WASHINGTON – Last Thursday, the Senate Commerce Committee held a hearing on “Ensuring Fairness and Transparency in the Market for Prescription Drugs.” The hearing looked at the opaque middlemen – known as pharmacy benefit managers (PBMs) – and cited an investigation and legislation led by Sen. Chuck Grassley (R-Iowa) to lower prescription drug prices and establish PBM accountability.
 
What Experts and Grassley’s Colleagues Are Saying:
 
  • Sen. Marsha Blackburn (R-Tenn.) said, “Senators Grassley and Wyden published a 2-year investigation into the cost of insulin. I know each of you are familiar with this. And what they noted was how the PBMs really stood in the way of a lot of transparency in this process. They concluded that the PBMs have an incentive for manufacturers to keep list prices high.”
  • Sen. Maria Cantwell (D-Wash.) said, “According to a Senate Finance Committee staff report released by Senators Grassley and Wyden, the price increases are due in part to the business practices of pharmacy benefit managers, the subject of today’s hearing. PBMs are contracted by government programs, insurance companies, self-insured employers, to negotiate on behalf of the pharmaceutical firms. And the way the system works they also make a lot of money driving up the price for consumers.”
  • David Balto, a witness for the hearing and an antitrust attorney, said, “One thing that could be very helpful besides the efforts by Senator Blackburn and other members to compel the GAO to do a comprehensive study on this market, and I know Senator Grassley and others have suggested the FTC to do a study, would be for Congress to specify what are unfair methods of competition that the FTC should scrutinize.”
  • Balto further said, “Many of you have identified the key issue here which is ultimately non-insured consumers lose. And even Professor Garthwaite identifies that problem. And that’s why consumer groups, if you’ll note in footnote five of my testimony, consumer groups supported the past administration’s proposal to eliminate the anti-kickback safe harbor for PBM rebates, and PBM rebates are just screwing up healthcare decisions right now and leading to a rapid escalation in drug prices as demonstrated by the Grassley-Wyden report.”
  • Sen. Richard Blumenthal (D-Conn.) said, “I think there’s no question that there ought to be a study by the FTC under 6B into the PBM market as a number of our witnesses have said, there’s a lack of transparency; there’s a lack of current data. The 2005 study is woefully out of date. That is the reason that I and others, including Senator Grassley, six Republicans, two Democrats have sponsored the Prescription Pricing for the People Act of 2021.”
 
Investigating Insulin Manufacturers and Holding PBMs Accountable

Grassley’s two-year landmark bipartisan insulin investigation with Sen. Ron Wyden (D-Ore.) studied why and how the price of insulin has increased so dramatically in recent years. The investigation found that manufacturer rebates are associated with high list prices in the insulin therapeutic class. PBMs leverage their size to extract higher rebates, discounts and fees from insulin manufacturers because PBMs consider insulin products to be interchangeable. While rebates are used to keep insurance premiums low, for those patients with high-deductible health plans, no insurance or for those who are underinsured, the practice of offering rebates results in high list prices at the counter. This causes some patients to ration their medication or forgo their medication entirely.

As ranking member of the Senate Judiciary Committee, Grassley has introduced and unanimously passed out of committee the Prescription Pricing for the People Act with Cantwell to bring transparency to the PBM industry. The bill directs the Federal Trade Commission (FTC) to study PBMs and make recommendations on the effects of consolidation on pricing and other anticompetitive behavior.

Most recently, Grassley pressed the FTC to investigate PBMs’ role in consumer drug prices. He urged the FTC to find consensus and move forward on a study examining bipartisan concerns about competition within the PBM industry.

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