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Lankford Pushes for PBM Accountability

WASHINGTON, DC – Senators James Lankford (R-OK), Chuck Grassley (R-IA), and Maria Cantwell (D-WA), along with their colleagues, urged the Federal Trade Commission (FTC) to complete its investigation into the health care industry’s most powerful prescription drug middlemen. The Senators are also requesting a status update on the investigation, which has now been open for over 18 months.

The letter to FTC Chair Lina Khan was also signed by Senators Susan Collins (R-ME), Peter Welch (D-VT), Cindy Hyde-Smith (R-MS), Tommy Tuberville (R-AL), Chris Coons (D-DE), Jerry Moran (R-KS), Shelley Moore Capito (R-WV), Jon Tester (D-MT), Thom Tillis (R-NC), Marsha Blackburn (R-TN), and Mazie Hirono (D-HI). 

“As you know, PBMs operate with little to no transparency, making it very difficult if not impossible to understand the flow of money in the prescription drug marketplace and how PBMs determine the prices for, and impact the cost of, prescription drugs…. A commitment to a timely study and interim progress report will provide transparency, insight about possible competitive harms, and inform the responsiveness and cooperation of impacted parties. We appreciate the FTC’s commitment on this matter to patients and taxpayers,” the Senators wrote.”

PBMs are involved in every aspect of the prescription drug benefit process—from setting prescription prices, to deciding which drugs insurance plans cover and how they’re dispensed. Of the six companies under FTC investigation, three control nearly 80 percent of the market. Despite PBMs’ sweeping influence, neither Congress nor the taxpayer has adequate visibility into their operations. By shining a light on PBMs, Lankford, Grassley, Cantwell and their colleagues are working to identify causes for the skyrocketing prices patients are paying for their prescriptions, as well as solutions to address them.   

Lankford has worked for years to pursue workable solutions to lower prescription drug cost and stand up to PBMs. Lankford has repeatedly called out abusive practices of PBMS in the negotiation of the final price of a prescription drug. One of these harmful practices is the issuing of retroactive direct and indirect remuneration (DIR) fees, which are clawback fees required sometimes several months after a pharmacy dispenses a drug to a patient. These fees range in size and timing, causing local pharmacies great uncertainty and driving up seniors’ out-of-pocket drug costs. According to the Centers for Medicare and Medicaid Services (CMS), DIR fees have increased more than 107,400 percent between 2010 and 2020. This has contributed to the closing of hundreds of independent community pharmacies.

Lankford joined his colleagues to introduce the Protecting Drug Innovation Act. The bill would roll back the federal government’s authority to set and control drug prices covered by Medicare. The power to set drug prices was a key component of the Democrats’ so-called “Inflation Reduction Act” that passed without a single Republican vote. Last year, Lankford celebrated a huge win for Oklahoma seniors and local pharmacies as Medicare officials finalized sweeping changes to Medicare Advantage and Medicare Part D plans for seniors. Part of this now-final rule from CMS mimics plans for lowering out-of-pocket drug costs for Medicare beneficiaries for which Lankford has advocated for several years. Lankford celebrated the rule’s proposal.

Lankford introduced the Protect Patient Access to Pharmacies Act last year to hold PBMs accountable for high prescription drug prices and their practices that harm locally-owned pharmacies. He also introduced two vitally important bills to tackle the biggest drivers of the high cost of prescription drugs, particularly for senior adults on Medicare: the Ensuring Access to Lower-Cost Medicines for Seniors Act and the Prescription Drug Supply Chain Pricing Transparency Act. Lankford has also sent similar letters to the FTC regarding their investigation into certain PBM practices.

Read the full letter HERE or below.

Dear Chair Khan,

We support the Federal Trade Commission’s (FTC) issuance of a Section 6(b) order and conducting a timely study of pharmacy benefits managers’ (PBM) business practices. You wrote on November 8, 2022, that the FTC’s inquiry was “a critical step in more closely scrutinizing business practices across the pharmaceutical supply chain that can raise drug prices, limit access for patients, and contribute to the shuttering of independent pharmacies across the country.” With the FTC’s inquiry reaching its year-and-a-half mark, we urge the FTC to complete the study without delay. In the interim, we believe it is important to know the status of the study and therefore ask the FTC to issue a progress report. 

As you know, PBMs operate with little to no transparency, making it very difficult if not impossible to understand the flow of money in the prescription drug marketplace and how PBMs determine the prices for, and impact the cost of, prescription drugs. Further, recent consolidations between PBMs, insurance providers, and other health care entities have resulted in vertical integration whereby a small number of companies now manage the vast majority of prescription drug benefits. CVS/Caremark, OptumRx, and Express Scripts control roughly 75% of the PBM market and are vertically integrated with insurers Aetna, United Healthcare, and Cigna, respectively. We appreciate the FTC’s recent withdrawal of prior advocacy statements and studies that no longer reflect current market realities.

There is widespread bipartisan support for examining PBM practices to determine whether they are causing Americans to pay higher prices for prescription drugs. This support is evident in legislation that has advanced through a number of Senate committees this Congress. The Senate Committee on Commerce, Science, and Transportation advanced S. 127, the Pharmacy Benefit Manager Transparency Act, which would authorize the FTC to hold PBMs accountable for unfair or deceptive practices and add transparency to the PBM market. Another bill, S. 113, the Prescription Pricing for the People Act, was approved by the Senate Judiciary Committee and would direct the FTC to conduct a study and report to Congress within one year on the effects of consolidation and potentially anticompetitive behavior that may impact prescription drug pricing. The Senate Committee on Health, Education, Labor, and Pensions and the Senate Committee on Finance also advanced bipartisan legislation to require more PBM transparency and accountability.

With this bipartisan legislative action taking place, we urge the FTC to complete its 6(b) study in a timely manner. In the interim, we request that you publicly release a progress report on the status of your investigation. A commitment to a timely study and interim progress report will provide transparency, insight about possible competitive harms, and inform the responsiveness and cooperation of impacted parties. We appreciate the FTC’s commitment on this matter to patients and taxpayers.

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