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Drug middlemen catch flak at another congressional hearing

Drug middlemen once again were on the hot seat at a congressional hearing on Wednesday.

The hearing by the House Education and Workforce health subcommittee was about consolidation in the hospital and health insurance sectors. No hospital or insurance company representatives testified, but JC Scott, president of the pharmacy benefit manager lobbying group Pharmaceutical Care Management Association was tapped as a witness.

None of the other witnesses were sympathetic to the PBM industry. Even the sole PBM executive on the panel made clear at the outset that his nonprofit PBM is not a member of the PBM trade group.

“Consistent with our corporate values, we are not members of PCMA,” Affirmed Rx CEO Greg Baker said in his opening statement. “PCMA does not represent what we are as an organization.”

There is heightened interest among lawmakers in both parties to rein in PBMs, and Sen. Chuck Grassley (R-IA) said at a STAT event Wednesday that he wants Republicans to turn up the pressure even more.

Many of the lawmakers on the House committee represent rural areas where they say independent pharmacies are being run out of business by PBMs. The big three PBMs, all of which are part of health care corporations that also include insurers, account for about 80% of the prescription drug market. Those corporations also own pharmacies and have started acquiring doctor practices to gain leverage over what drugs are prescribed, according to subcommittee Chair Bob Good (R-Va.).

Small, independent pharmacies say PBMs force them into contracts that don’t pay enough. The pharmacies can’t afford to turn down those contracts because doing so would cut them out of most of the market.

Scott countered that more independent pharmacies are opening than closing, and he said Congress should narrow its focus to rural pharmacies, which may be the only point of contact to the health care system for many people in rural areas. His solution is to let pharmacies give more vaccinations to create a new source of revenue, but he didn’t recommend paying them more for dispensing drugs.

Rep. Rick Allen (R-Ga.) said he has heard from his constituents that PBMs force employers to use mail-order pharmacies, and he asked the panel whether employers have much other choice.

Gloria Sachdev, President of the Employers’ Forum of Indiana, said PBMs will often make employers use the pharmacies that they own.

“That’s a real problem,” Sachdev said. “So while there appears to be choice, there’s limited choice.”

However, PBMs were not the only villain of the hearing, just the only villain present. Several committee members complained about hospitals buying doctor practices so they can charge facility fees and hospital rates, which are higher than rates charged for services provided at doctor offices.

Hospitals sometimes tack facility fees on medical bills, even when services are provided at locations off their main campus — in some cases hospitals have even charged the fees for video conferences with patients. Indiana this year banned hospitals from charging facility fees at doctor offices they buy.

U.S. lawmakers are considering following suit. Bipartisan bills in the House and Senate were recently introduced to ban the fees, which is part of a movement toward site-neutral payments in the commercial sector. The House Energy and Commerce Committee last month took the first step toward equalizing payments between hospitals and doctor offices.

Reporter: John Wilkerson, Washington Correspondent


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