PBM Executives Tout Value Before Senate Finance Committee

Are pharmacy benefit managers (PBMs) the reason for higher drug prices, or do they bring value and negotiate better deals? Those 2 questions were before the Senate Finance Committee Tuesday, which held its third hearing of the year related to pharmaceutical drug prices.

The hearings are a bipartisan effort between Committee Chairman Chuck Grassley, R-Iowa, who questioned whether PBMs prefer high-cost drugs that come with big rebates over cheaper drugs, and also whether consolidation in the industry, which is happening as drug makers buy PBMs, is contributing to the problem.

Ranking Member Ron Wyden, D-Oregon, as well as several other senators, questioned how PBMs bring value to consumers and taxpayers.

“Whether pharmacy benefit managers bring any real value to taxpayers is a mystery,” Wyden said.

Most drugs do not have rebates, said Steve Miller, MD, executive vice president and chief clinical officer of Cigna, which owns Express Scripts. Ninety percent of the prescriptions they fill are generics, he said.

Rebates are used in specific situations, such as branded drugs with competition.

Besides Cigna, the other companies that sent executives were CVS Health, which owns Caremark; UnitedHealth, which owns OptumRx; Prime Theraputics, and Humana.

Drugmakers blame rebates for the problem of rising drug prices, as has HHS Secretary Alex Azar, who is proposing to end rebates in Medicare Part D in 2020.

The Washington Post reported Tuesday that the administration may delay the end of rebates until after the 2020 election, so as not to cause backlash against Donald Trump.

But PBMs blame drugmakers, with John M. Prince, chief executive officer of OptumRx, citing patent evergreening and pay-to-delay tactics along with annual price increases. He also cited the cost of specialty drugs,

“When we have competition, we can bring down drug prices,” said Derica Rice, executive vice president and president, CVS Health and CVS Caremark.

The PBMs said they only offer rebates on about 8% of the prescriptions. They also said that they pass along most of those discounts to payers.

Part of the discussion turned to “spread pricing,” which is the difference between what a plan sponsor is billed and what a participating pharmacy is reimbursed. In some cases, whether or not a contract contains rebates or spread pricing is up to the client and how they choose to pay, the executives told senators.

Drug company executives said they want to offer more of those rebates directly to patients when they buy the drugs, an upfront approach to the discounts favored by President Donald Trump’s administration.

The executives said they were open to more transparency, such as having advisory bodies to Congress examine their way of doing business, but only so long as confidential information is kept from the public, they said.

In one of the more heated moments of the day, Sen. Ben Cardin, D-Maryland, took the PBM executives to task by bringing up shortages of common medicines and demanded to know what they were doing to solve the problem. He was mostly met with silence.