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House investigating PBMs Caremark, Express Scripts, OptumRx

admin by admin
March 6, 2023
in Healthcare


A key House panel has joined the chorus of critics railing against pharmacy benefit managers, increasing government pressure on several major healthcare companies.

Oversight and Accountability Committee Chair James Comer (R-Ky.) is the latest official to launch an investigation into the what he called “anti-competitive tactics” that increase healthcare spending and disadvantage patients, the committee announced in a news release Wednesday.

Comer sent letters to CVS Health’s Caremark, UnitedHealth Group’s OptumRx and Cigna’s Express Scripts demanding information about subjects including how they design formularies, steer patients, collect rebates from pharmaceutical companies and establish differential pricing arrangements. These three PBMs have a combined 80% market share and have expanded their operations to include group purchasing organizations headquartered abroad that aggregate rebates for other PBMs, about which Comer also inquired.

The House investigation will likely nudge PBMs to become more transparent in order to avoid new government mandates, said David Dobrzykowski, director of healthcare initiatives at the Sam M. Walton College of Business of the University of Arkansas. “When organizations face the choice between self-regulation and external regulation, self-regulation tends to be preferable,” he said.

Express Scripts did not respond to an interview request. OptumRx and Caremark referred questions to the Pharmaceutical Care Management Association, which did not respond to an interview request. The PBM trade group last week launched a seven-figure, 10-month national advertising campaign promoting its members.

The oversight committee also requested information from the Centers for Medicare and Medicaid Services, the Office of Personnel Management and the Defense Health Agency about how PBMs interact with government health programs. The federal agencies did not respond to interview requests and Comer declined to comment.

PBMs were already under fire from President Joe Biden’s administration, Congress and a number of states, both Democrat- and Republican-led.

The Federal Trade Commission is investigating PBM business practices similar to those Comer is scrutinizing. The FTC subpoenaed the six largest PBMs, including Caremark, Express Scripts and OptumRx, to obtain information for its inquiry last June. The agency did not respond to an interview request.

On the other side of Congress, Sens. Maria Cantwell (D-Wash.) and Chuck Grassley (R-Iowa) introduced legislation to increase transparency in the PBM industry: the Prescription Pricing for the People Act of 2023 and the Pharmacy Benefit Manager Transparency Act of 2023. The former would direct the FTC to research the effects of consolidation in the PBM industry nd the latter would prohibit PBMs from clawing back some payments to drugstores and require them to disclose the terms of their spread pricing plans and pharmacy fees to the FTC. Cantwell and Grassley, senior members of the powerful Finance Committee, did not respond to interview requests.

At the state level, PBMs have been hit by a growing number of legal actions seeking to reclaim what states term overpayments by Medicaid and other programs.

And the Inflation Reduction Act of 2022 dealt a rare blow against drug manufacturers and PBMs, Dobrzykowski said. The law gives the Health and Human Services Department the authority to set prices for certain prescription medicines, to fine drug companies that raise prices faster than inflation and to investigate secretive contracting practices.

Evidence on whether PBMs provide a net benefit to the healthcare system is mixed. For instance, while University of Southern California researchers linked large rebates to rising drug prices, CMS actuaries concluded that rebates constrain price increases.

One thing is certain: The companies in the pharmaceutical supply chain face more pressure than ever to bring down costs, Dobrzykowski said. “The environment is different than in the past, where there’s multiple points of pressure on the pharmaceutical space that could collectively drive change,” he said.

Comer, who hosted a forum on PBM issues in 2021, may be poised to do more than merely investigate, said Antonio Ciaccia, CEO of drug pricing research company 46brooklyn Research and president of the consulting firm 3 Axis Advisors. Ciaccia spoke at Comer’s 2021 event.

“I would be worried about being on the wrong end of James Comer,” Ciaccia said. “I don’t take him as somebody who wants to go through theatrics. This is about trying to measure the size of the problem as a means to figure out what the proper solution is. Diagnose, then cure.”



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