A bipartisan group of lawmakers is looking to crack down on conflicts of interest in the health care sector.
Sens. Elizabeth Warren (D-Mass.) and Josh Hawley (R-Mo.) introduced legislation on Dec. 11 that would force health insurers and the middlemen that negotiate drug prices to divest their pharmacy businesses.
Pharmacy benefit managers, or PBMs, serve as the intermediaries between drug manufacturers, health insurers, and pharmacies. They negotiate drug prices, process claims, and establish the list of drugs covered by health plans.
Roughly 80 percent of pharmacy benefit management in the United States is controlled by three health care conglomerates—CVS Health, Cigna, and UnitedHealth Group—that also own health insurance providers and pharmacy businesses.
If enacted, the new legislation would require those conglomerates to divest their pharmacies within three years.
“PBMs have manipulated the market to enrich themselves—hiking up drug costs, cheating employers, and driving small pharmacies out of business,” Warren said in a statement. “My new bipartisan bill will untangle these conflicts of interest by reining in these middlemen.”
Hawley said the bill would likewise break up insurance monopolies by stopping health insurers and PBMs from “gobbling up even more of American health care and charging American families more and more for less.”
The companion bill in the House is sponsored by Reps. Diana Harshbarger (R-Tenn.) and Jake Auchincloss (D-Mass.).
Harshbarger, a pharmacist, said she had personally witnessed how PBMs “self-deal and manipulate the system” to drive up costs, limit choices for patients, and run independent pharmacies out of business.
“I’m a proud conservative Republican, but we have antitrust laws for a reason,” she said.
A recent Federal Trade Commission (FTC) investigation found that PBMs sometimes exclude certain drugs from their formularies, or lists of covered drugs, in exchange for higher rebates from drug manufacturers.
That was one of the FTC’s charges against the nation’s three largest pharmacy benefit managers—CVS Health’s Caremark, Cigna’s Express Scripts, and UnitedHealth Group’s OptumRx—in a September administrative complaint.
Specifically, the commission alleged that the PBMs artificially inflated the price of insulin by demanding higher rebates from manufacturers in exchange for formulary access.
According to the FTC, this “chase-the-rebate strategy” led drug manufacturers to increase the list price of their drugs so they could offer higher rebates.
“Millions of Americans with diabetes need insulin to survive, yet for many of these vulnerable patients, their insulin drug costs have skyrocketed over the past decade thanks in part to powerful PBMs and their greed,” Rahul Rao, deputy director of the FTC’s Bureau of Competition, said in a Sept. 20 statement in filing a lawsuit against the companies.
“Caremark, ESI, and Optum—as medication gatekeepers—have extracted millions of dollars off the backs of patients who need life-saving medications.”
The companies named in the lawsuit have pushed back on the FTC’s claims and conclusions, holding that they are inaccurate and demonstrate a misunderstanding of how drug pricing works. They are also challenging the commission’s administrative process in court.
In a countersuit filed on Nov. 19 in the Eastern District of Missouri, the companies accuse the FTC of attempting to “reshape an entire industry via law enforcement” in a move that would never hold up in federal court.
“It is therefore unsurprising that the Commission brought this action in its own captive tribunal, where the Commission decides the allegations and the claims, sets the rules, does the fact-finding, chooses what the law is, and determines the outcome,” the lawsuit states.
The FTC’s administrative complaints are heard by an in-house administrative judge, whose opinion is then voted on by the commissioners.
Describing that process as “wholly partisan and biased,” the pharmacy benefit managers’ filing argues that it violates their due process rights. The complaint also notes that the claims at issue involve the companies’ private rights and therefore must be litigated in court.
“Forcing Plaintiffs to defend themselves in an unconstitutional, illegal, and misguided proceeding would cause irreparable injury that could not be remedied on appeal,” the complaint adds, requesting that the administrative proceedings be halted.
From The Epoch Times