White House announces Medicaid drug cost audits while House committee examines pricing process.
It appears lowering prescription drug prices – and examining the business of pharmacy benefit managers (PBMs) – are some of the few issues finding bipartisan support in Washington.
On May 23, the White House announced a plan to increase transparency in drug prices in Medicaid. The U.S. Centers for Medicare & Medicaid Services’ (CMS) latest notice of proposed rulemaking “
Federal lawmakers are targeting prescription drug prices “would shed light on the actual cost of drugs covered by Medicaid. Under this proposal, Medicaid would have increased ability to hold drug manufacturers accountable for what Medicaid programs pay for drugs,” according to the administration.
“President Biden is not only committed to protecting Medicaid, but continues to take bold actions to strengthen the program,” U.S. Department of Health and Human Services Secretary Xavier Becerra said in a statement. “With today’s proposed rule, we are advancing unprecedented efforts to increase transparency in prescription drug costs, being good stewards of the Medicaid program, and protecting its financial integrity. This proposed rule will save both states and the federal government money.”
The CMS rule aims to enhance transparency into the costs of administering drug benefits in Medicaid-managed care organizations. PBMs often negotiate and administer the pharmacy benefits, but their pricing practices have suffered “a lack of transparency,” according to the administration. To remedy this, CMS is proposing states, Medicaid-managed plans, and PBMs use contracts that report drug payment information of third-party contractors.
The same day as the Medicaid drug price announcement, the House of Representatives’ Committee on Oversight and Accountability held its first hearing “to examine the behind-the-scenes tactics that PBMs use to prevent payers” from understanding how they make billions of dollars at the expense of patients and taxpayers, Committee Chairman James Comer (R-Kentucky) said in his opening remarks.
PBMs began doing business in a competitive market that pitted manufacturers against each other, driving down prices of prescription medicines. Now, three PBMs – CVS Caremark, Express Scripts, and Optum Rx – control about 80% of the nation’s prescription drug market, Comer said.
He accused PBMs of using “self-benefiting practices that boost their bottom line without a benefit to patients,” and urged congressional action. Several states have filed lawsuits or opened investigations into PBMs, and the U.S. Federal Trade Commission is investigating.
The committee hearing title was “The Role of Pharmacy Benefit Managers in Prescription Drug Markets Part I: Self-Interest or Health Care?” So there may be more to come.
The committee’s formal witness list did not include representatives from PBMs or its trade group, the Pharmaceutical Care Management Association (PCMA). That organization’s President and CEO JC Scott pounced on that point.
“Without hearing from the wider industry in question, and without taking a broader look at the entire supply chain, the Oversight Committee risks fundamentally misconstruing the role of pharmacy benefit companies and playing right into the hands of Big Pharma, which wants nothing more than to weaken this one check on big drug companies’ otherwise unlimited pricing power and avoid accountability for their egregious abuse of the patent system that blocks competition and keeps prices high,” Scott said in a statement published on PCMA’s website. “We encourage the committee to reconsider its approach to this investigation to ensure its findings, and any related policy recommendations, accurately and fairly consider the facts, and the negative implications for patients and employers of any government intervention in the market that undermines the cost-saving value of pharmacy benefit companies.”