After Two Years of Legislative Stalls, Largest Pharmacy Benefit Managers Facing Questions on Nation’s Drug Prices

A CVS pharmacy in downtown Chicago. Part of the CVS Caremark family. M. Spencer Green/AP Photo

It’s a question echoed throughout every corner of the United States: Why are prescription drug prices so high?

A Congressional committee is aiming to find out.

Rep. James Comer (R-Ky.) announced a formal investigation on March 1 after more than two years of legislative attempts to demand transparency and accountability from the nation’s largest pharmacy benefit managers (PBMs).

Comer, the House Oversight and Accountability Committee chairman, sent letters to the country’s three largest PBMs on March 1, including Cigna Express Scripts, CVS Caremark, and UnitedHealth Group’s Optum Rx.

In his communication, Comer noted those three companies alone control 80 percent of the PBM market.

The UnitedHealthcare headquarters in Minneapolis, Minn., on July 12, 2019. Jim Mone/AP Photo

He further highlighted, “Initial findings that large PBM consolidation has negatively impacted patient health, increased costs for consumers, forced manufacturers to raise their prices, and created conflicts of interest which distort the market and limit high-quality care for patients.”

A 2022 study supported this, revealing PBMs have restricted access to more than 1,150 medications. In the analysis, the number of prescription drugs the three largest PBMs excluded from formularies have skyrocketed nearly 1,000 percent since 2014.

PBMs act as “middlemen” within the pharmaceutical industry. They function as third-party administrators for prescription drug programs and typically negotiate discounts and rebates with drug manufacturers.

Beyond the call for transparency and an explanation for rising drug prices, Congress’ investigation scrutinizes practices like the “fail first” policy. This well-established practice requires patients to try a PBM’s preferred drug first and “fail” before a doctor can prescribe what’s actually needed.

Investigation Into PBM Giants

“These policies can worsen patients’ health by forcing them to take medications which do not work for them,” Comer said in his letter, adding that “lengthy delays” for drug authorizations can cause patients to suffer or die while waiting for the approval of life-saving medications.

He further asserted, “PBMs enact these policies to get higher rebates from pharmaceutical manufacturers at the expense of patients.”

Attempts to get the investigative ball rolling began more than two years ago when Sen. Marsha Blackburn (R-Tenn.) introduced the Pharmacy Benefit Manager Accountability Study Act of 2021 in February of that year.

Subsequently, Sen. Maria Cantwell (D-Wash.) introduced the Pharmacy Benefit Manager Transparency Act of 2022 last May.

But the movement finally gained momentum after the Federal Trade Commission (FTC) announced a formal investigation into the six leading PBM market giants. The agency requested information and records of business practices from what is widely considered one of the greyest areas of the pharmaceutical industry.

The FTC submitted “compulsory orders” to CVS Caremark, Express Scripts, Optum Rx, Humana, Prime Therapeutics, and MedImpact Healthcare Systems.

‘Abuses’ of Drug Patents

“Although many people have never heard of pharmacy benefit managers, these powerful middlemen have enormous influence over the U.S. prescription drug system,” FTC Chair Lina Khan said in a press statement.

When The Epoch Times contacted Optum Rx and CVS Caremark, both companies deferred to a comment from the Pharmaceutical Care Management Association (PCMA) in response. The organization is a national trade association that represents PBMs.

Express Scripts did not respond to The Epoch Times’ request for comment.

“Pharmacy benefit companies have a proven track record of reducing prescription drug costs in federal programs, ultimately for patients and taxpayers,” Mike Baldyga, a spokesperson at PCMA stated in an official response to the Congressional inquiry.

“While we appreciate and share the Committee’s concern around drug pricing and existing gaps in affordability, we strongly urge members of the committee and Congress to stay focused on real solutions that are proven to reduce prescription drug costs,” he added.

Baldyga said lawmakers needed to hold big drug companies accountable for “egregious abuses of the drug patent system, which block competition and keep drug prices high.”

The PCMA representative maintains that increasing competition in the prescription drug market is the most effective way to lower costs.