House committee investigating potentially anticompetitive PBM tactics

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The House Oversight Committee has launched an investigation into pharmacy benefit managers' tactics that Chairman James Comer (R-KY) said are "harming patient care and increasing costs for consumers."

Comer is calling on senior officials at the Office of Personnel Management (OPM), Centers for Medicare and Medicaid Services and the Defense Health Agency (DHA) for documents and communications to determine the extent to which PBMs' practices impact healthcare programs administered by the federal government.

The committee is also calling on the largest PBMs – CVS Caremark, Express Scripts and OptumRx – to provide documents, communications, and information related to their practices.

Calling their practices "anticompetitive," Comer said they're distorting the pharmaceutical market and limiting high-quality care.

"Federal agencies administering healthcare programs for seniors, active-duty military, and federal employees rely on PBMs as middlemen to set drug prices, which opens the door to government waste at the expense of American taxpayers," said Comer.

CVS Health's CVS Caremark, Cigna's Express Scripts, and UnitedHealth Group's Optum Rx control an estimated 80% of the PBM marketplace, according to the House Committee.

WHAT'S THE IMPACT

In its letter to CMS, the House committee accused PBMs of engaging in "self-benefiting practices" as they retain control over drug prices, rebates, pharmacy reimbursements, insurers, pharmacy networks and formularies.

"PBMs use 'fail first' policies which require patients to fail on the PBM's preferred drug before they can take the drug originally prescribed," the letter read. "These policies can worsen patients' health, by forcing them to take medications which do not work for them. Additionally, lengthy delays for prior authorizations can cause suffering or even death as patients wait for PBMs to approve life-saving medications their doctors prescribe.  PBMs enact these policies to get higher rebates from pharmaceutical manufacturers."

The committee also accused PBMs of "spread pricing," whereby PBMs pay pharmacies a lower amount than they charge to a health plan sponsor – such as the government in the cases of Medicare and Medicaid – while pocketing the difference.

The committee's letters to CVS Caremark, Express Scripts and Oprum Rx accused each in turn of "dubious business practices and kickback schemes."

THE LARGER TREND

PBMs were created in the 1960s to help health insurers contain drug spending, according to the American Medical Association. PBMs can stimulate price competition among drug manufacturers by shifting demand among competing substitute drugs. 

In turn, manufacturers offer rebates to PBMs for their drugs to be placed favorably in a drug formulary, which PBMs are then supposed to pass on to insurers or employers. 

"However, the PBM market needs to be competitive for rebates to be fully passed on to final consumers," an October 2022 AMA analysis stated. "It is not clear whether PBMs are (fully) passing on those rebates. Indeed, some economists argue that consolidation in the PBM market, combined with opaque pricing, is one cause of higher pharmaceutical prices."

PBMs have long been scrutinized for their impact on the affordability of prescription drugs. 

In June, a number of pharmaceutical groups came out in favor of the Federal Trade Commission's decision to launch an inquiry into the business practices of the nation's six largest pharmacy benefit managers. 

Attempts to control drug costs have led to finger-pointing between health insurers and pharmaceutical companies, as well as controversy over drug rebates.

Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com