E&W Blog

Today, the Subcommittee on Health, Employment, Labor, and Pensions held a hearing to examine how pharmacy benefit managers (PBMs)—third-party intermediaries in a drug supply chain—are driving up prescription drug costs to create financial gains for themselves. 

Subcommittee Chairman Rick Allen (R-GA) highlighted Republican efforts to end PBM kickbacks and lower drug costs.

“Addressing this lack of transparency is critical to lowering costs. The Committee is taking steps to do just that. A key feature of President Trump’s ‘Great Healthcare Plan’ includes ending deceptive practices that enable PBMs to pay kickbacks to brokers and consultants, which raise drug prices. Building on this effort, my bill, the PBM Kickback Prohibition Act, prohibits PBMs from paying kickbacks to brokers or consultants in exchange for steering health plans toward preferred PBMs,” he said. 

Witnesses called out PBMs for failing to put patients first. 

“The perverse incentives that exist between brokers, consultants, and PBMs are anti-competitive and inconsistent with a healthcare economy that serves the patient first…Patients-first is not just a tagline, but a requirement under ERISA. Businesses and unions rely on health benefits offerings as a powerful employee recruitment and retention tool, and in turn, millions of Americans rely on union or employer-sponsored health care for their health benefits,” said Ms. Hannah Anderson, Director of Healthy America Policy and Senior Director of Policy at the America First Policy Institute.

Chairman Tim Walberg (R-MI) asked about how consolidation within the PBM space is limiting choice.  

“With the three largest PBMs controlling something like 90 percent of prescriptions, they know that they hold all the cards…Smaller employers have very few choices. They may be just stuck with the PBM chosen by their [third-party administrator],” Mr. James Gelfand, President and CEO of The ERISA Industry Committee (ERIC), explained.

Rep. Burgess Owens (R-UT) discussed how PBMs have lost sight of their intended purpose. 

“[PBMs] were meant to help the patients [by negotiating] lower drug prices, improving access, and bringing order to a fragmented system. But over time, this purpose has drifted. Today, too many PBMs seem more focused on taking value out of the system than delivering value to the patient,” he said.

In an exchange with Rep. Virginia Foxx (R-NC), Mr. Gelfand described the enormous power PBMs wield over the pricing, distribution, and accessibility of pharmaceuticals.

“PBMs do play a central role in determining both the cost and accessibility of medications because the power to create and manage a drug formulary is the power to grant and deny market shares to drugs,” he explained.  

Rep. Ryan Mackenzie (R-PA) asked Mrs. Chris Deacon, Principal and Founder at VerSan Consulting, about generic drugs and how PBMs have increased health care costs for patients by controlling access to these drugs.

“When the PBMs and brand manufacturers enter into rebate agreements, they often do so expressly conditioned…on limited access to lower-cost generics—including the exclusion of generics, biosimilars, and other formularies in exchange for higher rebates,” Mrs. Deacon said. 

Bottom line: Americans are still stuck with skyrocketing health care costs after years of failed Biden-Harris policies. Now, the Committee and the Trump administration are taking action to bring down costs, restore accountability, and put patients—not special interests—in charge.