At a health subcommittee hearing of the U.S. House of Representatives Energy & Commerce Committee, B. Douglas Hoey, CEO of the National Community Pharmacists Association (NCPA), called for legislative and regulatory action on pharmacy benefit manager (PBM) business practices to help rein in prescription drug costs.
The hearing, titled “Examining the Drug Supply Chain” and held on Wednesday, included testimony from representatives of organizations across the pharmacy and pharmaceutical marketplace.
One solution that Hoey posed to lawmakers was support for the Centers for Medicare & Medicaid Services’ proposed rule addressing the PBM-generated direct and indirect remuneration — aka DIR fees — in Medicare Part D.
“Over the past few years, CMS has been testing new payment and care models across hundreds of community pharmacies,” Hoey told the subcommittee. “Early findings suggest high patient satisfaction, improved outcomes and reduced overall health care spending, with reductions of greater than $1,000 per year for those patients who received high-level clinical intervention. To achieve that future promise, however, systemic barriers must be overcome. We believe intermediary parties — pharmacy benefit manager “middlemen” — are increasing pricing complexity and contributing to higher prescription drug costs.”
In testimony submitted to the subcommittee, Hoey noted that the PBM industry “exerts immense influence over how prescription drugs are accessed by the majority of Americans” but at the same time is “overly concentrated and largely unregulated.”
“Given the fact that the federal government is the largest single payer of health care in the United States, it makes financial sense for Congress to demand increased transparency into this aspect of the prescription drug marketplace in order to identify potential savings,” he wrote. “In addition, Congress could enact commonsense legislation to address the proliferation of PBM-generated pharmacy ‘DIR’ fees to lower out-of-pocket costs to Part D beneficiaries and reduce federal government Medicare Part D spending.”
Mark Merritt, president and CEO of the Pharmaceutical Care Management Association (PCMA), which represents the PBM industry, said high drug pricing has become a public focal point because of two key trends: pharmaceutical manufacturers’ shift from blockbuster branded drugs to much more costly specialty drugs, and higher deductibles from health plans that transfer more of the medication cost burden to consumers, which in turn shows patients how expensive these products really are.
The pharmaceutical supply chain “has nothing to do with why drug companies raise prices,” Merritt told the subcommittee. “As always, pricing power and pricing decisions in any industry are driven by supply, demand and competition, not supply chains. Prices are set exclusively by drug companies with zero input from anybody else in the supply chain, including PBMs.” Merritt also submitted written testimony for the hearing.
Other pharmacy and pharma group executives delivering testimony to the subcommittee hearing included Chip Davis, president and CEO of the Association for Accessible Medicines (AAM); Tom DiLenge, president of advocacy, law and public policy for the Biotechnology Innovation Organization (BIO); Elizabeth Gallenagh, senior vice president of government affairs and general counsel at the Healthcare Distribution Alliance (HDA); and Lori Reilly, executive vice president for policy, research and membership for Pharmaceutical Research and Manufacturers of America (PhRMA).