was purchased from an unaffiliated Pharmacy
▶ 1:12:50commercial payments were 80 to 90% less and Part D were 30% less there is massive massive Savings in this for CMS patients the government everybody this is Gravely concerning misaligned incentives are contributing heavily to the vertical integration this committee and other committees in Congress have highlighted Mr Chancey do you believe that dinking PBM fees from list list price
▶ 1:13:20is necessary to prevent pbms from favoring medicines with higher prices and and do you believe that this can help cons curb consolidation the PBM industry Mr johy yeah microphone would you please repeat your question yeah so I just you do you believe that dinking PBM fees from list prices is necessary and in effective
▶ 1:13:50I don't know all the details about dinking um I do know that it will um well they're they're competing with you Mr CH you really need to excuse me know your enemy yeah I do I do understand that um I I do know that it's that that the pbms are getting a discount off of that they sure as heck are let me let me add a second question M again Mr chy uh research suggested generic medicines in part D were placed on uh nonpreferred generic drug tiers almost 60% of the time in uh 2022 what role
▶ 1:14:20do you believe rebates played in this trend and how can dinking compensation from list price ensure seniors have access to cheaper clinically effective generic biosimilar anytime that we see something that we don't understand we know that there's rebates on the back side of that yeah you're right Mr Ginger how do you believe our pbmd leaking policy and Medicare party will help Employers in the Employers in the commercial market so as you know Mr dun the uh the D linking policy does not directly apply to the uh to the
▶ 1:14:50commercial Market uh I think that was done intentionally to sort of maintain the ability to um for some flexibility in the commercial Market I do think that uh you know often we will see Medicare policy will flow down to uh to orisa plans and Commercial market so um what I'm hopeful is that we'll see a a trend against uh linking fees to the price of drugs in the commercial market and certainly it's something that particularly with better uh transparency that's built into your bill uh we would be able to demand uh and try to change the way that we are paying our PMS now well thank you
▶ 1:15:20very much I I think this is an exciting area to explore there's a lot of savings had here Mr chairman don't give up thank you I Y back gentleman yields the chair now recognizes the gentleman from California Dr Ruez for five minutes of questioning on this hearing on how the Rainin pbms will drive competition and lower cost patients thank you Mr chairman uh as an Emergency Physician I came to Congress to improve the affordability and accessibility
▶ 1:15:50of health care for my patients and the communities that I a large part of that includes lowering the cost of prescription drugs in the ER I would treat patients and sometimes send them home with prescriptions however if a patient can't afford their medication they're not going to follow through and buy them I oftentimes got called by the pharmacist saying that this patient uh could not afford this medication and if I could prescribe them perhaps less expensive or maybe even less effective
▶ 1:16:21medication um not taking the medicine they are prescri prescribed can lead to worse Health outcomes and increase their chances of ending right back in the emergency room increasing transparency for pharmacy benefit managers is a good idea it's a bipartisan approach that has the potential to address Rising prescription drug costs Mr greminger how does a lack of transparency raise drug prices for patients um it it enables uh pbms to
▶ 1:16:51play mini games often we find that we they're sort of one step ahead of us so every time you know as you've um 5 years ago eight years ago uh rebates and discounts were sort of the biggest way that they made uh made money increasingly they' moved away from rebates and discounts and they've added on fees that are difficult to understand uh one of the things that your bill would do is at least try to be more transparent about what those fees are and what sort of value ad there is give the employers an opportunity to decide is this something that I'm I'm ready to pay for or is it something that I don't really need okay most prescription
▶ 1:17:21drug plans have a formulary where the plan is list it's covered drugs in a range of tiers from lowcost generics to more expensive specialty drugs bbms can design these formularies and determine which medications patients have uh can have and at what cost so Mr greminger how would increasing transparency help consumers better understand what is on the formulary and result in savings uh it's a terrific question so as you suggested most pbms in have a a a formulary sometimes
▶ 1:17:52a relatively complicated formulary we'll also see pbms change the status of a drug on a formulary multiple times per year sometimes even multiple times per week depending on what the size of the rebate is right so if they get a rebate differential they'll move something from tier three down to tier one and back uh back again um your bill or the bill in front of us uh would require pbms to disclose what's on their formulary at what uh tier and then actually provide a justification for why it's sitting there giving employers better information to decide is this appropriate or is it not
▶ 1:18:22um PB some of the larger um uh employers out there have instituted what are called waste free formularies where they've really sought to try to deal with this now thank you you know transparency is always a good idea it allows sunshine on the working of programs and of government it prevents corruption corruption uh that's why this committee needs to acknowledge the more pressing matter at hand that my Republican colleagues would rather skirt around the fact of the matter is while this hearing is about transparency for
▶ 1:18:52pbms as a way to lower cost for patience Republicans are not transparent in their plot to strip many Americans their own constituents included of their Medicaid Health Coverage to pay for billions in tax giveaways to billionaires Medicaid provides health coverage for 80 million Americans that's 32% and because my constituents are hardworking underresourced families 42.1% of my constituents rely on Medicaid
▶ 1:19:22for their health coverage important Health Services for beneficiaries are at stake and I have heard from some community health centers and hospitals in my district that have expressed concerns about what would happen to their ability to serve patients should these proposed Medicaid Cuts go into effect community health centers provide Essential Health Services in underserved Community you know this is not a blue or red issue Medicaid Cuts would not just hurt residents in blue States they will hurt people in Republican districts too this is about people
▶ 1:19:53it's about Americans it's an American issue I urge my colleagues to be more transparent themselves and let's work together in a bipartisan manner to protect Medicaid none of the other measures we take to lower prices and increase affordability of care matter if our constituents are losing access to care with Medicaid the cost of medicines is less without it people will pay much much much
▶ 1:20:23more out of pocket or go without their medicine indeed it will make America sicker and America poorer again thank you and I yield back gentleman yields the chair now recognizes excuse me the gentleman from Virginia representative Griffith for five minutes of questioning Mr chairman I heard earlier this morning ranking member palone say that uh based on the budget Bill Energy and Commerce was going to cut a trillion dollars out
▶ 1:20:53of while the budget Bill does set a goal of 880 billion for the Energy and Commerce Committee to find in savings it does not say that it has to come out of Medicaid and to paraphrase former chairman John Dingle of this very committee our committee's jurisdiction includes everything on planet Earth that you can see in a photo taken from out of space we have thousands and thousands of
▶ 1:21:24in which to look for Savings in the federal budget and In fairness all these statements about a trillion dollars and I've seen it online this morning being replicated it's a talking point on the Democrat side to scare the American people and it is nothing more than disinformation now to the matter at hand Mr greminger I agree with you on um CBO being wrong I agree with you that we need more transparency I agree with you that we need to move away from the rebate model but hold that thought I'll be be back
▶ 1:21:54in a minute Mr Wright I got this simple little bill called the fairness for patient medications act which in the last Congress was HR 3285 now what it says is is that if patient goes to pay for medication they won't pay more in their co-pay than the insurance company or the PBM has negotiated for that price with all the rebates they won't pay any more than what the insurance company is paying for that medication so
▶ 1:22:24that it doesn't become a profit center for the insurance company of the um it looks like to me that's good policy are you aware of the issue I am aare aware of the issue can you explain any rational reason why a a consumer often times not making a whole lot of money or even as you said in your opening statement maybe uninsured is going to pay more for the medicine than their insurance company I guess not uninsured but the why an insured who's paying
▶ 1:22:55for their insurance or their employer paying for the insurance would pay more for the medicine than the insurance company or the PBM is paying can you explain that to me you shouldn't ask me you should ask the insurers uh I I would I would I think the argument the argument that I have have heard is that to the extent that the insurer in some cases the PBM is negotiating a formulary a broader range of drugs are included and then the question of where do various drugs appear in certain formularies as part of the negotiating
▶ 1:23:25power of the insuring PBM we we think in negotiating power is a a good thing but if it but if it ends up actually increasing um out of pocket and co-pays for patients that's not good and so we be happy to look at the bill I appreciate that you know in 2018 we had bills in Congress we also had bills in in that passed earlier than the Congressional bill in the Virginia legislature Senator Todd pan who I happen to represent uh introduced the bill to say that pharmacists could tell you if you showed up and I had a constituent who
▶ 1:23:55had this problem prior to 2018 they showed up one time in their insurance there was some kind of a glitch and the pharmacist said well you can you can pay me this amount over the counter and she goes well that's more than that that's less than what my co-pay is and he goes yes ma'am I can't tell you that but since your insurance is currently lapsed for a day or two I can inform you that you can pay this so she never used her insurance again for that medication she just paid cash to the pharmacist that doesn't make any sense to me and Todd pan put a bill and said the pharmacist could actually talk there used to be a
▶ 1:24:25gag order and the pharmacist could talk about it now Mr greminger when Todd passed that bill Senator Todd p in Virginia passed that Bill W i ABC news of Richmond labeled their article on it as lawmakers take aim at scam driving up prices driving up drug prices last year your organization opposed my bill we agree on a lot of things I'm trying to figure out why your organization would be in favor of
▶ 1:24:55a scam driving up drug prices please tell the American people Mr Griffin I I to be honest I do not recall that we opposed your bill ah uh I would be delighted to come back and talk to you more about it because I think on face it makes a lot of sense all right I appreciate that because last year you all opposed it and I just for the life of me can't figure out why a patient should pay more an insured patient pay more than what their insurance company's paying for what they've negotiated to pay for and part of it comes back back to the rebate issue which I agree
▶ 1:25:25with you probably need to move away from Mr chairman I appreciate this hearing and I appreciate you and I yield my time back the gentleman yields chair now recognizes the gentle lady from Michigan representative Dingle for five minutes of questioning on PBM reform um thank you Mr chairman and as you know this is one of my deep passions and I feel strongly about it as you do although I would just say to my colleague if Mr Dingle were here he would still I'm going to he taught me a lot and the first
▶ 1:25:56question I'm going to ask is when you look at the world and you look at everything that you're talking about where is the 800 billion do going to come from and the only thing we talk about is Medicaid and when we want Medicaid we we here are worried about what those kinds of cuts are going to do to Medicaid so we're really glad if you're not going to cut Medicaid and you're not going to hurt people but what are you going to cut and I know you're not going to answer that question but I thought I'd ask that question um and I'll even build on
▶ 1:26:26what he said and say negotiating power for pbms gives the pbms their cut and screws the patient every single time and that is one of the problems and there still is a gag order and the only way a lot of us learn about this is we go talk to pharmacists that aren't taking care of us but somebody says we'll give us the answers and they'll tell you they I can go and buy my pills a whole lot cheaper G even at cost
▶ 1:26:56than covering them by insur by co-pay and there's something wrong with that system so uh as you can tell um I think they've been allowed to operate unchecked for too long I want to work with my colleagues to solve this issue uh I we had had an opportunity to provide critical checks on pbms last year in the continuing resolution and as my colleague the rank ranking member said it uh said by partisan Solutions were included in the text
▶ 1:27:26such as bans on spread pricing Clarity and enforcing Part D contract terms and establishing surveys to be able to hold pbms accountable to deliver fair prices but at the last minute Ellen musk and the Republican Party opted to back out on the deal I hope that the hearings today are a signed that we're really going to do it and we're not going to let anybody threaten us but we're really going to get it done this time Mr chair you know I want to work with you on this um back home I'm hearing from far too
▶ 1:27:56many michiganders especially seniors who can't conveniently access their prescriptions they need due to the exploit of PBM practices complicating access to the local pharmacies they depend on they're an invaluable resource in underserved communities and and I'm even in underserved underserved communities I get a lot more answers from my local farmacist and she I get educated a lot and we've got to ensure that they remain open and competitive so um
▶ 1:28:26I have no pbms act legislation and this bill would Implement Common Sense reforms to the PBM industry that will put a stop to some of the tactics that distort prices harm pharmacies and drive profits at the expense of patients it will strengthen PBM accountability and ensure Americans can get the medications that they need close to their home and at pharmacies they trust Mr chansy through your experience as a pharmac ass how would ensuring that pbms must align
▶ 1:28:57with Medicare plans for prescription drugs allow better access for seniors who are trying to fill their prescriptions so your question was how does would you say that last line again how would ensuring that pbms have to align themselves with Medicare plans for prescription drugs how would it help seniors have better access who are trying to fill their prescriptions well I I I think the uh a good Mentor of mine shared with me that where there's mystery there's margin
▶ 1:29:27and there's way too much mystery with the pbms and I think that transparency is going to help to um clear up a lot of those issues uh there's too many games and there too many Hoops some of the life-saving medications they have to go through all kind of Prior approvals and a lot of things and it's just really to prolong a patient not getting the medication and unfortunately um uh the patients uh pay for that uh I think that um that the relevant and reasonable contract terms between the
▶ 1:29:58uh pbms and the pharmacies will clear up a lot of the issues that we're dealing with today thank you uh Mr feedler ppms have restricted access to patients choice of Pharmacy and medicines that are right for them back in my district I hear from far too many michiganders especially seniors who face complications accessing the local pharmacies they Des depend on because of exploitive PBM practices I'm going to show you an example last night I forgot my inhaler because
▶ 1:30:28I only have one because my local pharmacy can't fill it because I can only get the new medicine the doctor prescribed at at one of the big ones so Mr feedler you mentioned in your testimony that a small number of firms control a large share of the PBM Market which allows them to demand higher prices to earn excessive profits and I suspect control the supply what reforms could be made to reform the of the PBM market so
▶ 1:30:59it's a challenging problem I think one one promising strategy is greater transparency I think the bigger problem is that's probably somewhat limited solution and so if you really want this Market to be more competitive you need more pbms and the question is how do you get there breaking up existing pbms is probably a challenging undertaking but I do think there's some room for antitrust Regulators to be looking at you know new entrant pbms and making sure that those pbms aren't being acquired U by incumbent PBM m in hopes of building a more competitive market over time I'm out of time but I didn't
▶ 1:31:29think the creation of more pbms would be an answer to anything and with that I'll yield back the Gent lady yields the chair now recognizes the gentleman from Florida whose team last night was beat by the Georgia Bulldogs representative bill rakis for five minutes of questioning I staff wrote that on there I don't I just reading what staff wrote you can move to take his words down if you want uh let's compare records Mr
▶ 1:32:00chair all right okay this is important stuff too all right uh Mr Chancey uh the Florida legislature recently passed legislation requiring any willing Pharmacy language in addition to PBM requirements this langel requires a PBM to include any pharmacy in their Network as long as certain conditions are met giving seniors more uh care
▶ 1:32:30options and options um again more care choices and affordable options excuse me one of the policies originally included in the CR uh and of course it was removed at the end uh was language to enforce any willing Pharmacy in Medicare Part D can you share how this language will help your patients and seniors in Medicare uh yes sir I think that's a
▶ 1:33:00great question had a patient just uh just a few weeks ago that she came in on a Friday afternoon around 3:30 4:00 had her children with her and um um she was uh heading out of town uh she said you know can I go ahead and get the prescription filled she dropped it off at the drive-thru and she said I need to go to the bank and come back um within 10 minutes after we filled the med medication she had not come back yet we got a call from the PBM and they told us that we needed to reverse
▶ 1:33:30that claim back it out and transfer that claim to Walgreens in the next city um and our pharmacist said well she came to us she chose us to fill this and you've approved it and they said well if you don't do this you're going to be in in violation of your contract um so my pharmacist backed it out and uh transferred the prescription to Walgreens and so the oness of having to um something that we didn't understand was put on us when she came back she was in a hurry to get out of town
▶ 1:34:00but but that's the type things that uh are terrible for the patients they're terrible for us and it takes away from the care and convenience of the patient and it also Lim limits access thank you uh Mr griminger can you further detail about why building off Florida's PBM accountability law with the PBM trans transparency policy we've marked up is important for employers at the federal level
▶ 1:34:31certainly um so a couple of thoughts we have a a fundamentally broken Market when it comes to the pbms and the interaction with the drug drug companies at some level the the two sides who like to hate each other um are really playing the very much the same game drug companies are winning pbms are winning drug companies have justifications to have higher list prices pbms have justifications to have larger rebates and larger fees that are tied to the price of the drugs um the transparency that are is provided under your uh your bill would finally allow employers
▶ 1:35:01to actually understand how much money the pbms are making on each drug how much money the employers are paying on each drug how much money the uh chain or retail or mail order pharmacies are making on the drug whether or not those fees are actually higher for chain or retail or mail order pharmacies owned by the pbms as opposed to going to one of uh Mr Chans uh uh units it would provide the kind of information that employers could actually use to price shop identify lower cost options better drugs uh and uh and ultimately reduce some of the the
▶ 1:35:31gaming that we see in the commercial Market but one of the things that's appealing about your bill is that it does not tell employers specifically how they have to structure their market right it says that the the pbms have to pass on all uh rebates it still allows for spread pricing it still allows for Value based purchasing it still allows for a lot of different uh design uh that uh that pbms and employers could actually use in sort of a fair and free and transparent Market to actually look for better options for drugs thank you uh Mr chansy I still have some time
▶ 1:36:01here Mr chy I've been a longtime supporter of policies to improve the quality of life for diabetic patients and I coach chair as uh Mr get said uh the diabetic conference cof I've become aware of a pharmaceutical manufacturer launching two different versions of an insulin bi similar one branded and one unbranded at two different price points in order to land on
▶ 1:36:31a PBM formulary in many cases the higher PRC branded reference product was exclusively covered by plan sponsors completely limiting access to a cheaper therapeutically equivalent biosimilar or requiring patients to go through unnecessary NE step therapy in order to access a cheaper biosimilar version of the drug can you explain
▶ 1:37:02what this means for seniors who rely on insulin in terms of what they're paying at the pharmacy counter uh what can we do to address this particular issue again for Mr chansy another good question I think that when it doesn't make any sense when there's a cheaper generic version and the preferred drug on the formulary is a brand name drug and they're having to pay a higher brand co-pay for that drug so you know we know that that's rebate
▶ 1:37:32driven so that's unfair to the patient and it takes the cheaper version away from them very good thank you uh Mr chairman uh you know in your particular bill you have this particular language it's going to be very helpful to the consumer and it came from the University of Florida school Pharmacy I'm assuming that it did so it's Florida law the gentleman yields all right very good you
▶ 1:38:02yeah I got you right the chair now recognizes the Gent lady from Illinois representative Kelly for five minutes of questioning on PBM reform thank you chair Carter and ranking member theet for holding today's hearing and thanks to all the witnesses for your participation I want to start by pointing out what you've heard already but it's very important that last Congress this committee already worked on solutions for the American people regarding PBM reform including commercial Market PBM transparency
▶ 1:38:33Part D delinking and transparency and a ban on spread pricing and Medicaid and yet in December 2024 after a tweet by Elon Musk the deal worked out by the Four Corners of the chambers was taken down so here we are again all because some of my colleagues don't want to stand up for the well-being of all Americans nevertheless I look look forward to working with this committee ahead of the March deadline to see those already negotiated reforms to the Finish Line when we pass the American Rescue plan a provision of my
▶ 1:39:03legislation the care for moms Act was included to extend Medicaid postpartum postpartum coverage from 60 days to one full year this extension has been a crucial Lifeline for mothers and their infants and I'm proud to say that this is no longer a temporary measure the expansion of Medicaid postpartum coverage is a critical part of our efforts to address the maternal Health crisis in this country as the Medicaid Program covers about four and 10 births in the United States Dr feedler
▶ 1:39:34what role does Medicaid play in ensuring pregnant women and children have access to health care so Medicaid covers um about four and 10 births in this country which is you know larger than any other Single Payer um and so it plays a critical role in ensuring that can both access the health care they need but also ensuring Financial Security right one of the core roles of health insurance is making sure that when you do have big Health expenses that's not a big you know hit that keeps your family from
▶ 1:40:04meeting other needs which we know you know um families expecting kids have a lot of other needs um on their budgets thank you currently 49 states in Washington DC have already made this extension permanent even Republican leading States like Alabama Tennessee Kansas Oklahoma and Nebraska have enacted postpartum Medicaid extension legislation with cuts to Medicaid funding States will have to come up with significantly new resources of funding are more likely find ways to cut Medicaid
▶ 1:40:35this means cuts to coverage cuts to benefits and cuts and payments to hospitals and community health centers Dr feedler with even lower Medicaid payments of more uninsured people do expect that more maternity care units will close particularly in Rural and undeserved communities and what impact will that have maternal and child health so one of the things we have exceptionally good evidence on is that when Medicaid coverage is broader the uncompensated care burdens borne by healthc care providers and particularly
▶ 1:41:05hospitals fall now you know there are probably some health systems that can you know absorb more uncompensated care but there are some that can't and you know ultimately probably some that are you know forced to close or cut back service lines so you know my expectation would be um that if um if we were to see big crops and Medicaid coverage we would see um you know some closures of of services that people depend on thank you for your response discussing pbms means nothing for people who lose their health insurance coverage because Republicans and the
▶ 1:41:35Trump Administration want to slash Medicaid in the state of Illinois that I'm proud to represent there are 2.4 million residents covered under Medicaid and that includes 35.4% of all children 40% of moms giving birth and then newborn babies 40% of working age adults with dis abilities and 69% of people living in nursing homes Mr Wright what impact has Medicaid expansion had on the continuity of coverage and health outcomes particularly for low-income parents
▶ 1:42:05thank you I I it's I mean your line of questioning on maternity carees uh is absolutely right there's no more important program for keeping both babies and mothers alive and well than Medicaid uh it's 40 in some states 50% of the population and to continuity of care it's a safety net for all of us um if we are if we find that we're in a situation where we lose a job or get divorced it's it's the ability for people to continue to get the care that they need
▶ 1:42:36if even if they are in the middle of post postpartum treatment even if they have a chronic condition like diabetes or something that needs ongoing care uh it's the ability for people to continue to have the coverage and have a usual source of care and not just end up in emergency room in the least in the most expensive least efficient place to get care so it's incredibly important for continum to care for all folks but especially for uh children and parents thank you so much and there's thousands of people that won't have care because they've just been laid off or fired I yield the rest of my
▶ 1:43:06time to ranking member Diane DEET thank you so much Mr chairman I'd ask unanimous consent to put an article into the record from today's New York Times which is entitled what can House Republicans cut instead of Medicaid not much it refers to the $880 billion ENC has been asked to find and it points out that if you cut everything else in the Energy and Commerce Committee besides Medicaid you'd still be $600 billion short but if you used creative budgeting
▶ 1:43:36not to worry you could save maybe 187 billion so the only thing we can cut is Medicaid I'd ask unanimous consent to put it in the record no we're going to give it to you right now so we'll study that uh accept that just yet M Kelly yields back and recognize the gentleman from Pennsylvania Dr Joyce thank you Mr chairman and ranking member toget for holding this important hearing and our panel for testifying this is a great opportunity
▶ 1:44:07to examine the bipartisan cost-saving reforms that passed through this committee and the House of Representatives in the last Congress while these reforms ultimately were not signed into law we were successful in building the necessary moment mum for these positive changes to occur we can see the impact of our efforts through actions that some Pharmacy benefit managers have taken to Institute additional reporting to their patients and to their plan
▶ 1:44:37sponsors now in the 119th Congress we have an obligation to return to our work of lowering prescription drug costs and improving access to Affordable medications for our constituents particularly for Medicare and Medicaid beneficiaries pbms were created to negotiate drug prices down on behalf of plan sponsors despite this we have continued to see an increase in what plans and patients
▶ 1:45:08are paying for prescription medications we need to create an environment that increases competition one of the most consistent drivers of lower costs because of the complexity complex complex nature an opaque component of these operations it's difficult for plan sponsors to effectively engage in truly competitive processes for choosing their Pharmacy benefit manager Mr griminger can you speak
▶ 1:45:38on how the transparency requirements that passed through this committee last Congress can help Drive competition through an increased ability for employers to compare options and negotiate effectively certainly uh so as you identify Congressman uh the bill uh under your consideration provides really in in transparency in a way that we've never seen before in the PBM Market um it allows plan sponsors to understand what the initial price of the Bill of the drug was from the
▶ 1:46:08original sale uh by the uh group purchasing organization all of the uh discounts and fees that might have been uh assessed on that drug and then finally get to sort of what the net cost was to the plan sponsor right now almost none of that information is available to us uh as I mentioned in my opening statement plan sponsors are fiduciaries over their plan assets we actually can be sued in fact two large organizations have so far been sued allegedly because they weren't overseeing their PBM contracts effectively we were paying too much for drugs
▶ 1:46:39um right now we don't have the ability in many cases to really understand what we're paying for any particular drug whether we're overpaying because there's a weird formulary placement where you're having a higher price drug at the bottom of a formulary lower price drug at the higher end of a formulary it's Etc this bill would correct all of that and be provide us with the transparency we need we would still be fiduciary liable but there's no way you're going to see a prudent fiduciary choose to say yeah I'm going to have a $5,000 drug at the base of a formulary and go through prior authorization to get to a $500 drug that won't happen because plan
▶ 1:47:09sponsors will have the transparency need and frankly the fiduciary requirement that they are placing the drugs appropriately and negotiating for the best prices the United States is home to World leading medical innovation in fact many on this committee have heard me say that Innovation is truly the Cornerstone of American Medicine there is a need to find Creative Solutions for coverage and payment of these Innovative medications to make them accessible at an affordable price Mr
▶ 1:47:39greminger how does value-based purchasing play a role in getting these Advanced medications into the hands of the patients who desperately need them yeah um so value based purchasing can mean a lot of things of course but um one of the things that's that's exciting about it is it's the notion that instead of uh paying for a drug based on sort of whatever the list price is whatever rebates you might have been able to uh been able to negotiate it's based on sort of unique clinical value above what else is available in the market right now I think that's definitely the direction we need to head and we're starting
▶ 1:48:09to see more Innovation be able to see there are absolutely some very high- pric drugs that are also transformative they're life saving they have the ability to uh to prolong people's lives and give them back their lives uh there are a lot of low value drugs out there that are equally expensive and don't have that same kind of change under a value-based purchasing Arrangement the employer purchaser plan sponsor is paying based on unique value above replacement effectively um which is I think the direction that we need to go it would allow for pharmaceutical companies to make quite a bit of money on drugs that are truly Innovative and not make much money
▶ 1:48:39on drugs that aren't Innovative at all again Mr chairman thank you for holding this hearing today and I thank the witnesses for taking time out of their schedules to be with us and I yield uh thank you the gentleman Pennsylvania Yi and the gentle lady Dr shrier from Washington is recognized for five minutes for our questions thank you Mr chairman and thank you ranking member deette thank you to all of our Witnesses today for speaking about this important topic the role
▶ 1:49:10of Pharmacy benefit managers or pbms in raising drug prices for patients putting local pharmacies out of business and covering up the financial Shenanigans and profit taking behind all of it uh I think or I know we all agree that increased transparency and reform regarding Pharmacy benefit managers is needed in fact I I know this uh because this committee worked in a bipartisan fashion last Congress to prioritize this issue
▶ 1:49:40and pass a number of PBM reforms that were ultimately included in a great endof year bipartisan by Camal package in fact the savings uh from these bipartisan reforms were set to pay for bipartisan priorities like extending teleah health flexibilities and Community Health Center funding um unfortunately my Republican colleagues let unelected
▶ 1:50:11billionaire Elon Musk kill this bill uh via x uh the committee is now again considering PBM reform but at the same time they are about to make drastic and unconscionable cuts to Medicaid in order to pay for tax cuts that benefit the very man who tanked this deal in the first place let's be clear Republicans voted just last night to take an ax to
▶ 1:50:41Medicaid we have heard evidence of this from many of my colleagues uh and Medicaid is a program that pays for health care for nearly half the pregnancies and children in this country for people with disabilities uh for Rural hospitals and nursing homes and they're cutting this to pay for tax cuts for billionaires and corporations I want to Pivot for a moment something important in my district uh rural hospitals Medicaid is
▶ 1:51:11a critical uh source of insurance com uh coverage for Rural America with nearly a quarter of people under 65 on Medicaid and 22% of people do enrolled in Medicaid and Medicare my district is about 10,000 square miles it is mostly in central Washington and without rural hospitals my constituents would have to travel hours either to Seattle or Spokane for regular care they serve a patient population that is
▶ 1:51:41sicker and older and less likely to have private insurance coverage and they operate on the slimmest of margins and are a critical access point for the Health Care system they in fact will be the first to tell you that Medicaid is the leanest payer out there they can barely make it through so the the fraud and the abuse and the bloat that my Republican colleagues are trying to go after just does not exist in this program um I I will
▶ 1:52:11warn this committee that should these Medicaid Cuts go into effect the first thing to go especially in our rural communities will be obstetrics and uh delivery and we have already had one hospital system almost have to lose OBGYN and to not be able to care for pregnant women and deliver babies and so this poses an additional risk to women and babies um Dr Fielder I Fiedler excuse
▶ 1:52:42me you just talked about the impacts of Medicaid cuts to women and children in particular can you expand on the impact that almost a trillion in cuts to Medicaid would have on Rural hospitals and their ability to deliver care so as I alluded to earlier you know we have very good evidence that Medicaid expansion and Medicaid coverage generally U reduces the burn of uncompensated Care on hospitals and which types of hospitals is that
▶ 1:53:12going to create the biggest challenges for it's the ones that are financially precarious to begin with and so you know um in many cases it's not always the case but in many cases rural hospitals are in fin precarious situations and so that would be one of the places that you would look to see you know where are major disruptions likely to occur and it is dangerous and expensive to deliver babies in an emergency room uh just touching in my last 25 seconds on pbms uh we know that the incentives are perverse in terms
▶ 1:53:42of profit making and I was wondering uh Mr Ginger if you could just comment about the importance of transparency in these negotiations pbms and Drug manufacturers in how um that could help us understand and then lower drug prices for American consumers so today as I said in the opening statement employers really don't know what they're paying for each individual drug uh which is obviously hugely challenging just I would add very quickly um we
▶ 1:54:12don't really know the nature of the the negotiations between the drug makers and the pbms themselves right all we can sort of sus out is what appears to be in those contracts uh and what we see is a situation in which both the drug makers and the PBM seem to be winning uh and working families and and American employers seem to be losing right thank you and I yield back the gentle lady from Washington yields back and I recognize the gentleman from Ohio representative balers for five minutes to ask his questions thank you chairman dun and thank you all for being
▶ 1:54:42here today during the 118th Congress there was thoughtful legislation put forward by my colleagues which we've talked a lot about this morning pushing for increased transparency and accountability for pharmacy benefit managers today I am hoping we can further illustrate why this sort of legislation is so desperately needed pbms were designed to help manage prescription drug benefits negotiate better prices with manufacturers and help control cost for insurers and patients however as time has gone on their role has morphed
▶ 1:55:12into something that has seemingly lost sight of these goals in 2018 the high Department of Medicaid conducted an audit finding pbms were making significant profits through spread pricing this audit which covered 2017 to 2018 showed that pbms overcharged the state of Ohio $224 million Ohio is not alone in this abuse following the findings of the audit my state became the first to act and as of now 16 states have banned spread
▶ 1:55:43pricing I look forward to hearing from all the witnesses today and I appreciate your time in discussing this very important matter my first question is for the pharmacist Mr chansy uh as a result of pbms and decent practices independent pharmacies around the country are closing I know that in my district we are not strangers to this issue I hear from my friends family and constituents alike that their trusted pharmacies have closed after Decades of serving their communities Pharmacy deserts
▶ 1:56:13have continued to grow and patients no longer have access to Patient pharmacist relationships that has helped them manage complex medication regimes and diseas dises it is estimated that between 2018 and 2021 alone the number of pharmacies has declined in 41 States so this is not just an Ohio problem this is not a rural problem this is a Countrywide issue that needs addressed and transparency is unlikely to be the sole solution as I discussed earlier the Medicaid spread pricing ban prevents pbms
▶ 1:56:43from engaging in spread pricing and requires them to pass along the full reimbursement amount to pharmacies addressing transparency and reducing the financial burden on the medicate system Mr chy can you talk to me about how the spread band can help address the phy issues that you have experienced yeah certainly I i' would like to start off by saying that 20% this legislation really addresses over half of the Independent Community farmacy businesses um 20% of the business on average is Medicaid and 35% is Part
▶ 1:57:14D um I I think that the this transparency uh and and stopping the spread pricing is uh going to it's going to lowerer the cost of the drugs and it's going to level the playing field right now it's not very level and just since June of 23 we've lost 450 of my colleagues and and at that rate we we just can't continue it seems like a crisis to me we've got to put uh in lack this legislation and I I would like to say yesterday but
▶ 1:57:44um even if we voted it in today it's going to take two to three years before that's going to really have the impact that it needs so um um I I think it needs to be done sooner than later thank you my next question is for Mr griminger um thank you for being here what a PBM does with rebates is critical part of transparency of course want to see excuse me see competitive market
▶ 1:58:14but the other part of this is that I really want to drive home is that we want to see 100% of rebates passed on to clients this is a critical part of this equation equation quite frankly how is it right now we aren't seeing these large pbms aim to lower the cost of goods for their own profit margins and lower the cost of goods sold for their clients by passing these savings on how can Congress ensure competition while also ensuring that the clients the employers and patients feel the effects
▶ 1:58:45savings thank you for the question Congressman I think one of the things that's really appealing about this legislation is that it includes uh all rebates and discounts from the very beginning of the chain all the way to the very end I want to I spoke about this just a little bit in my written and oral testimony the role of group purchasing organizations or sometimes called rebate aggregators these are theoretically separate companies separate corporate entities often based overseas uh that are wholly owned by the PBM their entire reason for being is to aggregate rebates uh and be the initial
▶ 1:59:15purchaser of drugs before that is then passed on to the PBM which is the next uh level in the chain of the corporate entity we hear from employers all the time that they are told by their pbms I'm passing on 100% of our rebates to you will you then ask oh say so which rebates are we talking about like oh well once the gopo sells it to us then everything else flows on to you of course omitting the fact that they are taking a huge rebate cut between the GPO and the PBM themselves I want to say very clearly it's the same company it's the same company with just two different corporate structures uh
▶ 1:59:45and uh I think it's critical that we actually are able to watch the flow of rebates from the moment the initial batch of drugs is purchased by the uh PBM or the GPO from the employe excuse me from the manufacturer all the way to the very end where we actually receive the final discount thank you very much Mr chairman I yield back thank you Mr balderson years yields back and uh we now call Miss Fletcher from Texas give her five minutes for her questions well thank you so much Mr chairman and thank you to Chairman Carter and ranking member DEET
▶ 2:00:15um and thank you to all of our Witnesses today for your testimony um I was struck at the beginning of this hearing when chairman Carter said that the true reason that we're having this hearing today is because of a sad and difficult story about one uh patient and their experience with uh delayed access to the the drugs and the care that they needed and that is
▶ 2:00:46the true reason that we're here doing this work but that's not the true reason we're having this hearing today and I want to associate myself with the comments that ranking member deette made the true reason that we are here is because in December of last year Elon Musk decided that he thought our bill our continuing resolution was too big it had 1500 pages or something like that too big can't possibly all be good don't do it and just like
▶ 2:01:16that years of hard work including hard work to deal with this very issue got cast aside and so we're having a hearing today on something we've already agreed on we've already worked on and we have addressed it's important that we do it so I'm glad that we're continuing the work but I think that what we know is that we've got an agreement here commercial Market PBM transparency was
▶ 2:01:46in the agreement we had in December Part D dinking and transparency was in the agreement a ban on spread pricing in Medicaid was in the agreement we have already made an agreement on this and the only reason it isn't law is Elon Musk I think that is important for everyone here to know I think that is important for everyone in this country to know this committee and this Congress has consistently allowed Elon Musk to substitute his own
▶ 2:02:16uninformed judgment for all of ours and it's got to stop it has got to stop so instead of rehashing some of these reforms that we've already agreed on I want to spend the time that I have left talking about and asking about the budget resolution that House Republicans passed last night that directs this committee the Energy and Commerce Committee to cut a minimum of $880 billion out of spending now we heard time
▶ 2:02:46and again yesterday in our that we weren't going to get to cuts to Medicaid because Medicaid wasn't in that resolution we know on this committee that that is where that money it's the only place it can come from so Mr Wright in your testimony you made it very clear that threatening access to coverage like Medicaid would increase cost for families far more than any PBM abuses and I want to ask
▶ 2:03:17you to to take some time to talk to us about the importance of Medicaid coverage especially on an issue that's very important for those of us in Texas as well as people across the country the importance of Medicaid coverage for pregnant women which covers 50 Medicaid covers 50% of births in Texas can you talk about what the impacts of losing Medicaid coverage in Texas and States across the country will mean I I mean obviously it would be have devastating ripples throughout the Health Care
▶ 2:03:47system and not just for the people who do have Medicaid coverage but for the system as a whole you um in many of whether it's Community clinics or rural hospitals in many cases Medicaid is is the biggest funding source and so if you're in that Community uh if if those institutions get uh hit with a big cut that impacts everybody in the community whether or not you're in Medicaid specifically if a Maternity Ward which already has had have we' we've seen closures already of if if
▶ 2:04:17they lose funding and again 40 50% of births are are paid for by byy Medicaid if they lose that funding that actually could potentially mean the closure of a Maternity Ward for everybody in that area create creating further maternity W maternity deserts uh in our country at a time when folks are talking about how can we better support parents how how can we better support the process of people starting a family and so it is incredibly important and just not both the prenatal and postpartum care is so important
▶ 2:04:47those first few years of life are the probably the best investment you can make in terms of a child's health not not just for that time for you know into their life um that's when brain development happens and and there are there's reams of of data and research that suggest that those kind of in investments in in um are C are the some of the best investments you can make but if if you have a a cut of the scale that is being talked about it's almost impossible to think how those will not be impact thank you so much I have
▶ 2:05:18gone over my time I do have some more questions for you so I'm going to submit them for the record and look forward to hearing your responses thank you so much Mr chairman I yell back the general lady yields the chair now recognizes the youngest pharmacist in Congress representative harsh barer from Tennessee for five minutes of questioning thank you Mr chairman I appreciate that reference to my age and thank you to the ranking member and thank you to the witnesses for being here yes I am younger than buddy um you know I've been a pharmacist well I better
▶ 2:05:48not tell you how longer then you're going to know how old I am I've been a pharmacist a long time and uh every week I hear from independent pharmacist from East Tennessee across the state from all over the country about these manipulative practices of pbms and uh all you have to do is read the last two interim reports from the FTC to understand that uh pbms can distort competition they steer uh prescription drug coverage to whatever pads the bottom line and essentially they print their own
▶ 2:06:18money and I say this in every PBM hearing and I'm going to say it again today pbms don't treat a single patient they don't cure a single disease and they don't ensure a single American so uh the bottom line it's all about the patience isn't it gentlemen it certainly is and how they're losing access to Pharmacy Choice who in most communities are your Independent Pharmacies who the who are the most trusted and the most readily available healthc care provider
▶ 2:06:48in that community so uh PBM reform is a bipartisan issue and you know what that means that means that both sides agree on this issue it's it's not an issue of contention so it's it's important that we get some PBM reform done Mr chansy this is a yes or no question uh is it sustainable for pbms to often reimburse Independent Pharmacies below their acquisition cost for drugs I've had to deal with it in my practice and
▶ 2:07:18have to deal with the take it or leave it contract track s that they offer uh the you know the abusive audit practices they do whether it's a desk audit or they come into your Pharmacy and audit and and then what they do after the fact is they reduce Pharmacy reimbursements because of ambiguous shifting unpredictable metrics and I guess my question for you is is it sustainable for your Pharmacy practice yes or no sir it is not sustainable
▶ 2:07:49it's not exactly thank you for agreeing with me me you know it's almost like you're playing a high sex game without knowing the rules and really it's it's a game with no rules isn't it that's exactly what it is and uh but it's not a game is it because who suffers in the end it's the provider and the and the patient so Mr Chancey this is another yes or no would you agree that the fairest and most transparent way to reimburse pharmacies for prescription drugs would to be uh to use the national average drug acquisition
▶ 2:08:19cost plus a reasonable dispensing yes or no yes I do yes I do too Mr griminger thank you for being here today sir uh we know about the uh vertically integrated organizations and how they have tremendous influence over which medications patients have access to when and where they get those drugs where it can be dispensed or administered in the amount paid out of pocket
▶ 2:08:50by patients I've had to deal with this in your view is the vertical integration of these companies hindering Market diversity and competition yes or no 100% 100% let me tell you about legislation that I proposed I've introduced a bipartisan legislation called patients before monopolies act and that would require Health insurers and pbms to devest from their Pharmacy businesses eliminating conflicts of interest in creating a more transparent system and I'm sure people love
▶ 2:09:20that but pbms don't like it so uh this is for Mr chansy again uh let's talk about patient steering pbms are now requiring patients to use PBM Affiliated pharmacies including male order pharmacies to where if you've got a cancer patient they can't go to their oncologist or their Community pharmacist and now it's it's filtering over to HIV patients and other chronic disease patients and I believe patient steering myself I believe patient steering
▶ 2:09:50are mandated the use of a PBM on Pharmacy should be prohibited across all federal plans would you support a Prohibition on patient steering by pbms to their Affiliated pharmacies yes or no yes I would okay this is going to be a lightning round I've got 31 seconds Mr Chancey Mr griman many of us in Congress believe that misalign incentives are at the root of the problem with high prices in America today for drugs and the pbms are taking advantage of these misalign incentives
▶ 2:10:20would you agree that that if patients have to pay a certain percentage of the drug sticker price reducing drug sticker prices can reduce patient out of pocket cost yes or no yes yes okay would you agree that pbms a brand pharmaceutical manufacturers sometimes enter agreements to exclude lower cost competitor drugs from the PBM formulary in exchange for increased rebates from the drug M uh brand named drug manufacturers yes I go as far as to say it's often not just sometimes ye yes exactly
▶ 2:10:50would you agree that higher price out of pocket cost for patients can adversely impact adherence to prescription regimens yes or no yes yes would you agree that poor patient prescription adherence can lead to poor health outcomes yes yes I've only got three more buddy it's quick do you agree that excluding lower cost generics from formularies and offering only the more costly brand name drugs reduce access to care yes yes do you agree that brand mandate should be prohibited by Medicare
▶ 2:11:21part D yes we don't have a position on Medicare Part D policy well you should yes would you support requiring the inclusion of generic drugs on formularies last question would you repeat that please would you support requiring the inclusion of generic drugs formul yes so long as the price is the net price to the employer is below that of the brand absolutely thank you sir and I yield back buddy thanks so much the gentle lady
▶ 2:11:51yields the chair now recognizes the gentleman from Massachusetts uh representative ainos for five minutes of questioning thank you chairman I want to associate myself with the excellent line of questioning from the gentlewoman from Tennessee with whom I'm co-leading two pieces of follow on legislation to these bipartisan reforms the pharmacist fight back Act and the patients perform monopolies act and indeed it we seem to be in in vigorous bipartisan agreement on this issue of PBM reform so I want to actually pursue
▶ 2:12:21an area of disagreement because that's how I learn better uh Dr feedler in your written testimony which I I Tred to review pretty carefully you really seem to push back on the idea of of getting rid of rebates you you you really defend rebates and actually kind of emphasize that dinking may not work very well and I want to engage with you on that question because maybe I'll learn something here on this one of the things you do emphasize is compettition I
▶ 2:12:51and the value of competition with new pbms entering the market how are these new pbms most of whom are flat rate pbms though transparent flat rate pbms supposed to compete when the plan sponsors are locked in with rebate deals that the incumbent pbms have that's especially relevant because of the 2021 Consolidated Appropriations law that made these plan sponsors fiduciary so there's a real opportunity now for competition from these flat rate pbms because these PL sponsors are fiduciaries and they know that their employees are getting screwed over and so they really have a liability
▶ 2:13:22here but they're locked in with the rebat so doesn't your point about rebates contradict your point about competition so I think one of the challenges with the idea of the solution here is more competition in the PBM market and I think we should try as well as we can but I think one of the real challenges is that it is probably the case that the big pbms when they're going up against the manufacturers have more leverage and I think that's just the reality of this market and so the tradeoff is do we want a more competitive PBM
▶ 2:13:52Market that I think does mean that PBM profit margins would come down and that would be good for clients but I think there is a potential trade-off in terms of what that does to drug prices I think my best guess is I net consumer save money from that but I think there is a trade-off and I don't think the evidence we have on that question is perfect yeah I'm not sure I'm ready to AED to consolidation is the only way we can get scale economies I mean the genericization function is what how we get lower prices not necessarily just through plan sponsor leverage the other question about rebates I have is of course rebat inflate list prices
▶ 2:14:22right uh they pump them up now we can debate plant sponsors and Pharma and pbms and they're all kind of shuffling money around but what we know is that patients pay their out of pocket out based on the list price not the net price so your defensive rebates seems to contradict the idea that we're trying to lower outof pocket cost for patients yes so that assumes that if you switch to a different pricing system that that patient Co insurance rate or deductible are going to remain
▶ 2:14:52the same and I think what's happening in many cases is the insurer the plan sponsor is setting that deductible or co- insurance rate to get cost sharing at the level they wanted to so if you brought the price down to the net price I think what we'd often see is the insurer deciding okay we're going to apply a hard Co insurance rate I'm not sure in those cases as a result the patient's pain is going down to be clear I don't have conviction that the current system is the right system but I do think there are tradeoffs here yeah I would just I would question why we are putting people in in the position of having out of pocket exposure to appropriately
▶ 2:15:23prescribed medication right there's no moral hazard with chemotherapy and I think that's absolutely Asma inhalers and I and I think to the that's why in my view I think often the solution is simply to regulate the ultimate insurance contract and say listen these are drugs we know patients need access to and this is the max dollar amount of cost sharing that can apply um you know particularly frankly to generic drugs where there's very little risk of it's a good idea Democrats did it last congress with the $2,000 out of pocket cap regretfully no no Republican joined us
▶ 2:15:53in it uh continuing your point on competition biosimilar Market is not working quite as well as we want it to we really want to get that competition to drive down the price of these large molecule drugs because they they stay expensive a long time uh again we have seen rebates play a really nefarious role here Humera and other examples where the pbms are using a dual pricing structure how can an Embrace of rebates coincide with wanting a more more competitive biosimilar market when they're clearly
▶ 2:16:23using rebates to lock in the higher priced brand drug so I think whether it's a rebate or there are other forms of discounts it's going to always be in the manufacturer's interest to try to keep that biosimilar out of the market and I think the challenge is because in many cases yes but rebates are the tool that is being used in this Tango between the pbms and Pharma to do it and I think let's take it away my contention would be that you would have other tools emerge fairly quickly um so I want to close on that point because you talk also in your written testimony
▶ 2:16:54about admin fees and then you know you squeeze the balloon in one place and it pops out someplace else again I'm not really willing to see that point like our job here in Congress is like just pop the balloon and and to your point Mr greminger about the group purchasing organizations they are one of the two places where the pbms are already pointing to that they're going to inflate the balloon Elsewhere One is these gopo fees which the the pfb legislation will help us get ahead of it but my goodness Congress needs to focus on this because I don't know what they're doing Ireland and Switzerland but where there is Mystery there is margin right
▶ 2:17:24uh and the second thing is specialty steering I mean you got Signa Express Script CEO bragging on earnings calls about how specialty steering is their new money maker and it is entirely a business not a medical proposition here we've got to pop that ball and two I yield back thank you chair recogniz this congressman from Iowa Dr Miller Meeks for five minutes thank you Mr chairman and I thank uh the witnesses for testifying before the subcommittee today it's no no secret that PBM middlemen artificially inflate the cost of and limit
▶ 2:17:54access to prescription drugs this occurs at the expense of patients who receive health insurance in public and private markets and impacts patients of all ages the PBM Market has become highly Consolidated with the three largest pbms controlling roughly 80% of prescriptions the top six pbms account for about 97% and in Medicare Part D four pbms manage benefits for Combined 90% of beneficiaries pbms claim they reduce prices by holding pharmaceutical companies accountable this is done they
▶ 2:18:24contend by requiring rebates on drugs which are then passed on to the beneficiary while pbms often do negotiate discounts for manufacturers patients are not the ones who benefit from them in Medicare Part D for example patient cost sharing is based off the list price of drugs which are artificially inflated to extract a higher rebate as a result of these practices for 79 of the 100 most rebated drugs in Medicare Part D beneficiaries pay more for their drug their insurer again demonstrating that beneficiaries in this case seniors
▶ 2:18:54are not benefiting from the rebates this is why I led the bipartisan share the savings with seniors act which would require full rebate pass through for chronic care drugs under Medicare Part D plans and that's not the first time I tried do PBM reform my first effort at PBM reform came as a state senator in 2019 where I passed PBM reform on transparency but could not get a pass through of 51% of the rebates the insurance companies were against me my Manu ufacturers were against me as they it was alluded to them that drug prices
▶ 2:19:24would rise and people would use brand named drugs rather than generics so I've been at this now for six years and when I was in Iowa last week I read despite all of the hurdles I had PBM saves County money the county adjacent uh to my district saved $60,000 of their County expenses with PBM reform and now states are doing it this isn't a partisan issue we have over 200 pharmacies have closed in Iowa since 2014 which includes not only independent locations but chain
▶ 2:19:55Pharmacy such as our high ve Pharmacy and we know the bigger Pharmacy uh chains are also closing um I'm very proud of the bipartisan work this committee has done to move on meaningful PBM reform legislation through regular order last Congress the Energy and Commerce Committee successfully moved three major PBM policies Medicare Part D dinking commercial Market transparency and banning spread pricing in Medicaid and I've done the same thing in the commercial market with the Drug Act Mr griminger we hear from insurers
▶ 2:20:25and pbms that implementing dinking won't have any meaningful action on reducing patients at a pocket cost in the commercial Market however we know that commercially insured patients are largely more exposed to list prices through larger deductibles than patients in Medicare Part D in fact in 2024 the average um annual individual deductible for employer sponsored health insurance was 1,787 while the maximum annual indiv individual deductible in part D could not exceed $545 do you
▶ 2:20:55believe that um if we uh move to regulate dinking in the commercial Market such as my bill The Drug Act would do would that reduce patient out-of-pocket cost uh in short yes um we uh the National Alliance supports uh actually applying dinking to the commercial Market uh as you know right now the bill that was considered in December only applies it the Medicare Market um there's no question it takes away a financial incentive that's currently built into the uh into the program and I absolutely believe that doing at the commercial Market will ultimately lead
▶ 2:21:25in relatively straight uh straight order uh to lower out pocket cost for consumers um Mr Clancy I'm gonna ask you a question but I want to dedicate this question to John and Jane Nicholson uh who run the Mahaska uh drug uh Family Pharmacy in Oskaloosa Iowa which is teetering on closing it's my understanding that KARK one of the three big pbms that controls 80% of all prescriptions in the country has a request for proposal out to pharmacies asking them to do two
▶ 2:21:55things and sometimes this information and contracts are sent by fax which most people don't utilize so in order to be considered part of the network of covered pharmacies and their Medicare prescription drug plans one offer an amount of reimbursement that is below what it cost a pharmacy to acquire and dispense medicines Force pharmacies to select which of their competitors care Mark should remove from the network a blatant disregard of Medicare Part D's any willing provider requirements for pharmacy which state that any pharmacy that agrees to A Part
▶ 2:22:26D plan standard contract terms and conditions must be allowed to participate in the pl network is it not the exact type of anti-competitive behavior everyone has been pointing to for years now and does it demonstrate why we need stronger protections for all pharmacies serving seniors in Medicare not just those owned by pbms I very much agree and in Georgia car Mark covers our State Health Benefit Plan and uh I ran my reports before I came and 24% of the prescriptions I dispense I get reimbursed below my cost
▶ 2:22:56of purchasing the drug 75% of the prescriptions that I feel are below my cost of doing business so one 25% is actually my gross profit scripts thank you so much I yeld back thank you chair recognizes the Congress leader from New York M AIO Cortez for five minutes thank you so much Mr chairman I'm um I think that in a political environment that we're in right now it's
▶ 2:23:26actually just a a a tremendous glimmer of hope that people can have in seeing that there are areas in which we can agree and pbms are a perfect example in which everyday Americans who live in rural areas who live in urban areas working people are getting totally squeezed by um by essentially this middleman where
▶ 2:23:56their costs are being totally driven up that their prescription prices are being totally driven up and for once we have Republicans who are championing this legislation and tackling lowering these costs Democrats who are on board with this and I can tell you should this legislation come to the floor this Republican majority has my vote you have my vote on this and you have the vote of many Democrats on this um now
▶ 2:24:27we've had this for some time as what has been mentioned last Congress Republicans and Democrats worked together to draft bipartisan legislation on pbms and one provision that made it into the December 17th 2024 continuing resolution demonstrated how we can work together to reign in pbms and lower drug costs for um we've seen how this can work and this is a bipartisan measure that can propose more oversight of the PBM Marketplace
▶ 2:24:57Dr fedler can you explain how greater oversight can in this circumstance can help lower costs for everyday Americans so I think uh the most promising change from my perspective is the proposals to expand transparency which I think would help um pbms clients get a better deal from pbms um you know that's probably most important for employers and I my view is that over the long run employers ERS would pass some of those savings along is it wages lower premiums or better benefits and and we've seen this at work even you know
▶ 2:25:27with Hospital Provisions forcing a little bit more transparency we've seen costs go down when there's actual disclosure around what is going into these prices now this bill was almost passed on December 17th within a bigger package to prevent the government shutting down it has all of our support for folks following at home Democrats supported it Republicans supported it so why isn't this moving it's not because there's no substance for it all four Witnesses testifying today are in support of it
▶ 2:25:57Republicans are in support Democrats are in support so what happened well on December 17th at 4:15 in the morning Elon Musk began firing off a barrage of social media posts opposing Pharmacy benefit manager reform PBM reform and all of a sudden this bill that had almost unanimous support fell apart in a ma in a matter of hours
▶ 2:26:28and the vote was postponed on that day after he tweets it gets cancelled Elon mus tweets we have nearly 435 members of Congress all on board of it he sends one tweet and all of a sudden everyone backs off and it kills drug pricing reform that saves people money on their insulin on their on on their asthma inhalers on everything that they need and then to
▶ 2:26:58kick it off five days after he kills Pharmacy benefit manager reform we get this tweet from Elon Musk what is a pharmacy benefit manager this was at 1:02 a.m.
▶ 2:27:18on December 30 first of 2024 5 days or so a couple days after he kills the bill so the problem here is not a substance issue it's not a process issue it's an oligarchy issue it's a power issue and this room is where the power of the people of the United States reside whether you're a Democrat
▶ 2:27:49or you're a Republican everyone here was elected to be accountable to the people of the United States not to be governed tweet but to be governed by their duly representation and so we can get this done because there are more of us than there are of him so I would love a commitment from from our Republican counterparts who we agree with on this issue
▶ 2:28:19to just put it on the floor and let us vote for it where there is bipartisan agreement and we can actually get a result of the America for the American people by booting this guy out from political influence and with that I back thank you the chair recognizes himself for five minutes of questions my state of Oregon ranks second to last in the country for access to retail pharmacies this is a problem that is not going away it was reported
▶ 2:28:49that 2024 36 pharmacies closed their doors this shortage like almost every other healthc care shortage is more acute in rural areas where often only a small number of pharmacies serve an extremely large area my district for example is larger than the state of Washington and uh we've been losing pharmacies and it's leaving communities in Desperate Straits Mr Mr Right can you speak to how consolidation in the PBM market and PBM business practices
▶ 2:29:20are impacting access to pharmacies in rural areas thank you for the question um I think the the issue of consolidation you know we've talked uh about the three major pbms that control 80% of the market but I'd also like to stress not just the consolidation consolidation both vertically and horizontally the the the ability of the the integration between insurers pbms and pharmacies means that there is a perverse incentive uh and a misaligned incentive for
▶ 2:29:50pbms to favor the pharmacy chain that they happen to own which is may be unrelated to cost quality convenience customer service or any of the things that we would want um good purchasing to be based on that it's appropriate to negotiate over those factors it's not appropriate to negotiate or to be undercut by the fact that you're you're members of the same group long as I'm asking you questions who actually benefits from the rebate well well
▶ 2:30:20the to the extent that the the rebate system creates an incentive for higher list prices then that's a detriment to all of us who pay the price whether it's patients payers employers Union trusts or or or anyone to the extent that the the rebate does go to the at Le at least to a paay although we don't necessarily know exactly what those rebates are and that's one of the reasons why the transparency legislation is so important and going to that transparency piece that you would you would think what would happen as a result of total
▶ 2:30:50transparency what's the good that comes from it well I think that the main the the main point would be that you would that both patients but in particular the plans the purchasers the payers would have a better idea of of to see if they if there is a if the PBM is negotiating on their behalf for the best uh cost and quality to be passed through or to get a bigger rebate on behalf of the PBM and that's the that's the misaligned
▶ 2:31:20incentive that right now we have um it's no PE situation Dr chansy your family has operated an independent Pharmacy for three generations some say that pbms aren't to blame for the closures of these pharmacies and some alleged that the new generation is simply in incapable or not wanting to carry on the business I I find that uh not convincing what's your thought I I totally disagree um the pbms are directly related to
▶ 2:31:51uh our unfair reimbursement and some of the tricks in the games that they play are are killing Independent Community Pharmacy uh as as I shared earlier we lost 450 since June of 23 and when you lose an independent Pharmacy in in an area no one's rushing back in to replace them so you're not just losing a a drug distribution Point you're losing a health care provider and in six counties in Georgia that that is the only health care provider in those counties
▶ 2:32:21so it's uh it's it's a critical situation yeah but your opinion what's going to fix it because I I represent many many many small communities and they're losing their pharmacies what is the what's the best thing we could do here to to help well I think the transparent the chairman Carter's transparency Act and the no PBM bill that you guys have worked on is a great start that's going to impact uh 55% of the business that the average independent does is going to do away
▶ 2:32:51with the spread pricing it's going to increase transparency it's going to have a a fair uh reimbursement model and we're going to encourage CMS to to put in uh language that's going to be relevant and reasonable uh contract language so between the pbms and the pharmacies what would the next step be pass this legislation I'm I'm talking about after we pass it I'm not optimistic sort what is there something
▶ 2:33:21next that you would like us to do well I think then next we need to tackle the commercial Market thank you I want to thank the witnesses where is our am I going to close out this no we got person sorry oh sorry apologize for that uh chair recognizes Congressman VC for five minutes thank you Mr chairman and I want to think the witnesses for being here today
▶ 2:33:51uh and like some of the other um uh members have already stated we had a great opportunity uh last year uh to really put in some good bipartisan PBM reforms uh but uh for whatever reason my Republican colleagues caved uh to the president of many large companies here in the US and the world everyone knows who the president of those companies are that's Elon Musk uh and president Elon Musk tweeted his disapproval and suddenly Republicans
▶ 2:34:22who have been negotiating in good faith decided that they were just going to walk away because uh president musk uh said that um that we shouldn't stand up for the American people and so we backed down and it's really uh sad because there are a lot of patients around this country that are really counting on us uh to do something about this issue and so um Dr Fielder let me ask you if Republicans had kept their word and passed these bipartisan PBM reforms last year would they have helped reduce
▶ 2:34:52the high cost of prescription drugs for Americans even if even if it were just a first step I think these reforms would have reduced the cost of PBM Services um and in many cases that would have translated into savings for consumers in the form of you know premiums and potentially you know in in some cases at the pharmacy counter as well yeah no thank you very much and look I want to be clear I support the PB PBM reforms uh but but let's not pretend that this hearing is about
▶ 2:35:22helping patience because it's not uh it's about Republicans trying to distract from the from the real agenda and that's getting health care for millions of Americans so they can hand out more tax breaks to super rich people uh around the country and again that's sad uh last night Republicans passed uh tax cuts that will threaten the health care for more than 80 million Americans who rely on Medicaid and ship and so to put that in perspective Medicaid covers is about 40% of all births in this country and nearly 40%
▶ 2:35:53of all children who get uh their health care uh through Medicaid and my home state of Texas one in three children and one in two pregnant mothers rely on uh on on these Services through Medicaid uh and I really worry because in the district that I represent I have one of the highest maternal mortality Health rates um in the entire country uh and we need to really take this seriously and so for Mr Wright I wanted to ask if Republicans succeed in this Reckless effort to gut Medicaid what will
▶ 2:36:23that mean for the lives of mothers newborn and children who depend on this care and what happens when access to prenatal care disappears when kids can't get the medications they need and when families are left without options um thank you Congress Congressman I I think you're right that we're in the middle of a maternal mortality crisis and that and just to be plain spoken that means um an unacceptable rate of deaths of both moms and of and of infants and and uh there's no better way to do an investment to deal with that issue than
▶ 2:36:53in Medicaid there's there's no bigger threat to the to that issue if if Medicaid is cut severely since it is such a important source of funding for maternity Wards for for prenatal care for postpartum care and for for children in those early development stages and through their school careers um whether it's the identification of learning disabilities and the ability for them to to to get in school and stay in school whether it's the ability of those families to to be financially whole and not face you know be one emergency
▶ 2:37:23away from Financial ruin um so these are very core programs and again these are um and it uh it has an impact on obviously those folks who have Medicaid coverage but for a lot of but it has Ripple effects through the Health Care system that we all depend on as well yeah yeah and you know and I don't want to get off topic here but with uh so much of the country uh really focused on immigration issues and we never talk about how the fertility rates in this country uh have played
▶ 2:37:53a role in that I don't know why people want to make these uh these maternal mortality rates even higher by not doing something like tackling uh some of these PBM reforms and again taking the word from you know president uh Elon Musk that is the president of several companies um I don't understand why we're not doing anything and standing up to these uh billionaires so with that Mr speaker thank you an you back to balance of my the gentleman yields the chair now recognizes the gentleman from Texas
▶ 2:38:24representative kensaw for five minutes of questioning thank you Mr chair thank you all for being here um on on this important issue on pbms pbms were created to control cost but we continue to see Rising drug prices and increased patients out of pocket expenses Mr uh griminger we hear a lot about the difference between list price and net price um but what's missing from that conversation is who benefits from that Gap from your perspective are pbms primarily acting as a cost controlling
▶ 2:38:54intermediary or have they positioned themselves as profit centers instead I think at this point they're un unquestionably profit centers uh the high list High rebate uh model tends to benefit both the pbms and the drug makers yeah and there there's an argument that the business model relies on complexity that the more opaque pricing is it's easier to extract revenue from multiple players you do think pbms would function the same way of drug pricing were fully transparent would we see a fundamental shift in how they operate
▶ 2:39:25that's certainly My Hope and I think this legislation creates a foundation for that to to create a fundamental shift in the way that we price drugs in the commercial Market uh I think there's there's no question that the reason that we see both high list prices and ultimately High net costs is because of the complexity the opacity uh and the fact that uh that you know the producers of drugs and the people who control the drugs are making quite a bit of money whereas the people who are actually purchasing the drugs employers purchasers Working Families are paying more yeah and and we know that formularies you know the list
▶ 2:39:55of covered drugs Drive prescription drug utilization and that pbms have significant control over which medications patients can access to what extent do you think rebate driven formulary placement distorts the market particularly when it comes to generics and and biosimilar adoption I think there's a very heavy Distortion um as we see in uh in drug formularies pretty commonly a higher priced you know uh less effective just equally effective drug placed at the base of a formulary because it's heavily rebated because they may be able to Tech
▶ 2:40:25on higher fees and then ironically patients actually have to go through some sort of medication management to sort of get through the more expensive drug before they can get access to the cheaper drug it's implicit in the way that the model is currently built uh uh functioning on on kind of the rebate structure uh there are employers that have worked to try to eliminate wasteful drugs in their formularies they they've created what's called a waste-free formulary and have seen millions of dollars in savings it's difficult to do and it requires a very aggressive um employer who has access to their formularies and can
▶ 2:40:55uh can negotiate with uh pbms in most cases um employers tend to just take the formula that they're handed to them by their PBM uh which as we know is heavily distorted and know pbms argue that they use rebates to help lower overall costs but they but they also choose not to cover list price Alternatives such as generic and biosimilars can you speak to whether pbms are truly considering patient costs or outcomes in these decisions or or if it's if it's all um you know
▶ 2:41:25I I I hate to uh to comment too much on on what they are intending to do right we we know what the outcomes are so the outcomes are certainly um higher profits uh for the pbms uh we know that patients often are asked to pay the out-of-pocket cost associated with a higher list price or a higher price drug before they're given access to a lower cost alternative we know that the impact of that uh is lower utilization more people get getting sick uh people not being able to afford the drugs that they need we heard the story at the very beginning of this about a patient who ended up in the hospital because
▶ 2:41:55of a change in the formulary based on a PBM um I don't want to suggest that I know what's in the heads of the folks that that run pbms but I know that certainly the end uh endpoint uh is um higher profits for pbms and less access for patients thank you um Mr feedler there's been growing scrutiny of how pbms interact with vertically Integrated Health plans and and Specialty pharmacies in your view do these integr ultimately help patients or are they reinforce reinforcing market dominance in ways that limit competition and drive
▶ 2:42:26costs so at the risk of being the sort of stereotypical two-handed economists I think they are trade-offs here um I think the concerns that they are steering um business particularly to their own pharmacies and that that is um over time giving them a dominant position in the pharmacy market is a real one I think there's also opportunities to use in Affiliated pharmacies to skirt medical loss ratio relationships in cases where the insurer the PBM and the pharmacy are all part of the same entity um on the other hand I think there are instances where it's legitimately more efficient for
▶ 2:42:57PBM to deliver drugs through its own Pharmacy in terms of the cost of processing claims or managing utilization um it may also allow the PBM a sort of way out around Market power held by some outside pharmacies so I I I think there are real trade-offs here and honestly the from my perspective the evidence is not clear on what what the net effect is okay I appreciate that I yield back thank you gentleman yields back chair recognizes a gentleman from
▶ 2:43:27Ohio representative lansman for five minutes of questioning on PBM reform thank you Mr chair the the biggest issue that we're all wrestling with or should be wrestling with is is the cost uh of everything including prescription drugs and healthc care and in an Ideal World we get to a place where we're reducing costs and saving uh taxpayers money that that that that we're reducing the cost
▶ 2:43:57of let's say Medicare and so with the PBM reforms one of the bills was uh our bipartisan bill that would require transparency in the transactions that pbms have with Medicare so they're buying at one price and selling to MediCare at another uh that we have full transparency ultimately that money has to go uh to Medicare the savings should go to Medicare and to seniors and it would save Medicare
▶ 2:44:28tens of millions of dollars seniors ultimately tens of millions of dollars and thanks to uh chairman Carter and other Republicans on this committee Democrats there was an incredible package of PBM reforms uh and it sat there we we talk a little bit about what happened at the end but there was this long period of time where
▶ 2:44:58it was supposed to come to the floor and it was it was going to be up for vote a full vote because it passed as I mentioned to the chairman yesterday because of his hard work and I mean this he is so passionate about this and an incredible uh leader on these reforms which will save people tons of money and will save taxpayers M Tax spare money uh that it it sat you know uh in this Congress for
▶ 2:45:29I don't know six seven eight months and and people watching at home should know that we come up here every week we vote for four days we vote on like three bills uh even though when we went on for uh the the the election I looked it up there was there was 69 eight bills that had passed out a committee including all of the PBM reforms so why didn't it come to the floor they get it in the final package uh the final spending
▶ 2:45:59package and then yes Elon mus says I don't like it uh he raises the question what is a PBM it's it's a middleman it's it's the companies that buy and sell prescription drugs on behalf of providers including Medicare uh and it gets cut and so we can blame Musk but it was also the speaker and others who said we're going to take it out of the bill and my frustration is because this is a a a a hearing on PBM reform is
▶ 2:46:30this larger issue with committees including this one and incredible work from the chairman and others and it just never goes to the floor the one big thing that we passed last year at the end of the year was the Social Security Fairness Act because we forced a vote we had to force a vote with a discharge petition and so I I know that Mr get mentioned the idea of a suspension vote I would also argue that a discharge petition whatever it takes we have so much compelling evidence that these reforms
▶ 2:47:00will fundamentally improve people's lives it will save people money at a time when people are struggling to pay their bills including the cost of Health Care and prescription drugs why wait another day put the packages put the package back together put it on the floor force a vote if we have to but I think that's where we are so that nobody can stand in the way and say well this guy didn't like it or you know maybe next time it's just I do believe that
▶ 2:47:30this is one of those moments where uh the the the policy is right people are desperately in need of help and we should do everything in our power uh to get this thing done and I I I just I stand with the chairman and uh the ranking member in making sure that we're doing everything in our our power I will say in my final minutes or seconds that uh Mr palone makes a very important point which has been brought up many many times which is
▶ 2:48:00even if we pass P we have to pass the PBM reform but it will only help people who have health care and if this body decides that it's going to take Health Care away from millions of people in order to pay for tax cuts for big corporations and billionaires uh we they have failed uh and so we have to do everything in our power to make sure that doesn't happen uh that we get the PBM reforms done uh and we ensure that there isn't a single
▶ 2:48:30dollar cut to people's Healthcare thank you and I yield back gentleman yields the chair now recognizes the gentleman from Michigan representative James for five minutes of questioning thank you Mr chairman uh something actually just came back which is Germaine to this conversation I'd actually lead with this let me uh back this back up I'm sure you'll be able to recognize the voice theing bill that passed last night aims to cut2 trillion
▶ 2:49:01can you guarantee that Medicare Medicaid Social Security will not be touched yeah I I mean I have said it so many times you shouldn't be asking me that question okay this will not be read my lips I Mr chairman I have to object to the playing of a of a I have to object to this you have to object to the words of the president because you don't agree with it I'm reclaiming my time Mr chairman I'm reclaiming my time I want to correct the record for all of my Democrat colleagues who are fear-mongering that right
▶ 2:49:31now the president of the United States just stated that we are not going to be touching Social Security Medicare Medicaid this is directly from the president of the United States from his lips so what we are here to do is increase accessibility what we're here to do is lower cost what we are here to do is increase quality and get rid of waste Fraud and Abuse and part of that is making sure that PBM reform comes I appreciate
▶ 2:50:01the opportunity to speak and dispel the rumors and the fear mongering but Donald Trump's election signaled that the status quo is failing the American people for decades health care costs have soared while access and quality have declined enough is enough pbms have been accused of exploiting opaque practices to drive up cost for Michigan families we need reforms in order to enable transparency in fact the president United States just signed transparency reform EO are you telling me right now President Biden could
▶ 2:50:31have done that for the past four years president Trump has done it in the first 60 days and we are continuing to pass rules through the last Congress and working on this one to make sure we get PBM reform done increasing transparency so in the 3 minutes that I have here I'd like to hear from our friends uh across who come thank you for your time uh a study analyzing nearly 2 million generic prescriptions dispensed to Michigan Medicaid Managed Care beneficiaries between q1 2016 and q1 2018
▶ 2:51:02revealed that pbms overcharged the state's Medicaid Program by at least 64 million through spread pricing overcharged during this period the spread margin on oral solid generic drugs escalated from 2% to 30 4% of managed care costs while Pharmacy margins over the national average drug acquisition costs decreased by 50% by q1 2018 pharmacies were reimbursed an average of only 49 cents above
▶ 2:51:33nadc per prescription equating to just 5% of Michigan's estimated $10.64 dispensing cost per prescription these practices have raised concerns about their detrimental effects on patient access to care and the financial VI ability of Independent Pharmacies given this context how have PBM practices such as spread pricing rebate based formularies patient steering to Affiliated pharmacies and administrative fees impacted your ability to see patients
▶ 2:52:04uh Mr uh griminger Mr chansy um Dr feedler uh Mr Wright thank you for your time uh we have a minute and a half any one of you would like to uh jump in I would appreciate it well I agree with you 100% we have to stop steering and we have to um we have to uh we have to have access but as long as they continue to be able to pay themselves different than they're paying the community pharmacies uh it's just an unlevel playing
▶ 2:52:34fi and it's not sustainable for the community pharmacies thank you U Congressman thank you for your question I I will say that um certainly I know that banning patient steering in the Medicare discussion is is uh is here I we would oppose uh any anything that requires plan sponsors to uh to open up their Pharmacy networks and and treat sort of any willing pharmacist or provide uh uh Care at any willing pharmacist
▶ 2:53:04um we believe it's the role of plan sponsors employers and purchasers to identify what the lowest net cost is placed to uh to provide um whether it's care or prescription drugs often that is at a Community Pharmacy because of the distorted markets and we see that pbms are charging a lot more for mail order pharmacies but in the end we want to make sure that we maintain that flexibility in a free market thank you yeah I would align myself with Mr grer on this uh I mean we but the reason we support the transparency reforms that we're talking about in this committee is because we need much more
▶ 2:53:35sunlight on even what these processes are what the problems are and what the misaligned financial incentives are that actually create all these per per perverse problems um but I think with that then we can have a better better ability to then have um if one of the Congress members Mees what's next I think that the transparency would inform additional reform uh with regard to dealing with abuses thank you Mr chairman I'm out I'm out of time I look forward to working with my colleagues on both sides of the aisle to prioritize the American people and out our own political differences
▶ 2:54:05thank you thank you gentleman yields the chair now recognizes a gentleman from New Jersey representative King representative King from New Jersey for five minutes of questioning thank you Mr chairman and thank you to our Witnesses here today I'm interested in hearing how we can change the dominant PBM model to help to better help patients in New Jersey and across the country Mr chansy last year a New York Times
▶ 2:54:35investigation highlighted the experience of a 77-year-old New Jersey man Joseph Kaplan had with America's opaque Pharmacy benefit system Mr Kaplan explained a scenario where his preferred Pharmacy was integrated with a P with apbm Express Scripts they told him they could receive a thre mon supply of his drug for $186 however after his own research Mr Kaplan discovered that Costco a non
▶ 2:55:05preference Pharmacy could provide the three-month prescription for $56 M uh Mr Kaplan concisely described the scenario it's just nuts first can you explain to us how that our current system allows for such a confusing scenario for patients well I think that is um we have one of our pharmacies is located next to a a CVS and many times we will not be able to fill the medications at our Pharmacy
▶ 2:55:36we'll have to send them to another Pharmacy as long as the pbms are going to continue to be in the game with us uh it's going to be unfair and I'll equate it to this it's almost like um it's it's almost like Walmart telling Target who can do business with them and what prices they can charge that's the environment that we're in right now and everybody would say well that's ludicrous well that's our world that's where we're at until we make some changes there um we're going to continue to have
▶ 2:56:06these problems and and so how is the the reform measure that we're working to get through this committee and pass the Congress on a bipar basis help Medicare patients like Mr Mr Kaplan well with transparency to start with transparency and eliminating the spread pricing the uh the three access advisor study talks about that the pbms are paying themselves 35 times higher than they're paying Independents for prescriptions
▶ 2:56:36that's ridiculous and that's on mail order but they're paying themselves that much more than we're getting paid in the community even in the in the state level from the bricks and mortar stores sometimes they will get paid 50 to $100 more on a prescription than they're paying us and that that's just we need a Level Playing Field we need a fair Equitable um uh reimbursement model and we need transparency and we need to eliminate the spread pricing okay and are there any other further actions as we're looking
▶ 2:57:06at reforming this entire ecosystem that you would encourage Congress to look at to improve our current Pharmacy benefit program for patients I think the legislation that um uh representative barers talked about earlier would address a lot of the issues that we're talking about and uh look forward to to that getting more progress as well thank you um uh I now want to discuss uh how many pvm's current rebate model incentivizes
▶ 2:57:37high list prices for drugs in this model many drug manufacturers offer high list prices so that they can provide a greater discount demanded by their PBM through a rebate the manufacturer does this to get a better place on an insurance plan formulary this can also result in less favorable formulary placement for cheaper generic drugs or biosimilars which is concerning since these products are some of the most time tested tools to lower um
▶ 2:58:07drug prices through competition Dr fedler could you explain how pbms current practices May limit the market P penetration of these FDA approved generic and biosimilar products and how this lack of competition affects the drug prices uh faced by patients so I think it's reasonable to worry that pbms sometimes favor highly rebated drugs over low price drugs even when that's not in the payers interest and and I think you know biosimilar entry is one place where that could have
▶ 2:58:37consequences um I will say that I think where this is happening the main issue is not necessarily Always self-dealing by the pbms but frankly it's the manufacturer who is insisting on some of these types of arrangements that can then put both the PBM and the payer in a difficult circumstance where they've got a lot of patience on the reference product and moving those patients over is going to be very expensive so I think this is a place where frankly there's a lot of blame to go around and you know the pbms incentives can be misaligned here but ultimately the manufacturers are um you know working pretty hard to protect
▶ 2:59:07their Market position as well and they need to be part of the conversation as well okay thank you are back gentleman yiel the chair now recognizes that G lady from where Massachusetts Massachusetts of course thank you Mr representative Tran for five minutes of questioning on BBM reform yes yes absolutely thank you Mr chairman uh thank you to all the witnesses today as many of my colleagues have already uh stated
▶ 2:59:37this committee spent the past two years working across the aisle to craft a bipartisan package of critical Health bills including long overdue PBM transparency reform forms after months of negotiations careful policymaking we put forward a package that would lower costs increase transparency and strengthen health care for families across the country but one tweet from Elon Musk killed that bill because it was in his view too long
▶ 3:00:07how embarrassing that idea that a Billionaire's unserious off-handed social media post could derail two years of serious bipartisan War work work that would have improved Health Care access and affordability for Millions is just a shameful indictment uh of the way my Republican colleagues operate one of the policies caught in the crossfire was my bill the accelerating kids access to Care Act which would make it easier for children on Medicaid to cross state lines
▶ 3:00:37for life-saving care that they need without delay that policy a straightforward and necessary fix was sacrificed because my Republican colleagues CH to Cave to the whims of a billionaire instead of protecting vulnerable kids and it's even more in infuriating when you consider that the pay4 to support this good policy was a ban on spread pricing in Medicaid a practice that allows pbms to siphon off taxpayer dollars that should be going to Patient Care
▶ 3:01:08let's be clear this is part of a much larger assault on Medicaid just last night with their budget resolution vote House Republicans went on the record in favor of cutting 800 80 billion from Medicaid that goes far beyond targeting waste abuse and fraud those are the cuts that will rip coverage away from families children postpartum moms seniors in nursing homes and kids with disabilities so while we sit here talking about PBM transparency and Medicaid reform let's not lose
▶ 3:01:38sight of the bigger picture here there are people in this room who just voted to gut the very program that they claim to want to strengthen just unacceptable and I know I will be joined with my colleagues on this side of the aisle we won't stop fighting to protect the kids and families who rely on Medicaid for their care and while I'm pleased that strengthening Medicaid to help kids cross state lines more easily has bipartisan support I'm concerned with the Deep cuts to the program and how
▶ 3:02:08that how they will undermine its impact if states are forced to scale back their Medicaid programs this policy would become meaningless Dr as we've seen with last night's budget resolution vote House Republicans are pushing for nearly $880 billion in Medicaid Cuts if these Cuts go through what would that mean for families already struggling to access care broadly you're going to see States facing two hard choices right they can either raise taxes and cut
▶ 3:02:38other elsewhere in their budget whether it's education or Transportation or Public Safety or they can say we're going to cut our Medicaid programs and you know that's going to mean their options are they can cut enrollment they can narrow what services Medicaid covers they can put in more utilization restrictions like prior authorization or they can cut they can pay providers less and all of those things we know um reduce access to care and where people are becoming uninsured we know that impairs Financial Security as well and I think this is all in a
▶ 3:03:08context where we know Medicaid is a is a fairly stingy payer um certainly relative to private insurance and typically relative to Medicare as well and you know that Medicaid beneficiaries already enjoy you know worse access to care than people with many other forms of coverage thank you one of the policies in our bipartisan package was a ban on spread pricing in Medicaid can you explain how Banning spread pricing could free up resources to strengthen Medicaid and in turn help policies like the accelerating kids access to Care
▶ 3:03:38Act ensure children can cross state lines for the care that they need without DeLay So I think the hope is that banning spread pricing you know reduces the cost that's states are bearing in their PBM or manage care contracts um I think you know I've expressed concerns elsewhere in my testimony that pbms may try to get some of that back in other ways but I think this is a place where because of medical loss ratio requirements that apply the this type of requirement may actually generate some savings uh for the ultimate payer and obviously policy makers could use that
▶ 3:04:09um those funds in a variety of ways thank you I mean at the end of the day Medicaid is a Lifeline for millions of children families and vulnerable Americans and we have a responsibility to strengthen it not dismantle it at the whim of the special interests of a billionaire so I hope my colleagues will reconsider the harms these Cuts would cause and work to help us protect and improve access to Care thank you I yield back the general lady yields the chair now recognizes the Gent lady from Florida representative caster for five
▶ 3:04:39minutes of questioning on PBM reform thank you very much Mr chairman and thank you to the witnesses for being here today I uh strongly support PBM reform I think it is vital and necessary and Urgent uh but I have to say that today families are scared and they're reeling because they know what is coming uh we had a debate yesterday in this committee for about 12 hours as as they debated
▶ 3:05:09on the floor of the house uh as Republicans March forward with drastic cuts to the health and well-being of families across this country Medicaid uh health services are in the bullseye the Medicaid of course is the largest provider of health services for children uh for all of our neighbors with disabilities or complex conditions for uh our older Neighbors in long-term care U and
▶ 3:05:39why to why got this and rip coverage way to provide tax cuts to the wealthiest people people in this country um I just I it's just really hard to be to hear this debate because I I don't think there this should be much of a debate they what they' they're saying is that this committee will come back in a couple weeks and try to take out $880 billion dollar from the health
▶ 3:06:09of our families um that's going to hurt kids that the and frankly um when all of us hope that you know I hear from my community pharmacist and they're they're on a Sho string and this is all this all comes on the heels of what we saw happen at the end of last year because we had worked so hard on this bipartisan package um and what happens and I know you've heard it from
▶ 3:06:40a number of of my colleagues today but it's just simply not acceptable to allow Elon Musk to come in at the 11th Hour and throw a wrench into our bipartisan work that would have rained in the pbms and and uh and said we need more transparency we need more Part D dinking we need a ban on spread pricing uh and unfortunately the house of Republicans reneged on the agreement so you can see why we're kind of
▶ 3:07:10exercised today while we are so concerned about it but I'm I'm particularly concerned about what this means for the health of a Nation when you start to say to Children and Families that you're not going to be able to see the doctor that you need and get the care that you need um this is so fiscally unwise too because it it's pretty inexpensive to take care of a child to take care of a child early and provide the health care that they need um and don't just
▶ 3:07:40take it from me take it from the independent uh Congressional budget office they say Childhood Health Coverage leads to higher future earnings and more productivity this is why all Americans should be concerned about the gutting of this important pillar of the health of the nation because when you start to to deny children access to the doctor's office and early Wellness that means that they're not going to be as successful in life CBO says that outside
▶ 3:08:10of the financial benefits the positive effects of Health Care are extensive um Mr right is it smart and fiscally wise to not to provide Health Care to America's kids and what do you what do you think is is coming I mean I think I mean there's several economic impa we're talking about the economics there's several economic impacts to these Cuts there's ones of just to the community as a whole um hospitals health health systems are are are typically the
▶ 3:08:40largest employer in the community if you make these cuts it has it has that impact and a particular multiplier effect because money spent in a community has um a multiplier effect it Healthcare is not something you can Outsource it it's in the community circulates in a community a cut would have a redounding effect in that Community economically to those individual families obviously uh as Mr fedler said the part of HealthCare coverage is about making sure people have access to care but partially is keeping the
▶ 3:09:10the family financially whole and not facing um huge bills that come with everything from child birth to Chronic conditions to an emergency and the cost of living certainly is a primary issue in the lives of of Americans right now that's right and is that going to is is targeting Medicaid to give tax breaks to billionaires going to help the average person I I I mean the the loss that that people will have individually will be we might will be much greater because of the financial instability that comes with not
▶ 3:09:40having health coverage I agree thank you very much thank you General lady yields I believe that is it for questioning today I want to thank all of our Witnesses again for being here today members may have additional written questions for y'all I'll remind members that they have 10 business days to submit questions for the record and I ask the witnesses to respond to the questions promptly members should submit their questions by the close of business on
▶ 3:10:1212th I also ask unanimous consent insert in the record the documents included on the staff hearing documents list without objection that will be the order and without objection the subcommittee is
▶ 3:12:46e for