Bipartisan Concern Over PBM Consolidation Expressed at House Hearing

Federal Health Care Reform

House Republicans and Democrats expressed concern this week over the degree of  competition in the pharmacy benefit manager industry and its contribution to soaring drug prices and the impact on independent pharmacies.  At the House Judiciary Regulatory Reform, Commercial and Antitrust Law Subcommittee hearing on the state of competition in the PBM industry, Rep. Bob Goodlatte (R-VA) noted the need to "explore whether the proper economic incentives exist for PBMs and pharmacies to place a genuine check on rising drug prices."  Rep. Henry Johnson (D-GA) noted that "significant horizontal consolidation" has occurred in the PBM industry and "that this is compounded by the vertical integration of certain PBMs into the mail order and retail pharmacy markets."  A recent report notes that the three biggest PBMs control nearly 80 percent of the U.S. PBM market.  Bradley Arthur, president of the National Community Pharmacist Association, described to the committee seven areas where PBM power has an undue influence on patients, health plan sponsors and pharmacies, including the inherent conflicts of interest through ownership of mail order and specialty pharmacies that often incentivize or require patients to use such pharmacies.  However, Amy Bricker from Express Scripts told the committee "the PBM marketplace is extremely competitive," and the company's "scale allows it to negotiate discounts form drug manufacturers and pharmacies that lower costs" for their clients.  Natalie Pons from CVS Caremark testified that "PBMs will save plan sponsors and consumers almost $2 trillion, or nearly 35 percent, between 2012 and 2021 when compared with prescription drug expenditures made without pharmacy benefit management," by negotiating manufacturer discounts, driving higher utilization of generic drugs, and negotiating contracts with pharmacies that are willing to provide discounted rates."