The Role of Pharmacy Benefit Managers
Billionaire bought justices and the wealthy few are striving to rule over us. Join us to advocate for Freedom over Fascism.
Please share our Freedom Over Fascism publication with friends, family members, and community members.
The Role of Pharmacy Benefit Managers
September 11, 2024
For Immediate Release
WASHINGTON, DC - Today, Ranking Member Jerrold Nadler (D-NY) delivered the following opening statement, as prepared, for the House Judiciary Subcommittee on Administrative State, Regulatory Reform, and Antitrust Hearing on “The Role of Pharmacy Benefit Managers”:
"Mr. Chairman, the price of prescription drugs is out of control, and it is directly affecting the health and safety of our constituents. Over nine million adults have skipped medications prescribed to them because they could not afford them—with women, people with disabilities, and the uninsured most affected.
Prices are skyrocketing and people are dying or not getting the care they need, while health care giants reap massive profits, merge with other companies to entrench their dominance, and obscure critical information from Congress and regulators about their practices.
One reason that prescription drugs have become unaffordable for so many people is the growing dominance in the health care market of pharmacy benefit managers, or PBMs, who serve as middlemen between drug manufacturers, health insurers, health care providers, and pharmacies.
As a recent FTC report found, the PBM market is highly concentrated, with the largest PBMs vertically integrated with the nation’s largest health insurers and specialty and retail pharmacies. As a result, the leading PBMs exercise significant market power over consumers’ access to drugs and the prices paid for those medicines.
This includes steering contracts to their own affiliated businesses and away from local, independently owned pharmacies. They also have the ability to negotiate higher drug prices while limiting access to potentially lower cost generic alternatives. And because of their dominance, they are able to keep their practices largely shrouded in secrecy.
To address these concerns, we must act to increase competition in the PBM market.
But, to be clear, the problem is bigger than pharmacy benefit managers. It is true that only three PBMs control 80 percent of the market—but PBMs play just one part in our overly concentrated health care system. I urge my colleagues, on both sides of the aisle, not to lose sight of the forest for the trees. If we truly want to address the rising cost of prescription drugs and health care, we must address consolidation industry-wide, rather than just focusing on one class of middlemen.
For example, 90 percent of all drugs are distributed through just three drug wholesalers, 95 percent of all health insurance markets are highly concentrated, and approximately 50 percent of all generic drug markets are dominated either by monopoly or duopoly drug manufacturers, when controlling for volume.
Not only does this lack of competition lead to higher prices, but it also allows the dominant companies to avoid transparency.
An environment in which a handful of companies control Americans’ access to, and prices for, critical medications means that we all lose. We lose out on a more innovative health care market. We lose money paying exorbitant prices for drugs. We lose time fighting with our insurance provider for access to the drug our doctor prescribed. We lose knowledgeable counseling from our local, independent pharmacist. And in the worst cases, we lose a loved one who could not access or afford the medicines they need.
Although interest in PBMs has ramped up this Congress, their market dominance and their role in driving up drug prices is not news. This subcommittee addressed the issue five years ago under a Democratic majority.
But we did not just talk about it—we took action.
It is time for this Republican majority to act as well. We do not need another rehash of known issues with no goals or plans in mind to fix them.
Democrats have taken action to rein in high drug costs and to make medication more affordable and accessible. Last Congress, over unanimous Republican opposition, Democrats passed the Inflation Reduction Act, which expanded Medicare benefits, lowered drug costs, and strengthened Medicare for the future.
This Committee also passed three bipartisan bills that would have addressed drug pricing: the “Stop Stalling Access to Affordable Medications Act,” the “Affordable Prescriptions for Patients Through Promoting Competition Act,” and the “Preserve Access to Affordable Generics and Biosimilars Act.” Republicans have failed to advance any of these bills this Congress.
It is my hope that as we continue our work to diagnose the problems associated with consolidation and anticompetitive conduct in health care markets, we will also work together on finding meaningful solutions that would provide a better deal for Americans on prescription drugs and other health care costs.
I thank our witnesses for appearing here today and I yield back."
Resources:
https://democrats-judiciary.house.gov/calendar/eventsingle.aspx?EventID=5372
Please share our Freedom Over Fascism publication with friends, family members, and community members.