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Senator Lankford Attends Hearing on Rising Drug Prices in America

WASHINGTON, DC – Senator James Lankford (R-OK) today participated in a Senate Finance Committee hearing entitled, Drug Pricing in America: A Prescription for Change, Part III. Lankford had the opportunity to question Derica Rice, Executive Vice President and President of CVS Health and CVS Caremark, Dr. William Fleming, Segment President, Healthcare Services of Humana Inc., John Prince, CEO of OptumRx, and Dr. Mike Kolar, Interim President & CEO, Senior Vice President and General Counsel, Prime Therapeutics LLC. 

Lankford’s questions focused on drug rebates and Medicare Part D, reducing healthcare costs for seniors, performance metrics for independent pharmacies, and the negotiation of list prices for drugs. Today’s hearing was part three of a multi-part series dealing with the rising drug costs in our nation. 

In January, Lankford attended the first hearing of the Senate Finance Committee on Drug Pricing in America: A Prescription for Change, Part I. During the hearing, Lankford questions centered on the 340B Drug Pricing Program’s increasing costs, the Medicaid rebate program, and restructuring the way drugs are priced to increase transparency. 

Excerpts from Lankford’s Q&A:

On pharmacy “clawbacks”

Lankford (3:05-4:35): When I talk to independent pharmacies, they’ll talk about the DIR (Direct and Indirect Remuneration fees) 100 percent of the time and clawbacks. They are a stand-alone, rural pharmacy and there are two issues that come up. Let me deal with them in order. One of them is obviously, they get a bill at some point for $50,000 that they’re clawing back from something, six, seven months ago or before and they didn’t know that was coming back. Obviously, cash flow becomes exceptionally difficult on that. They will reference that there are performance metrics put on them, but I can never hear what those performance metrics are. Can anyone give me an example of what performance metrics might be for an independent pharmacy to avoid the clawbacks? 

Dr. Fleming: Senator, I’m a pharmacist. Forever, pharmacists have wanted to be paid for cognitive services, to be paid to be at the top of the licenses. The example of performance fees that we put in place to get the pharmacists engaged are things that will help the patient with drug adherence, identify those patients who are not as adherent, engage with them. And through these programs, we’ve seen a two percentage point increase in drug adherence in several disease states, year over year over year because of getting the pharmacist engaged in a value-based conversation, just like we asked doctors and hospitals. 

On drug price negotiation

Lankford (05:36-7:12): Do you ever negotiate a higher list price for a drug to give you more flexibility on the rebate side? Is there a time when you work with a manufacture to negotiate a higher list price to give you more flexibility? And have each of you answer that.

Dr. Miller: No

Mr. Rice: No

Fleming: No

Mr. Prince: No

Dr. Kolar: No 

Lankford: Do any of you ever, when a generic comes available, do you put the formulary, the generic on a formulary with the branded group? So there’s branded tiers, generic tiers, and such where the generic would enter the formulary in a branded tier. Does that happen with you at all on the pricing?

Miller: I would have to, because of the basis of the large number of drugs, I’d have to get back to you if there is any specific example, but that would not be our practice.

Rice: Senator, our focus is providing the lowest cost option.

Lankford: So that generics would not be on a branded tier. 

Rice: If it’s the lowest-cost option.

Fleming: Senator I can think of limited circumstances, very rare, where that’s the case. Usually because of the six-month exclusivity rule when the generic hits the market.

Prince: Senator our objective is around lowest net cost for drugs and what tier goes on but in terms, it might be, I’m not sure, there’s examples where that might occur, but it would be rare.

Kolar: Senator I can’t think of a specific example but our model would be to prefer the lowest net cost drug. 

Lankford: To the consumer?

Kolar: To the plan for the benefit of the member.

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