Are PBMs To Blame For The High Cost Of Prescription Drugs?

The two political parties cannot seem to agree on many things these days, but members of the Senate Finance Committee on Thursday agreed on a common enemy: Pharmacy benefit managers.

This was the second committee hearing in two months to discuss PBM business practices. In February, the Senate Committee on Commerce, Science and Transportation approved the Pharmacy Benefit Manager Transparency Act, which was sent to the full Senate,

“People care a whole lot about this matter of being mugged at the pharmacy counter,” Committee Chairman Ron Wyden, R-Ore, said during a hearing on PBMs at Thursday’s meeting.

A senior Senate Republican agreed. “Something ought to get done this Congress,” said Sen. Chuck Grassley, R-Iowa.

Wyden said there is a bipartisan desire to make the process fairer. “In recent years, it’s increasingly apparent that PBMs are using their data, market power, and know-how to keep prices high and pad their profits instead of sharing the benefits of the prices they negotiate with consumers and the Medicare program,” he said, adding that, “I believe this is an industry that is going in the wrong direction, and that’s having a big impact on the prices Americans are paying at the pharmacy counter.”

“We don’t have competition here,” added Sen. Ron Johnson, R-Wis.

Witnesses testifying at the hearings were divided over whether PBMs are to blame for the high price of prescription drugs.

“The supply chain for medicine is riddled with perverse incentives and marked by skyrocketing prices. We see persistently rising prices on the medications people depend on, day after day, to treat widespread problems such as diabetes, high blood pressure, high cholesterol, and opioid addiction,” said Robin Feldman, director of the Center for Innovation at the Hastings College of Law at the University of California.

A second witness disagreed.

“PBMs are now heavily focused on the dispensing of specialty drugs, as are other players in the health care ecosystem,” said Lawton Robert Burns, a professor of Health Care Management at the Wharton School at the University of Pennsylvania. “Yet, PBM critics continue to attack them regarding strategies heavily pursued in the past, particularly manufacturer rebates and pharmacy network management. Although still a sizeable portion of their revenues, such strategies and revenue sources are on the wane.”

Clearly, Wyden disagreed.

“We want to make this a bipartisan effort here,” he said. “We’ve got to get going on this.”


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