The U.S. healthcare system would be greatly improved by more transparency from all players, including hospitals, pharmacy benefit managers (PBMs), and insurers, members of Congress and witnesses agreed Wednesday at a House hearing.
“For too long medical prices have been shrouded in mystery and patients have lived in fear of how much their medical bills will end up costing them,” Rep. Bob Good (R-Va.), chair of the House Education & Workforce Subcommittee on Health, Employment, Labor, and Pensions, said at a hearing on competition and transparency in healthcare. “The Trump administration issued a rule to require hospitals to give employers and consumers accurate pricing data. Hospitals were required to file this information, but only 25% of hospitals fully comply.”
“We must push for standardized data and make it usable so employers can effectively meet their fiduciary obligations,” he continued. In addition, “Congress must codify the transparency and coverage rule to ensure the administration enforces requirements that plans submit drug pricing data. Without this critical information, employers and patients will be left in the dark when it comes to navigating the complexities and costs of the drug supply chain.”
Rep. Mark DeSaulnier (D-Calif.), the committee’s ranking member, said he was interested in changing the incentives of PBMs to make sure they act in the best interest of clients. “At a minimum, we should all agree that employers and consumers deserve to know how the rebates PBMs receive from drug manufacturers impact their decisions that raise costs for workers and families.”
Gloria Sachdev, PharmD, president and CEO of the Employers’ Forum of Indiana, a coalition of employers interested in healthcare affordability, expressed frustration about PBM transparency. “None of our employers have seen any pharmaceutical claims data at the drug level,” she said. “When they get rebate information, they get it in aggregate. So that’s not helpful to the employer because then they can’t shop for it.”
“They are told, ‘If you want to change the formulary, then that might impact the rebates that we give you.’ Let’s say they have 500 drugs that they’re covering, maybe more, and we would want to see what the rebates are at the drug level. We don’t get that level of information at the drug level,” she added.
Sachdev noted that the Indiana state legislature recently addressed the hospital pricing issue, passing a law that barred hospitals from billing additional hospital facility fees for off-campus services. “Just because a hospital buys a physician clinic in a strip mall does not mean they should be allowed to add on hospital facility fees when nothing about the service or doctor or location has changed,” she said. “Tacking on hospital facility fees can easily double the price for no reason. We should pay the same amount for the same service regardless of who owns it.”
The hearing also featured two very different witnesses from the PBM industry. J.C. Scott, president and CEO of the Pharmaceutical Care Management Association (PCMA), which represents large PBMs including CVS Health, Express Scripts, and Optum Rx, said that “efforts to lower drug costs must start with an understanding that drug prices are set by drug companies and that in the prescription drug market, as in many markets, competition is vitally important.”
“Lawmakers must ensure that the misuse of the patent protections originally put in place to balance rewarding innovation and ensuring affordable access for patients is not blocking competition and keeping prices high,” he noted.
Greg Baker, CEO of AffirmedRx, a PBM based in Louisville, Kentucky, said his company doesn’t belong to PCMA because “PCMA does not represent who we are as an organization. We have founded a new not-for-profit organization with numerous other PBMs who also do not want to be represented by PCMA, called TransparentRx.”
“I would like to embrace many of the much-needed reforms gaining steam in Congress,” he said. “PBMs, especially traditional ones, and especially the big three, deserve scrutiny and reform. More importantly in my opinion, their approach is a central feature to sustaining unnecessarily high drug costs in America. We have a broken system which hides profits and inflates prescription costs, harming the interest of diverse communities, working families, and seniors.”
The idea that PBMs promote generic drug use “is a falsehood,” Baker said. “You can look at any traditional PBM formulary that’s publicly available online and consistently see where brand-name drugs are put in place on the formulary over generic drugs. And when you consider the fact that of the 160-[million]-plus Americans who take private insurance, that 55% of those people have a coinsurance or a high deductible plan, that means they are subject to a higher cost at the pharmacy counter. That is not acceptable in our opinion.”
Rep. Pramila Jayapal (D-Wash.) wanted to talk about hospital consolidation. “We’ve seen a concerning increase of [hospital] mergers across the country,” she said. “A recent report by The New York Times found that areas with the highest rates of hospital consolidation had prices go up between 11% and 54%.”
The hospital business model has undergone a big shift, said Sophia Tripoli, MPH, director of healthcare innovation at the consumer group Families USA. “It’s based on two things: buying up local competition to gain more negotiating leverage over how to demand higher prices, and generating high volumes of high-priced services,” she said. “And the results of course [are that] the prices get passed on — particularly in the commercial market — to employers. We see stagnant wages, we see increased premiums and cost-sharing for consumers, and we’re stuck with unaffordable healthcare.”
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