Pharmacy, PBM Stakeholders Testify on Marketplace Competition
CVS Health, Express Scripts, and the National Community Pharmacists Association were among the stakeholders to recently testify on the state of competition in the pharmacy benefit manager and pharmacy marketplace.
CVS Health, Express Scripts, and the National Community Pharmacists Association (NCPA) were among the stakeholders to recently testify on the state of competition in the pharmacy benefit manager (PBM) and pharmacy marketplace.
The US House Judiciary Committee’s Subcommittee on Regulatory Reform, Commercial and Antitrust Law conducted a hearing on this topic to evaluate negotiation and pricing practices in the pharmacy industry.
Witnesses were asked to testify on how these practices affect different health care stakeholders, but especially patients.
NCPA president and BlackRock Pharmacy and Brighton-Eggert Pharmacy co-owner Bradley J. Arthur, RPh, outlined for the Subcommittee what he described as the “undue influence” PBMs have on patients, health plan sponsors, and pharmacies.
“Small community pharmacies like mine are faced on a daily basis with the impact of PBMs’ disproportionate market power,” Arthur said. “…The current situation and overall business climate that exists in which market power is increasingly concentrated in an ever-shrinking number of corporations…makes me apprehensive about what is around the bend.”
According to CVS Health senior vice president and assistant general counsel Natalie Pons, however, that market power is what makes the PBMs a positive force for patients.
During her testimony, Pons said the size of the PBM network allows it to secure lower prices from pharmaceutical manufacturers because PBMs “have multiple clients and are therefore able to negotiate larger volume discounts than individual plans.”
That negotiating power translates to direct savings for patients, she argued, referencing a 2011 study from health care consulting firm Visante that found “PBMs will save plan sponsors and consumers almost $2 trillion…between 2012 and 2021 when compared with prescription drug expenditures made without pharmacy benefit management.”
Amy Bricker, RPh, vice president of retail contracting and strategy for Express Scripts, similarly argued “our scale helps level the playing field [and] also allows us to drive a hard bargain and lower costs for patients, clients, and taxpayers.”
She also alleged during her testimony that independent pharmacies are “more than holding their own,” referencing the recently released NCPA Digest that found both the number of independent pharmacies and gross profits have remained steady over the last few years.
But that fact that the 3 biggest PBMs—Express Scripts, CVS Caremark, and Optum Rx—control about 80% of the PBM market prompted antitrust lawyer David Balto to testify that there is a “need for stronger enforcement and legislation” to regulate the marketplace.
“The lack of enforcement, regulation, and competition has created a witches brew in which PBMs reign free to engage in anticompetitive, deceptive, and fraudulent conduct that harms consumers, employers, unions, and pharmacists,” Balto testified.
Arthur concluded his testimony by noting that PBMs do play an integral role in patient access to medications, but he asked the Subcommittee to consider “industry-wide regulation similar to what is generally required of commercial health insurers.”
This was the third of 4 planned hearings in a series dedicated to evaluating competition in the health care industry.