House Oversight Panel to Probe Pharmacy Benefit Managers’ Role in Rising Healthcare Costs

The US House of Representatives Oversight Committee announced on Tuesday that it will hold a hearing to scrutinize the role of pharmacy benefit managers (PBMs) in the escalating costs of healthcare. The hearing, scheduled for July 23, will feature testimony from key executives of the major PBMs, a sector often blamed for the high prices of prescription drugs in the United States.

The committee’s chairman, Representative James Comer, a Republican from Kentucky, revealed that the witnesses will include Adam Kautzner, president of Evernorth Care Management and Express Scripts; David Joyner, executive vice president of CVS Health and president of CVS Caremark; and Patrick Conway, CEO of OptumRx, Reuters reported.

“Many lawmakers, drugmakers, and government officials have pointed a finger at these industry middlemen, suggesting they play a critical role in high prescription drug costs,” Comer said in a statement. The scrutiny comes amid growing bipartisan concern over the affordability of medications for Americans.

Understanding Pharmacy Benefit Managers

Pharmacy benefit managers are companies that administer prescription drug benefits on behalf of health insurers, large employers, and Medicare prescription drug plans. These entities, collectively known as payers, rely on PBMs to negotiate fees and volume-based discounts, or rebates, with drugmakers and pharmacies. PBMs also create formularies, which are lists of medications covered by insurance plans, process claims to reimburse pharmacies, and manage pharmacy networks. Many PBMs also operate their own mail-order pharmacies, adding another layer to their complex business model.

The financial dynamics of PBMs involve collecting fees from payers and rebates from drugmakers, creating a system that some critics argue lacks transparency and accountability.

Market Dominance

According to data from the platform Statista, three companies dominate the U.S. pharmacy benefit management market, controlling 79% as of 2022. CVS Caremark leads with a 33% market share, followed by Express Scripts at 24%, and OptumRx at 22%. This concentration of power among a few players has raised concerns about the competitive landscape of the industry and its impact on drug prices.

The Road Ahead

The upcoming hearing represents a significant step in addressing the complex and often opaque role that PBMs play in the healthcare system. As the committee seeks to unpack the influence of these intermediaries, the testimonies of Kautzner, Joyner, and Conway will be pivotal in understanding how PBMs contribute to the overall cost structure of prescription drugs and what reforms might be necessary to ensure fair pricing for consumers.

Source: Reuters