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Lankford Calls Out Abusive Practices Driving Up the Cost of Rx Drugs

CLICK HERE to watch Lankford’s remarks on YouTube.

CLICK HERE to watch Lankford’s remarks on Rumble.

WASHINGTON, DC – Senator James Lankford (R-OK), who serves on the Senate Finance Committee with jurisdiction over Medicare and Medicaid, today spoke on the Senate floor about the abusive practices of pharmacy benefit managers (PBM), the drug-price middlemen, impacting pharmacies, particularly rural and independent pharmacies. Lankford continues to call out the ways PBMs are driving up the cost of prescription drugs and decreasing cost transparency for pharmacists. The two abusive practices PBMs utilize that Lankford highlighted are direct and indirect remuneration (DIR) fees and the manipulation of a drug’s coverage and placement on a “tier” of coverage that determines patient access to a drug.  This gaming between name-brand drugs and generics keeps prices high for patients at the pharmacy counter while simultaneously making PBMs more money.

Lankford remains a long-time advocate for practical solutions that bring down the cost of prescription drugs at the pharmacy counter, especially for senior adults on Medicare. Last month, he introduced two vitally important bills to tackle the biggest drivers of the high cost of prescription drugs for Medicare beneficiaries: the Ensuring Access to Lower-Cost Medicines for Seniors Act and the Prescription Drug Supply Chain Pricing Transparency Act.

At a recent Senate Finance Committee hearing, Lankford pressed the witnesses about practices PBMs use to limit access to lower-cost generic drugs, manipulating Medicare Part D health plans’ formulary tiers to usurp patients’, doctors’, and pharmacists’ expertise, sometimes forcing a patient to pay for a higher-cost brand-name drug even when a cheaper option is available.

Lankford also introduced the Protect Patient Access to Pharmacies Act to ensure all pharmacy price concessions, including fees imposed by PBMs, are assessed at the point of sale and that pharmacies will have proper access to performance metrics so they can continue serving Medicare patients.


“When I talk to most Oklahomans with pharmaceuticals, about the cost of drugs, and going to the pharmacy, they don’t think a lot about supply chain issues. Though I actually have a bill working on this, and this is an issue we’ve got to resolve. About 10,000 of the active pharmaceutical ingredients come from communist China. We’re very exposed there. That’s a very big risk. We’ve got to work to be able to make sure that we can get access to the pharmaceuticals without depending on China to do that. But that’s a risk people want solved, but don’t talk about most. People most of the time talk about the cost of the drug and availability at their local pharmacy…”

“…There are drug companies that do research, develop the drugs, and do all the clinical trials and get it approved and they’re ready to go. But then there’s a wholesale network that handles the distribution, and there’s this group that almost no one has heard of, called the pharmacy benefit manager. Now the pharmacy benefit manager oftentimes sets the real price for the drug, because the drug company may produce it at one price, the pharmacy is ready to sell it at a price, but there’s a group in between, the pharmacy benefit manager, that they actually control how it works….”

“…Now, if I’m at the pharmacy in Atoka, Oklahoma, the patients coming into that rural, beautiful community, they just know what they’re paying at the counter. But if you go behind the counter and talk to the pharmacist there or in any number of other communities there, they’ll tell you they’re struggling as an independent pharmacy, especially in rural areas, because there’s a game happening with the pharmacy benefit manager, that’s to the benefit of that, what’s called a ‘PBM’ and the detriment of the local pharmacy and the patient. This is an issue that’s got to be resolved…”

“…Let me give you a couple of examples and things that I believe we need to address that I have been working on for years and that finally the Finance Committee of the United States Senate is actually taking on this issue. One of them is another little code thing that most people don’t know it exists, called DIR fees. This direct and indirect remuneration fee is how the process works behind the scenes at an independent pharmacy…Here’s what happens, they purchase the drug and get the drug, they’re ready to sell it, they sell to the consumer, the consumer at the counter pays them for it, they’ve got their money from the consumer, it goes out the door, and then a month or a quarter or sometimes even a year later the pharmacy benefit manager sends a notification to the pharmacy and says, ‘I didn’t like the way that you did that.’ It wasn’t a quality thing. It was just how they did it. Sometimes they’ll say, ‘Well, you really should have prescribed two drugs to this person, and you just did one.’ Now, the pharmacist doesn’t choose what drugs are going out to the patient that’s there. The doctor does. The pharmacist just fills the script. But the pharmacy benefit manager may say, ‘Oh you needed to sell them more drugs than what you did, so we’ll reimburse you less for this,’ and they literally change the rules after the sale is done, so they’ll reimburse them—sometimes they’ll reimburse less than the actual drug cost to the pharmacist. So, the pharmacist actually loses money, but they don’t know that until months later. That’s what’s happening right now in small pharmacies across America because the pharmacy benefit managers are focused in on how can they make more money even if it closes down rural independent pharmacies…”

Another issue I have been working on for years. This is a game played between the pharmacy benefit managers and the pharmaceutical companies that actually produce the drugs. Most drugs, when they come out, are remarkable. The engineering and the science in modern medicine and the technology that it takes to be able to go through the clinical trials to get something approved to show that is not only safe but effective is remarkable science and there are great researchers doing that and it’s incredibly expensive to do. Because it is incredibly expensive in the United States, we protect the patent rights of that new drug. So a drug when it comes out is really expensive when it comes out because we want that company to make enough money to be able to pay for all of the research they put into producing it and make a little profit or else they will not produce more drugs and more innovation. That’s how it works. But that patent is protected for a season, usually around a decade that it’s protected for them…”

“…This is a simple fix. Generic drugs should be on the generic tier. Branded drugs should be on the branded tier for sales. This is not rocket science again, this is straightforward consumer protection. This is an issue that I have pushed on for a long time, that I get a lot of pushback from, the pharmacy benefit managers and drug companies are not big fans to this. I have no opposition to drug companies, I want them to continue to thrive and produce new drugs and make a profit on the production of those new drugs. But when they’re doing something to the consumer to drive up the price when they could get a cheaper price, that’s bad for them and bad competition. Let’s fix that.”

“And there are even folks that say, ‘Let’s have the federal government take over the pricing and the federal government will set the price. That would work beautifully.  I laugh and say, ‘If you think the government will solve every problem, try to get your passport right now.’ Right now, it takes about 18 weeks to get a passport, and it used to take four weeks. The federal government is not the solution in everything. Protected free markets are a good solution on this. Competition will work if we allow the markets to actually work. But if someone is in the middle controlling all of that. That is something that we need to intervene and say let’s have fair markets out there to get down the price of drugs. Because there are generics and biosimilars out there that will bring down the price, if they’re allowed to get to market…”