Congress aims to lower prescription prices by regulating the practices of pharmacy benefit managers (PBMs), companies that lawmakers say drive up costs, creating hardship for patients, and small businesses, and an added burden to taxpayers.
PBMs, which are largely invisible to the general public, negotiate the prices insurers pay for medications, determine the amount consumers pay, and process insurance drug claims.
Members of both parties pledged to pass legislation regulating the way PBMs operate to increase transparency in drug pricing and boost competition.
“PBMS are the pharmaceutical supply chains hidden middlemen that are driving up costs for prescription medications, delaying access to necessary treatments, adding hoops for patients to jump through, and robbing hope from patients,” Chairman Buddy Carter (R-Ga.) said at a Feb. 26 meeting of the House Energy and Commerce Subcommittee on Health.
Ranking member Diana DeGette (D-Colo.), said: “Republicans and Democrats agree we must rein in PBM abuses. We know how PBMs play games to pad their bottom lines at the expense of consumers.”
Supporters argue that PBMs are necessary in the free market system, benefiting insurers and drug manufacturers.
Critics say PBMs have virtually eliminated competition in the drug market through consolidation and inflated costs through opaque pricing and unfair practices.
The four largest PBMs have grown in size by acquiring competing businesses and by being acquired by the companies they deal with, pharmacies and insurance companies.
“The core problem with the PBM market is that competition is weak,” Matthew Fiedler, a senior fellow at the Center on Health Policy of Brookings Institution, told the subcommittee.
“PBMs wield market power that they can use to demand prices in excess of their costs of delivering services, and in turn, earn excessive profits,” Fiedler said.
Caremark, owned by CVS Health Corporation, which also owns CVS pharmacies and the health insurer Aetna, is the nation’s largest PBM with 33 percent of the market.
Optum Rx, owned by United Health Group, which also owns the United Healthcare insurance company, controls a 22 percent share.
Express Scripts, a subsidiary of the insurer Cigna, has 24 percent of the market.
Humana Pharmacy Solutions, owned by Humana Inc. along with health insurer Humana, controls 8 percent of the market.
Prime Therapeutics, owned by a group of Blue Cross insurance plans, has 5 percent of the market.
Medimpact, owned by Medimapct Holdings Inc., and Birdi mail-order pharmacy have 4 percent of the market.
“PBMs are also engaging in anti-competitive tactics,” Hugh Chancy, a pharmacy owner from Valdosta, Georgia, told the subcommittee.
Those include reimbursing pharmacies below the cost of dispensing the product, coercive contracts, and incentivizing consumers to use pharmacy chains owned by their own companies, Chancy said.
Pricing
PBMs often receive an administrative fee for their services from insurance companies. They also profit by keeping a portion of the rebates from drug companies that the PBMs negotiate on behalf of insurers.Also, they may keep the difference between the amount an insurance company pays them and the price charged by a retail pharmacy, a practice known as spread pricing.
In this system, the true price of the drug is unknown to both the buyer and insurance company, and the seller, a drug company.
“Most self-funded employers, to this day, do not know how much money they are spending on any specific drug,” Shawn Gremminger, president and CEO of the National Alliance of Healthcare Purchaser Coalitions, told the subcommittee.
The problem affects governments also, which pay for more than half of the nation’s health care.
Incentive
Rebate pricing gives PBMs an incentive to raise rather than lower the list prices for drugs, according to Grimminger. With a higher list price, the PBM can negotiate a larger discount.Because the PBM retains an unknown portion of the discount, the higher the price of the drug, the more the PBM gets paid.
“I think we need to actually move completely away from rebate model,” Grimminger said. He favors a market-driven price for each drug “based on its clinical value.”
The Centers for Medicare and Medicaid Services (CMS) paid for some 455,000 doses of Gleeved, a drug used in cancer treatment, in 2022 at nearly $250 per dose according to Rep. Neal Dunn (R-Fla.). The drug has been available since 2016 in generic form and was priced at just over $1 per dose, Dunn said.
Legislative Remedy
Congress had planned to address PBMs in December 2024 through H.R.10445, Further Continuing Appropriations and Disaster Relief Supplemental Appropriations Act, 2025.The bipartisan bill, which did not advance after opposition from President-elect Donald Trump, included provisions to ensure transparent drug pricing, cost-based reimbursement, and a prohibition on spread pricing for drug purchases by the federal government.
Speaking of making PBM pricing transparent and cutting excessive costs from prescription drugs, Rep. Neal Gutherie (R-Ky.) said: “As chairman of the full [House Energy and Commerce] Committee, I can tell you it is a priority of mine to ensure these common sense and bipartisan policies become law.”
The proposed remedies may not be as effective as hoped according to Fiedler, who cited Congressional Budget Office data saying that the transparency provision was projected to reduce PBM revenue by about $900 million per year.
PBMs pre-tax profits were about $18 billion in 2022, Fiedler said.
The Epoch Times requested comments from Optum, Prime Therapeutics, and Express Scripts but received no response by the time of publication.
A representative of CVS Caremark directed The Epoch Times to seek comment from the Pharmaceutical Care Management Association, which did not respond by the time of publication.
