PBM executives decline to revise controversial testimony to House committee

PBM executives decline to revise controversial testimony to House committee


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Dive Brief:

  • Top executives at major pharmacy benefit managers are standing behind recent testimony on the Hill that put them in hot water with the chair of the powerful House Oversight Committee.
  • Chair James Comer, R-Ky., accused Patrick Conway, the CEO of UnitedHealth’s Optum Rx; Adam Kautzner, the president of Cigna’s Express Scripts; and David Joyner, the president of CVS’ Caremark, of lying during a July hearing, and gave them until Wednesday to correct their statements or face potential fines or jail time.
  • Optum Rx, Caremark and Express Scripts have responded to Comer and declined to change any testimony, the companies confirmed. The House Oversight Committee is “reviewing the PBMs’ written responses as well as the additional documents and information they provided,” according to a spokesperson.

Dive Insight:

During the House Oversight hearing earlier this summer, Conway, Kautzner and Joyner defended PBM business practices in front of a generally unfriendly panel of lawmakers.

PBMs, middlemen that sit in between drugmakers, payers and pharmacies in the drug supply chain, have found themselves at the center of public fingerpointing over what entities are to blame for the increasingly unaffordable cost of medications in the U.S.

During the hearing, lawmakers on both sides of the aisle pressed the executives on how Caremark, Express Scripts and Optum Rx, which jointly control about 80% of prescriptions in the country, use their size and reach to extract profits from the pharmaceutical supply chain.

Along with raising concerns about rampant vertical integration, lawmakers slammed the companies for giving preferential treatment to owned pharmacies at the expense of independent businesses and favoring more expensive brand-name drugs on their formularies, or lists of covered drugs, in exchange for higher rebates.

The executives denied that their rebating practices raise drug costs, and testified that their PBMs treat affiliated and unaffiliated pharmacies equally when setting rates, negotiating contracts and telling patients where to dispense their medications.

Comer took issue with the pharmacy testimony, arguing it conflicts with committee findings and research by the Federal Trade Commission, which is investigating the PBM industry. The Kentucky Republican, who has led the Oversight Committee since early last year, threatened Conway, Joyner and Kautzner with legal action, including up to five years in jail in addition to fines that could reach hundreds of thousands of dollars, if they didn’t walk back the alleged perjury.

However, Optum Rx, Express Scripts and Caremark are sticking by their executives’ words.

Caremark’s letter responding to the allegations, which was shared with Healthcare Dive, criticizes Comer’s reliance on an interim report from the Federal Trade Commission in accusing Joyner of perjury.

Major PBMs, along with the agency’s two Republican commissioners and some pharmacy market experts, have argued the July report — which accused PBMs of making it harder and more costly for patients to access drugs — is overly based on anecdotes instead of empirical research.

According to an analysis funded by Caremark (along with Optum Rx and Express Scripts), the PBMs “substantially” reduce drug costs, “contrary to the insinuations” in the FTC report, wrote Nicholas McQuaid, a partner at Washington, D.C.-based law firm Latham and Watkins, in the letter to Comer dated Tuesday. McQuaid, who co-leads the firm’s Congressional Investigations Practice, used to run the Department of Justice’s criminal division in the early months of the Biden administration.

That same analysis, which was published in July, also shows that Caremark reimburses CVS pharmacies at lower rates than unaffiliated pharmacies, McQuaid said.

Whether PBMs give their own pharmacies higher pay for dispensing drugs has been a key focus of antitrust regulators and congressional probes into the industry.

Lawmakers and regulators have also noted that PBMs could be steering patients to their own pharmacies. PBM executives denied that they were doing so during the July hearing — another facet of their testimony that Comer said was false.

Caremark offers its employer and health plan clients hundreds of different pharmacy network designs, including one that includes almost all U.S. pharmacies, McQuaid said. That National Choice Network is most popular with Caremark clients, and it includes 28,000 pharmacies that are independent — about 42% of all the network’s total locations, according to the lawyer.

Clients can also choose a narrower network design that excludes certain pharmacies, for example high-priced pharmacies in areas with cheaper options, according to McQuaid. That type of contracting “is common in the healthcare industry and has been shown to reduce costs” and “the materials cited in your letter, some of which do not relate to CVS Caremark, do not undermine this conclusion,” McQuaid wrote to Comer.

Caremark’s rebuttal does not directly address evidence collected by the House Oversight Committee and cited by Comer that Caremark reimburses competing pharmacies below the acquisition cost of drugs — and below what it pays its own pharmacies — and that some patients are being forced to fill their prescriptions from Caremark-affiliated pharmacies instead of the location they choose.

Express Scripts and Optum Rx did not share their letters to the committee, though the PBMs confirmed that they were not revising the July testimony.

PBMs maintain that they save employer and health plan clients money, while making it easier for consumers to access pricey drugs. The companies instead point to pharmaceutical companies, which set the list price of medication, as behind the the high cost of many drugs.

Pressure has been mounting on the federal government to act to curb the high drug prices, at a time when roughly one-third of Americans report not taking medication they need because of cost. The Inflation Reduction Act passed in 2022 gave Medicare the ability to negotiate the price of certain drugs, which is expected to reduce spending at the expense of pharmaceutical companies’ revenue.

PBMs are also unlikely to sidestep reform, given ongoing congressional scrutiny in the form of hearings and legislative proposals to rehabilitate the pharmacy supply chain. Most bills have centered around injecting more transparency into PBMs’ business practices, something that industry leaders have said they’re open to.



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