everything they possibly could under extraordinary circumstances, a fire that burned at a temperature of 2,000 degrees. and we call upon the members of our broader charlotte community to do everything that they can for these families that have suffered truly unimaginable loss. thank you, mr. speaker. i yield back. the speaker pro tempore: the gentleman yields back. pursuant to clause 12-a of rule 1, the chair declares the house in recess until

this poster shows an additive, a therapy drug used to treat leukemia, can cost the patient at c.v.s. more than $17,000 for a 30-day sphraoeufplt an identical prescription, 30 days, would only cost $72 at cost plus drugs.

that's a massive difference. mr. baker, do you attribute the difference in cost of p.b.m.'s? >> i do. >> obviously this does not cost $17,000. if cost plus drugs can sell it for $72. where does the extra money go? >> great question, chairman comber. at the end -- comer. at the end of the day mark cuban started his pharmacy about 18 months ago. what we love and appreciate about the brand and generic drugs they are selling is they list their invoices online. you can see exactly what they are paying for all those drugs they procure. they mark then them up 15%. and sell them with a small labor cost and shipping cost. it gives us a good comparison. chair comer: what a concept in health care. that could be everything in health care. >> yes. we appreciate working with mark and his farmcy. their tag line is they are selling trust. that's so important in the conversation here today. that's lacking in a lot of

areas. but the reality is mark's cuban's pharmacy buys thousands of less drugs than the p.b.m.'s. it's based on volume. the contention probably is the large traditional p.b.m.'s are getting lower cost than mark cuban does. when we compare what he's actually been selling those drugs for with a very healthy 15% markup in general, to some of the other prices we see in state and other public organizations. it paints a bad picturing. chair comer: do you think a patient is more likely to take the drug if it's 72 or $17,000. >> $72. >> would you say agree on item medications like this are killing people? because they can't afford it? chair comer: because they can't afford it they don't take it. chair comer: you have a lot of stories and examples of this.

can you think of another example of a cancer patient that obviously when they determine to have cancer like my mom found thee sh stage 4 cancer, it would be of the utmost importance to treat that. what are average delays for getting people -- people medication when they have to go through the p.b.m.'s? >> the patient i mentioned in my testimony i wrote a prescription october 146789 how are you doing? he said i don't know i don't have t i investigated with my own pharmacy, they told him his insurance told to us send him someplace else. that pharmacy took cvs care mark, and he tphrao*eupbl got his medication on december 1. when i spoke to that patient a few weeks ago, he was doing well on the medication. unfortunately he told me he has to go through these hoops to get his medication refilled. chair comer: unacceptable when

time is of the essence. i an thank our witnesses for being here. i yield to ranking member raskin for his questions. mr. raskin: thank you, kindly, mr. chairman. mr. isasi, there are a lot of complexities in the health care system as we just heard from the witnesses. so i want to try to get clarity on the basic points. who ultimately sets the price for prescription drugs? mr. isasi: the drug manufacturer. mr. raskin: i ask unanimous consent to submit in the hearing record community democrat conference of 2021 drug pricing investigative staff report which makes this case. chair comer: without objection, so ordered. mr. raskin: the committee found that the investigation found that drug companies aggressively raise prices to meet revenue targets that drug companies targeted the u.s. market for higher prices than in other countries. and drug companies are engaged in anti-competitive practices to keep prices high.

at the same time it appears that p.b.m.'s, the pharmacy benefit managers, are also to blame for a number of problems. three of them dominate 80% of the market, giving them enormous leverage over drug prices, patient choice, and independent pharmacies. the three major p.b.m.'s have been integrated into the large health insurance corporations which also own their own pharmacies. this presents a serious structural conflict of interest and incentivizes practice that is may make it more difficult to get timely access to affordable medication. dr. atkins, how do p.b.m.'s take the practice of medicine out of the hands of doctors, as you say, and prevent patients from receiving the treatments that were specifically for them. dr. atkins: several examples. one is the anti-medic therapy for patients on key though therapy. when someone has cancer they are

afraid of dying, being in pain, and being sick. many times the drugs we use because we have guidelines how we treat cancer patients. we use one for nausea anti-pharmacy benefit manager says you can't use that. once the patient gets sick then we can use the medication. and it has an effect on the patient. once someone gets very sick sometimes you have to convince them to try the medication again. keep getting treatment for their cancer. another example would be as i mentioned in my statement, i had a patient i wanted her to get one drug for her breast cancer. something called an inhibit tore. what i wanted to give the patient her p.b.m. said no she has to fail another one first. if you look at the national guidelines for cancer treatment, if patients on this one you do not give another one behind that because it's the same drug. this happens every day. mr. raskin: as a cancer patient recently declared in remission, i rang my bell three weeks ago,

thank you to dr. atkins -- i have to say what you're telling me is horrifying. the idea that you as the oncologist would proscribe a specific drug for your patients -- patient and used to use a different drug that doesn't work. and you have someone who is a nondoctor overriding your endorsement. can you explain why that's happening. how is that in any way to the financial benefit of the p.b.m.? or insurance company to do that? dr. atkins: insurance companies will make a decision based on what drug is less expensive for them. that was the -- not what's best for the patient. i assume the drug they wanted me to give this patient was less expensive for them than the other drug. mr. raskin: mr. baker, following

up. how do p.b.m.'s make their money? what are their incentives that cause them to appear based on dr. atkins' inventory of really horrible examples of people getting the run around. what are the incentives that the p.b.m.'s have to keep people from getting their medicine? mr. baker: thank you for the question. i'm not sure how much time we have here today if we want to go all the different ways p.b.m.'s make money. here's a few. at the end of the day what the p.b.m.'s are consistently trying to do in our opinion is figure out how they get around the different mechanisms by which people can see traptly what they are doing, how they are charging the american taxpayers, the american government, and employers everywherefore medications. is the poster behind chairman comer shows, one way they drive

to their own pharmacies, they decide what they pay to them sefplts bad things can occur when a p.b.m. decides. they keep a percentage of manufacture revenue. two of the big three as we talked about are not based here in the united states. one is in switzerland and one in ireland. for what is mostly an american issue of paying rebates back to put form leather place drugs out. it is that rebate and the replacements that drives some of the decision that is p.b.m.'s make that oncologists everywhere have to abide by. my contention is it's not driving it a lower cost. it's driving to a higher cost because when you as a for-profit company make a remembers s-pblg of revenue, would you want to make 7% off of $50,000 drug or 7% off of $50 drug? that's the conflict that exists when these large organizations are trying to come up with formulary decisions.

mr. raskin: i yield back. i just hope we can figure out some bipartisan reforms that change the incentive structure. chair comer: 100% in agreement with you on that. i hope that we can do that. that's the objective and look forward to doing that. the chair recognizes dr. gosar from arizona for five minutes. mr. gosar: thank you, chairman. james madison once said monopolies are the sacrifices of the many to the few. thomas jefferson wanted to include an anti-monopoly provision to the bill of rights. the author of the declaration thought all patents should expire after a certain amount of years to protect against monopoly. george mason refused to saoeupbt constitution due to the lack of prohibit shun. and explicitted anti-monopoly decision never made it into the final constitution. all the founders shared the fear that the power would result in the rich few setting unjust prices all at the expense of the common man. whether it's big tech, big

banks, or airline industry americans lose when monopolies form and thrive. americans have almost nowhere to turn. thanks to big tech. community banks are disappearing as the treasury secretary publicly promises to bail out big banks. but let the smaller ones fail. there is clearly something wrong. that right with the health care -- not right with the health care system. there are few but guy tphapbtic -- gigantic entities, pharmacy benefit managers and others. i had the opportunity to spearhead the passing after bill in 2021 that ended a special privilege afforded to health insurance companies that allowed them to ignore important antitrust protections. i commend chairman comer for his willingness to shine a light again on the questionable business practices. dr. atkins, do you believe these three companies count for 80% of a market are revenues over $4353

billion in healthy? dr. atkins: i do not. mr. gosar: do you consider them an amonopoly. dr. at-k*eupbs: yes. mr. baker: i consider them an owe hreug on poely. mr. gosar: dr. dwayne? duane. mr. duane: yes. dr. atkins: yes. mr. gosar: mr. baker. mr. baker: i agree. mr. duane: i agree. mr. gosar: it was testified in the house energy and commerce health subcommittee hearing in 2021 that 47% of the price of the drug a patient pays is the middle men, mostly p.b.m.'s. does that stat inspire confidence that american consumers are engaging in a health kreu drug market? dr. atkins: it does not. mr. baker: i would say there is

transparency. we knew exactly where that 47% was going. it was being used to make drugs more affordable, yes. but in this point in time where there is no transparency, no. mr. gosar: doctor? doctor duane: i can't think of a market where the person in the middle gets half. no. mr. gosar: president trump's sent forefor medicaid and medicaid services release add rule in 2019 and a final rule in november of 2020 that the p.b.m. lobby was able to stop in court. are any of you familiar with that rule and able to point any positives or shortcomings? dr. atkins: i can't comment specifically. i know that p.b.m.'s take money from patients. and make it harder to treat patients. i think when you have monopolies, patients have fewer choices. it is not just p.b.m.'s. hospital corporations. etc. mr. gosar: mr. baker? mr. baker: if you are referring

to the rebate rule i think it was called, yes. we know that rule. it was as we say here today, delayed until 2032. i think there is a lot of conversation that can still be had on that. i think in general p.b.m.'s can do a good job of making drugs more affordable in the united states. i think if we understand where and how they are making the decisions they are making, they can help keep pharmaceutical manufacturers in check so they do not price gouge on the american public. at the end of the day those things are not occurring as we sit here today. those are problems i think we need to solve. mr. gosar: dr. duane, can you think of any administrative changes that would be beneficial to that ruling to make it more applicable? dr. duane: it should be applicable immediately. the sooner you get rid of rebates, the sooner you see drugs transparent in their cost and can compete on the merits of the drug itself and not based on who is willing to pay more to a

kickback. mr. gosar: you brought up two of these are not in the united states. they do business in the united states. we can dictate to them, can we not? mr. baker: i would hope that's the case, yes, sir. mr. gosar: dr. atkins, do you see anything as a doctor we can do administratively to make this work better? dr. atkins: more transparency and choices for patients. mr. gosar: i yield back. chair comer: the chair recognizes ms. norton from washington, d.c. ms. norton: that can you, mr. chairman -- thank you, mr. chairman. mr. isasi you offered an example of a woman called maureen who had to give up food in order to pay for prescriptions. actually, half of all americans insured by medicare lived on income below $30,000 in 2019.

that translates to 30 million seniors and people with disabilities who are living on $30,000 or less per year and about 15 million of those americans live on less than $17,000 per year. out-of-pocket health coughses -- costs can be particularly difficult for seniors who often live on fixed incomes. i'm proud that democrats passed the inflation reduction act last year which will cap out-of-pocket costs for seniors covered by skphaeur part d -- kevin mccarthy part d at $2,000 per year. along with other steps to make health care more affordable. mr. isasi, how will provisions in the inflation reduction act like the exspa*epbgs spapbgs of low-income subsidies and a cap on out-of-pocket costs help

seniors with less income? mr. isasi: you bet. to your question the way that those improvements capping out-of-pocket costs, providing immunizations for free these are important provisions capping the cost of insulin. they were paid for by finally letting the government to get in and negotiate a fair price. it's a perfect example when we stop big pharma greed, we can do important things for our seniors and families. ms. norton: in our year-long investigation into drug pricing, oversight committee democrats found that pharmaceutical companies' practices often inflate drug prices. the inflation reduction act responded by requiring for most drugs in medicare part d that

drug companies pay the government any price increase above inflation. mr. isasi, how will this rebate requirement help lower drug prices for people covered by medicare part d? mr. isasi: it's so important. the two main elements for big pharma in terms of their play on price gouging in launching a price that's high and year after year after year raising the paycheck inflation. the inflation reduction act stopped that and says once your drug has come to market you cannot increase it faster than inflation. if you do you pay us that money back. it's very important. it's already kicked in. it's holding drug costs down. ms. norton: committee democrats and the biden-harris administration are making sure that seniors see some relief from high drug prices. i will continue to work to hold

the industry accountable so health care is more affordable and more accessible to all seniors and americans. i yield back. chair comer: the chair recognizes dr. foxx from being north carolina. ms. foxx: thank you very much, mr. chairman. i thank our witnesses for being here. dr. atkins, i would like to say from the start that i support capitalism and for-profit companies along with the amazing innovation they provide our nation. however, i have serious concerns over the p.b.m. industry promotion of fail first policies. also known as step therapy. that can prevent or delay patients from accessing the medicines they need. a recent study found that a significant share of commercially insured patients taking medicines face steep therapy restrictions. step therapy restrictions. dr. atkins, in your role as oncologist you have patients that are required to fail first on a medication and what can you

do when a patient has to fail first? dr. atkins: yes, we do. fail first almost every day. usually it's more common with the anti-medications but also with iron products that we use. we know we try -- and i mentioned in my written testimony about other patients who had to use a different drug than what i wanted to use. we try to talk to the insurance company, the p.b.m. sometimes it works, sometimes it doesn't. unfortunately my practice we have to tkwaoel this every day. we have 10 oncologists and eight people in charge of dealing with p.b.m.'s and insurance. every day it's more than a full-time job. we try to jump through whatever hoops we need. my whole goal is to get my patient treated. ms. foxx: a follow up on that. can you explain more the dangers of requiring a patient with a thrive threatening illness to fail first on a drug they were not prescribed. do you believe the insurance

industry should be telling patients what medicines they can take or should that be a decision left to you and the patient? dr. atkins: what drug the patient should take is up to the physician. we are trained to take care of patients and know what the best drug s some of the dangers are treatment delays. as i mentioned earlier if patients gets sick with a medication because i'm forced to give them a different anti-meds than what i want to use, it's hard to convince the patient to try another cycle of the medication. some patients will just say i won't do the treatment which will shorten their life. ms. foxx: again, dr. atkins, in 2021 the f.d.a. approved 93 first generic drugs which provide more affordable options for patients. generic drug prices company up to 95% less expensive when compared to brand drug prices. are you aware of instances where p.b.m.'s block patients access to lower cost generic drugs in favor of higher-priced brand

drugs? if so why would this be the case? dr. atkins dr. atkins: when i'm treating a patient i look at the drug itself. i am not looking at the generic. i don't know if they blocked it in favor of a more expensive drug. every day the p.b.m.'s be getting in the way of treating my cancer patients and my whole goal is treating the patient. ms. foxx: we know that p.b.m.'s create formularies or prescription drugs that will be covered by certain insurance frames. does -- plans. does affirmedrx determine which prescription drugs are covered? mr. duane: everybody knows what they pay for their prescription drugs and i think that's a big part of the problem. so when we really look at our formularies, we partnered with

the cleveland clinic. 12 years ago they brought all of their own benefits for pharmacy benefits into their own world and they have their own pharmacists and technicians who manage this. so we really wanted to say let's partner with the world-class organization who understands the clinical nature of pharmacies and they also help guide us to make sure we're making the right decisions on behalf of our clients and their members. ms. foxx: and what happens if a patient is prescribed a drug that isn't on the formulary? mr. baker: they always have a path to coverage, dr. foxx. they want to make sure if there is a good, sound, clinical reason for them to be on it that we can get it approved for them. ms. foxx: thank you. i want to just make a short statement, mr. chairman, what mr. baker just said. we need transparency. that is the whole issue in all of our medical fields. we need transparency on pricing. we passed our surprise billing bill out of the education and

workforce committee. we still don't have the transparency that we need from hospitals. we have to have transparency in the cost of medical care. we have the best medical care in the world. it's also the most expensive. thank you, mr. chairman. i yield back. chair comer: gentlelady yields back. the chair recognizes mr. lynch from massachusetts. mr. lynch: i want to thank you for holding this really important hearing. years ago when i was chair of the subcommittee on the federal workforce, we conducted an extensive investigation into the role of p.b.m.'s, pharmacy benefit managers, with respect to the federal employee health benefit plan, fehbp. so we were focusing on what federal employees were paying for their farm suit companies. the fehbp, the federal employee health benefit plan, is the largest employer-sponsored group

health insurance program in the world. has eight million employees. excuse me. eight million federal employee members, retirees, former employees, and also their families. what our previous investigation found was that the federal employees who were part of this health benefit plan were paying up to 45% more for their prescription drugs than other federal programs, including those administered by the v.a. and department of defense, and we found that the one singular reason for the inflated costs of prescription drugs in that program was that the program relied upon pharmacy benefit managers to negotiate prescription dprug benefits -- drug benefits in maintaining affordable prices. in fact, one of the aspects of our investigation involved a report issued by change to win,

which was a federal coalition of big labor unions, that were trying to use their bargaining power to lower the prices of the drugs they were paying for. and the report demonstrated the need for greater transparency in pharmacy benefit contracting. in particular -- and this is what really got me. we found that c.v.s. caremark, which is a drugstore and p.b.m. combination, we found that they were treating people walking in off the street better than members of this health benefit plan that the p.b.m.'s were covering. so here you have members who have insurance, they're part of an eight million-member health benefit plan, they have insurance. they walk into the drugstore,

and they pay more than someone walking in with no insurance just off the street. the p.b.m.'s were offering less coverage than someone with no insurance. and remember, we're talking about the bargaining power of eight million employees completely wiped out because of the greed of these p.b.m.'s. in fact, we could not even find out, as the federal government, we could not find out what the profit margin was for these -- for these different drugs. that was several years ago. has that changed at all? can he find out -- can we find out what the p.b.m.'s are paying for their drugs and how much they're marking them up, dr. atkins, mr. baker, dr. duane, director isasi? dr. atkins: it's a lack of

transparency. you don't know what they're paying for the drug. also, when i write a prescription for a patient, they'll ask me how much is the drug, i'll tell them i don't know because their co-pay is difference based on their insurance and where they get the prescription filled. so we don't know. >> we don't know in this example. it's a large employer arrangement where the p.b.m. is negotiating. in medicare, we do know. medicare receives all of that information. and the p.b.m.'s have to explain exactly what the net price was. and this is a good example of two really important points. one, we have to change law to make sure that the

>> all of this is about one simple fact. big pharma is charging way too much money for their drugs and we are trying to get a better price. what's happening is p.b.m.'s -- >> heat me just ask because again it's not my area of expertise, if big pharma says that how can it be this low on the left and high on the right? >> generic. they make most of their money for name brand drugs. and they get 12 times more in profit. big pharma has been the p.b.m., gets 2%. big pharma 12%. 24%. at the end of the day we cannot hide the fact that underneath all this big pharma is price gouging us. we are trying to come up with

some mechanism like a p.b.m. to negotiate a fair price. at the end of the day it's because the government is not negotiating price. in the rest of the world they do. that's what this is all about. >> thank you for your answer. mr. chairman, my time has expired. i am ' going to advise all the panelists my office will submit questions in writing to each of you. these will be questions that will use to help us develop a legislative response to this nightmare americans face. thank you, mr. chairman. chair comer: i thank the gentleman from louisiana. the witnesses you can see, everyone who is watching, there is a sincere desire among this committee to work together. to try to solve this problem. i think that's a very positive outlet. i'm excited about the future. with that i recognize the gentleman from illinois for four minutes five minutes. mr. krishnamoorthi: thank you to the audience for paying

attention. dr. duane, since 2010 independent community pharmacies have been disappearing from the landscape. more than one in seven have disappeared. that's about 15% of independent pharmacies. one reason for the dramatic decline is because of something called dir, direct and indirect remuneration fee that is p.b.m.'s charge pharmacies. you are familiar with them? >> i am. mr. krishnamoorthi: for those not familiar, these are unpredictable fees p.b.m.'s charge pharmacies months after they dispense prescriptions. and after p.b.m.'s have reimbursed the pharmacies for doing so. sometimes these d.i.r.b.'s amount to retroactive clawbacks of the entire amount of the reimbursement that they provided to the pharmacy. and shockingly sometimes they are more than the reimbursement they provided the pharmacies. i stead of making money, these pharmacies -- instead of making

money, these pharmacies lose money because of the dirc's. right? dr. duane: right. there could be two ways to incentivize someone. you could use a carrot or stick. the dirc's these p.b.m.'s have used is a big stick. mr. krishnamoorthi: let me jump in. according to the government these dirc's increase by 107,400% from 2010 to 2020. this is not a typo. this is not a typo. this is a travesty. you know what p.b.m.'s stand for, dr. duane? it stands for pretty big markups. that's what p.b.m.'s stand for. we have got to stop this. let me turn to another slide that i have talking about another aspect of what p.b.m.'s do. p.b.m.'s make a lot of money.

and one way they make money is through rebates, which you talked about earlier. mr. baker, originally these p.b.m.'s were supposed to help third party pairs like insurance companies, employers, help negotiate the lowest price of prescription drugs, right? what they did they maintain these lists of medications called drug formularies which listed the drugs and drugmakers that made the best deals with the p.b.m.'s on behalf of their clients. here's where the problems began. the p.b.m.'s started extracting quote-unquote, rebate payments as you described earlier, from drugmakers to be listed on the formularies, even though the p.b.m.'s did not pass along the rebates to consumers. what ended up happening is that these rebate payments looked like kick backs, not like rebates or discounts. isn't that right? mr. baker: i agree.

mr. krishnamoorthi: it fattened the bottom of the line p.b.m.'s. they have seen their profits rise from 2010 to 2020 by 97%. so almost doubling in 10 years. that's three times what the stock market has yielded. . 85% of americans are quote-unquote concerned, or very concerned that perform b.m.'s are charging for medicines and pocketing the differences. 88% of democrats and 88% of republicans shared that concern. can you think of a single issue where almost 90% of democrats

and republicans agree on anything? >> no, but that's encouraging to see. >> i think we have a mandate from the american people, when 90% of americans have an issue, we must investigate. i'm glad the f.t.c. and biden administration are doing so right now i look forward to the result and taking corrective measures. we cannot be complacent on this issue. thank you and i yield back. >> the chair recognize mrs. diggs for five minutes. >> i appreciate our witnesses here being with us today. mr. chairman, i think buddy carter of georgia has done a lot of work in this area. i request unanimous consent to submit into the record his report, "pulling back the curtain on p.b.m.'s." thank you. i have serious questions about

the concentration an apparent subdealings in the pharmacy benefiting more markets. the largest three p.b.m.'s cover most of the market. c.v.s. and on otum rx. can you talk about the role of p.b.m.'s, how that role has changed over time, how it went from where it started out and how we goat to where we were today, please? >> as i said in my opening statement, i think p.b.m.'s are critical to the american health care system but as with many things in health care, there's a lot of blind spots where people can't see what's happening. i think we've created a p.b.m. industry where the general mantra is, in chaos there's profit. so as we've talked about extensively today this is a complex, tai kaye yotic world. i think a lot of that is by design. we don't feel it needs to be

that way. we feel that p.b.m.'s do a very good job in general of trying to keep dunn prices then they want to but unfortunately as you brought up in the interveeping years since they started their mission of, you know, coordinating care for people and making sure that there's payment mechanisms for independent pharmacists to get paid, these for-profit companies have created numerous pockets of money that they can hide and make sure that they're investing back in shareholder value which is driving up costs for the american public. that's probably not fair. >> the largest p.m.: -- p.b.m.'s are vertically increased, do you think that's increased or decreased prices? >> increased. >> how about transparency for consume, increased or decreased? >> decreased. >> do you believe it increases or decreases opportunity for subdealing or conflicts of interest? >> i think it increases those opportunities. >> has the structure led to delays for patients seeking medication? >> it hurts patients.

>> doctor, have p.b.m.'s made it more difficult for veterans in our your community access prescription drugs in a timely manner? >> absolutely. >> how so, please? >> when they offer contracts to a pharmacy like us, it is unsustainable and drives us out of business. reduces the options service men and women have to obtain their prescriptions. a decrease in access leads to increase in difficulty. >> many p.b.m.'s started forming organizations based in switzerland and ireland. these were framed as increasing their power to negotiate prices have consumers seen reduce in drug prices after this? >> no.

>> mr. chairman, some of the things i've heard is we are in chaos, that facilitates hiding pocks of money, redeucing transparent virk deucing options for patients. i'm grateful that you are holding this hearing today. i think this is something we need to continue to work on, look at and with that, mr. chairman, i yield back.

>> thank you very much. the chair recognizes mr. mfume from maryland for five minutes. >> mr. chairman, thank you very much. mr. mfume: mr. chairman, thank you very much. i particularly want to add, to all who have spoken here, our thanks to you and the ranking member for holding this hearing. it is so, so vital. i'm sure that people who are watching this after while are scratching their heads, wondering how do these so-called p.b.m.'s who are really pharmacy benefit mismanagers sleeping at night. it's a damn shame. that's only way i can describe it. it's a damn shame that americans have to be ripped off in this manner and for it to continue over and over and over again. dr. atkins i was particularly moved by your testimony about your patients in georgia. it's heart wrenching. and your bottom line was that

drugs don't work if people can be the afford them. and there's so many people that can't afford them. household spending on health care has increased in the past three decades, increasingly with detrimental impact as we all know on our nation's senior, on people with disabilities, on other patients who are treated by medicare, and we are at a crossroads right now, i think, in this nation which is why there's this demonstration of bipartisan support but also bipartisan anger at what is for lack of a better term a real ripoff. people are dying. while companies are profiting. in my own state, the maryland prescription drug price affordability board documented measure 1,200 prescription drugs with prices that outpaced the rate of inflation throughout just last year alone. that translates into real people

facing real cry sies. case -- crisis. case in point. a man who will remain anonymous for this hearing, his wife has lupus and a degenerative disc disease. her cost of medications is hundreds each wouldn't. he was retired, he had to return to work, he had no other choice to try to find a way to qualify for benefits to support his wife's medical expenses. but most of all to keep his wife alive. john, from baltimore county, was diagnosed with multiple mie lomd recently finished bone marrow treatments. he now takes 21 doses of a medicine that each dose costs

$990. he needs the drug to keep his cancer under control, he has no other choice but to beg for the generous i have to drug manufacturers and pharmaceuticals. those, unfortunately are a few stories of the many, many millions of stories that represent the reality for people. some of them are our families. some of them are our friends. they are our neighbors. and they are looking to us to end this practice, to end this kind of foolishness. mr. chairman, i'd like to ask unanimous consent to submit to the record the report last year of the prescription drug affordability community forums that happened throughout the state of maryland taking testimony from persons of all walks of life. >> without objection, ordered. mr. mfume: i want to say a couple of other things. i don't like getting angry like this but when you hear something that's hurting people in this way, it cries out for solutions.

i don't like the fail first policy and practice which is absolutely ridiculous. i don't like the fact that the preferred drug offered up is often times the most expensive drug. we all are ticked off at this notion of price gouge, the lack of transparency, and the fact that no one seems to regulate the p.b.m.'s but the p.b.m.'s. they're having a field day out there. getting rich over and over and over again. they're practicing medicine. without a license, ladies and gentlemen. they're making determinations that oftentimes end the lives of people who cannot fight back for themselves. and so i hope and pray that out of this committee and out of this very important hearing comes bipartisan legislation to create a solution to end this once and for all. it is a sin, it is an abomination and it is abaffront to everything that we hold moral

and right in this country. thank you, mr. chairman, and ranking member, i yield back. >> thank you, we look forward to working with you, mr. mfume. the chair recognize mrs. la turn over kansas for phi minutes. mr. laturner: thank you and welcome to all those on the panel today. mr. baker there have been allegation of p.b.m.'s participating in spread pricing where they payless for generic drugs than they charge insurance providers and pocket the difference. in my home state of kansas accusations of this practice were settled for $26 nt 7 million. can you explain more about how the spread pricing model works and why this is controversial? >> yes. thank you, sir. at the end of the day spread pricing is as simple as the pharmacy middleman has all the rules. they have all the data. they done share a lot of theme. people don't really know what's going on. unfortunately, independent pharmacists are getting paid a low amount for the prescriptions they're dispensing to help communities live better,

healthier lives. and then self-funded employers have a separate contract with these pharmacy benefiting mores and then the p.b.m. can sit in the middle and say hey, here's $10 for the prescription you dispense and the hard work you did. say to the employer i'm going to charge you $20 for that prescription because you don't know what i paid the pharmacy over here. it creates a -- it creates a lot of opassty. mr. laturner: thank you. i'm interested in the contracts. there are contracts for p.b. -- for pharmacies to participate in a p.b.m.'s network. >> yes. >> laturner: what does that mean? >> some people may hear network and think of a preferred network or nonpreferred network but to be in a p.b.m.'s network means i can bill the p.b.m. and receive

payment. if i'm not in their network, i can't take a penny from them and the patient is forced to pay the full cost. mr. laturner: how do some of them i simply ask and others we have administrative organizations that can help us join on our behalf. mr. laturner: is it difficult for an independent pharmacy to participate in a p.b.m.'s network? mr. duane: it's very difficult. it's two-fold. number one, it's difficult to get a contract offered to you. but secondly, it can be difficult to get a contract that makes you whole or even to participate. so even though you get a contract it may not be one that makes sense for you to be able to participate in. mr. laturner: independent pharmacies have been shut out due to p.b.m. anti-competitiveness practices, correct? mr. duane: absolutely we have, yes. mr. laturner: p.b.m.'s pay pharmacies they do not control

lower amounts than the pharmacies they do control. a lack of transparency, however, sometimes allows them to claim they paid competing pharmacies higher reimbursements that they actually did. there have been a number of lawsuits to recoup. ohio medicaid was overcharged $223.7 million. kentucky medicaid was overcharged $123.5 million. what should congress be doing to prevent this practice in the future? mr. duane: thank you for that question. that's a great question. i think it's very simple. i think it's two-fold. number one, i think you have to get rid of the rebates. i heard a lot about how big pharma is the one making the prices. big pharma is the one pushing it up. i am not carrying any water for big pharma. these rebates really obscure what the true price it. you hear gross to net bubble. the gross list price of a drug goes up but after the rebates the price actually decreased over time. you have to be able to get rid of those in order to make sure we're playing with a full deck

of cards. the second thing you need to do, i think we need to look at what the medicaid program in some states does and that's they reimburse based on a fair evidence-based, referenced-based price for the drug and they i think -- and i think there is some legislation looking at that in the medicaid space federally right now and the c.b.o. scored saving a billion dollars over 10 years. that is a no-brainer to me. and i think it makes sense because, you know, there may be a drug that metformin, a common drug for diabetes. it's inexpensive. it's one of the lifesaving drugs you can prescribe for a diabetic. we make almost no money on it at all. there are vanity drugs or lifestyle drugs that we make quite a bit more money on and it doesn't make sense because the labor is the same. by aingeoring the price to a reference-based price, ingredient cost, a referenced-based cost in service fee, you ensure everyone's getting the best deal but that competition can still exist.

mr. laturner: i appreciate your time. mr. chairman, i yield back. chair comer: the chair recognizes ms. ocasio-cortez from new york for five minutes. ms. ocasio-cortez: thank you for this hearing, mr. chair. i think it's incredibly important that we tackle these issues substantively. and i've been very surprised to hear some of the commentary across the other side of the aisle. i heard earlier republicans saying someone should go to jail for how expensive some drugs are in this country. and i thought i saw a pig flying across the ceiling of this committee room. but where there is common ground, i think we should pursue it and we should pursue it aggressively. now, i want to take a step back here and really make sure we're he will straighting this issue in a way that people can understand because if we do that we can get on the same page about developing energy towards a solution. so if i am just an everyday person and i am getting a

prescription from my doctor and i get that prescription, i take it to my pharmacist and then all of a sudden i get a bill and i realize that my insurance co-pay, whether it's for any condition, diabetes, cancer, whatever it may be, could be $1,000 and before you know it you're paying your rent check on a medication that you need to save your life. and we need to take a step back and figure out, how did we get here? especially on drugs like insulin where there's a public patent and there really is no reason for it to be that expensive. so we see that there's a drug between the drug and you receiving that at a pharmacy, there are several steps. you have your drug manufacturer, which folks call big pharma. then you have your insurer. that's -- those are the areas that i think people understand. someone makes the drug. someone insures that drug i can buy it. but then there is someone in the middle and that is a p.b.m. or a

pharmacy benefit, manager, isn't that correct, mr. isasi? mr. isasi: yes. ms. ocasio-cortez: the drug manufacturer does not sell their medication directly to the pharmacy or does not sell their medication directly to the insurer but there is this middle person known as a p.b.m. and they will set a price. the manufacturer will set a price very high and the p.b.m. will say, let's make a deal. and they say if you give me a rebate, then i can make a -- the formulary for the insurance and i can make sure that your drug gets covered by this insurance. you can sell a lot of your drug. and then, you know, all is well in the world. and that's the general concept, the pitch from the p.b.m., isn't that right? mr. isasi: yes. there's a few more middle men but that's it in a nutshell. ms. ocasio-cortez: along the way someone is making a cut. you have the manufacturers charging, the p.b.m.'s, insurers

and before you know it you're paying a rent check on insulin which should cost virtually nothing. now my question here is that we have to figure out a solution. we have a vicious cycle with the p.b.m.'s because they say if you give me a rebate i'll pass it on to the insurers so the drug manufacturer says, great. i'll make my price even higher. i'll say my list price for a drug is $5,000 so i can charge you $1,000 or even more and i'll make you seem like you're getting a deal so you'll put me on a higher level in the formulary and all about this process is focused on who is making how much money instead of what people are getting the treatment that they need. now, i'm very curious, genuinely, to hear from the other side of the aisle and some of our witnesses here today -- everyone ok over there? from the other side of the aisle and from some of our witnesses here today about solutions. i'll be candid about mine.

i believe that the profit-seeking motives in the pharmaceutical industry is out of control. and i think that it is what is hurting people. i personally believe that if you have a public entity that does not have a profit motive like medicare, negotiate these prices with the manufacturers, including the transparency that we see along with other entities like tricare, medicaid, etc. then, we can get an actual fair price for these medications that includes their manufacturing and r&d costs but will not finance stock buybacks and other predatory behavior. and then i believe that medicare should expand its eligibility so that people can buy into at-cost public insurance. now, i understand that not everyone in this room agrees with that assessment. i am very curious to hear about any other proposals because i think at the core what we're talking about is an extreme

out-of-control profit motive that is -- that has virtually no guardrails and that congress doesn't impose guardrails on for a whole bunch of other dark money reasons. so i'm interested here to hear from dr. atkins, mr. isasi, mr. baker. we heard about eliminating rebates. we heard about increasing transparency. i think those are very important steps. i'm curious what other solutions, whether broadly systemic or more tailored that you all would propose to this committee that we consider in order to help actually solve this problem and go beyond talking about it. mr. isasi: i just wanted to say really quickly, you put your finger right on it. right on it. at the end of the day, the only reason p.b.m.'s exist is because we don't have the ability to fairly negotiate with big pharma. so we came up with p.b.m.'s. and i want to be really clear. the idea of repealing the rebate, under the trump administration, the c.b.o. scored that $170 billion in cost.

because p.b.m.'s are actually saving us money, right, but the fundamental problem first of all we heard about, one, is in medicare, p.b.m.'s have to operate on what's called a loss ratio. we can limit profit. let's put them on some guardrails. at the end of the day, look, this isn't going to be about you putting money in your coffers. it's about getting a good price for the american family. right? two, to the same end, we got to create a lot more transparency, especially for the federal health benefit program or other large employers that they can actually see what is the fundamental, the net price i'm paying so they can actually track and keep and hold them accountable. but let's not forget. at the end of the day, when you look at all the money flowing to the system, the manufacturers are getting 12 times more profit than everyone else. so this is all about one major problem. drug makers are extorting

obscene prices from the american public and it needs to end. chair comer: the chair recognizes the gentleman from mr. palmer from alabama for five minutes. mr. palmer: thank you, mr. chairman. i want to ask mr. baker some questions about when you -- your firm developed your formularies, does the higher price drugs, which you get higher rebates from, does that factor to the decision about what drugs you'll cover? mr. baker: no, sir. we drive to lowest net cost. mr. palmer: i have several things i want to cover following up from the gentlelady from new york. she raised some good points. so the p.b.m.'s act as middle men between the drug manufacturers and players like payers like health insurance for discounts on drugs in the form of rebates. she made that point. what i want to know is, where is that money going? mr. baker: that's definitely the big question.

i don't think we have transparency to completely understand. mr. palmer: is it possible p.b.m.'s are pocketing the difference? because it's not getting back to the patient. mr. baker: that would be my contention as well. mr. palmer: they indicated that the p.b.m.'s have increased -- required fees while reducing the rebates in order to pass them onto patients, do you believe that's the case? mr. baker: i believe so, yes. mr. palmer: are you familiar with rebate aggregators? mr. baker: yes. mr. palmer: can you explain what they are? mr. baker: there is a lot of talk that manufacturers make 12 times as much as everyone else. manufacturers are making lifesaving drugs for everybody. these g.p.o.'s were established, two of the three overseas. if you go online and you look on linkedin, i've never been able to find more than 30 people associated with these three big

g.p.o.'s and they're bringing in close to $12 billion a year. so where the money goes i think is anybody's best guess but they do have numerous fees that they charge. they keep those fees inside their own organizations and drives shareholder values. what trickles out at the other end what is kept in the middle. mr. palmer: you made a point that needs to be followed up on. these aggregators are sometimes located in foreign countries like switzerland, ireland? mr. baker: that is correct. mr. palmer: what drives that business to those countries? mr. baker: that is a very good question. mr. palmer: have we so overregulated on our end? i think there's a problem on both ends of this. that it forces things overseas. i know in 1996 president clinton

signed a bill repealing section 936 of the i.r.s. code that devastated the pharmaceutical industry, manufacturing industry in puerto rico. literally put puerto rico into depression. we also had an issue with taxes. i know of one chicago-based pharmaceutical company bought a pharmaceutical company. a higher percentage would be located in ireland. could avoid taxes. it was 12% in ireland. is that correct? mr. baker: i would not know. mr. palmer: it's a form of tax evasion, isn't it? mr. baker: i will rely on your expertise on the i.r.s. code. mr. palmer: this is not an i.r.s. code. this is a business question issue. are they making business decisions to avoid paying higher prices by locating $12 billion in profits overseas?

mr. baker: i was not there when they made those decisions. again, i think it definitely looks like that is what was occurring. mr. palmer: are you aware of p.b.m. spread pricing and can you explain why there is controversy around that? mr. baker: yes, sir. i think depending on what happens with the money that's actually spread. so some people contend when that spread occurs, the moneys go back and help drive down costs and if that's the case we have transparency around it. it might not be a bad thing. my general contention is the opposite that i think more often than not spread pricing is just used in a world where nobody seize what's occurring to -- sees what's occurring to drive profits back to the organizations and that's a bad thing. mr. palmer: so you could direct patients to go to certain medications to get the larger rebates because we can't track it? mr. baker: that's an accurate statement. mr. palmer: mr. chairman, i think this is an extremely important hearing. i think we've gotten some information from the witnesses that i think will be constructive and working

together in a bipartisan way to come up with some solutions to help patients. and one of the things we need to look at is a lot of these profits are landing. with that, mr. chairman, i yield back. chair comer: thank you very much. the chair recognizes ms. bush from missouri for five minutes. ms. bush: thank you, mr. chairman. st. louis and i are here today specifically in support of medicare for all and health care as a human right. leaving life medical decisions in the hands of drug manufacturers and multibillion dollar p.b.m.'s instead of patients and their health care providers is literally killing people. let's put this conversation into context. in the wake of a deadly pandemic that has left millions traumatized, disabled, and suffering long-term health challenges, republicans are using the debt limit to needlessly restrict access to medicare and medicaid.

this will leave millions more uninsured or underinsured and will have to rely on predatory corporation it's like p.b.m.'s to receive medical care. as we've heard today, pharmacy benefit managers are intermediaries that negotiate with drug manufacturers, health insurers and pharmacies to determine the costs and the coverage of medicine. as a nurse, i've seen america's broken health care system force patients to make the impossible choice between paying for lifesaving medication or buying groceries. i've seen them cry because their medications were changed and the doctor ordered one thing and they were not able to get that particular medication because of this broken health care system. when congressional democrats and the biden administration worked to pass the inflation reduction act, we capped the price of insulin for medicare beneficiaries and empowered medicare to directly negotiate to lower prices for drugs.

but st. louis and i know we have such a long way to go. that's why senator bernie sanders and i recently introduced the insulin for all act, historic legislation to rein in big pharma and cap the price of insulin of $20 per vial every person who depends on insulin to live. the privatization of our health care system itself is at stake, which is why i stand with my colleagues and i demand medicare for all be enacted now. dr. duane, according to a 2019 study by the american medical association, one in eight pharmacies closed between 2009 and 2015, and these closures disproportionately affected independent pharmacies in low-income neighborhoods. in st. louis, 15% of residents live more than a mile away from a pharmacy and a lack of trust in culturally insensitive medical providers, which i've seen firsthand, can pose such a great barrier to care like a

lack of transportation. what can we do to level the playing field so we can keep serving our communities and those hard to reach populations? mr. duane: yes, ma'am. thank you for the question. the biggest thing we can do is make sure providers are being not asked to subsidize any system that is in place. and i think -- my pharmacy is in a predominantly low-income area as well. and sometimes we have to make heavy decisions about whether we participate in certain medicare plans or whether we participate in certain medicaid plans because we know it won't be sustainable for us to do. that shouldn't be a choice. i should do what i went to school to do, what god put me to do which is care for people. we need to look through the lens to make sure the practitioners that are here to serve all patients, those underserved

patients included to make sure they're able to do so in a sustainable manner based on not the profitability of three, you know, fortune 12 companies but of what we as practitioners need the resources, the tools in order to do what's right by those patients. mrz ms. bush: thank you for those insights. three p.b.m.'s control about 80% of the entire market. these p.b.m.'s also integrated with insurance companies and pharmacies to funnel business toward their own pharmacies. at the expense of our independent community pharmacies. which our communities lean on. dr. duane, does this create a conflict of interest in your opinion? dr. duane: i think it absolutely does. no matter what kind of walk you come from, you ought to choose who you receive care from. when the p.b.m.'s steer you

through the advertising they send to your home or the logo they print on your insurance card, it makes you second-guess yourself or wonder if you can go to a certain practitioners or if you're forced to go to a different pharmacy or something like that. so i think it does disadvantage people because, you know, this is a very difficult concept for someone like me who lives and breaths it every day. for someone is of low health literacy or is just not able to involve themselves in their care to the extent they may want to, it becomes almost insurmountable to understand, really, the complexities of that system and i hit it the -- i and i think the p.b.m.'s end up take advantage of that and they allow people not investigate and instead go with their intention which is to push them to the pharmacy that they stand to benefit from the most. ms. bush: and with that i yield back. thank you, dr. duane. chair comer: thank you. the chair recognizes mr. fallon from texas for five minutes. mr. fallon: thank you. so much is head scratching. formularies and gross to net

bubbles and aggregators. it hurts my brain, to be quite honest. i think it's purposefully complex, though. i think there is method to the madness. i see my colleague from georgia, congressman buddy carter, a great pharmacist in his own right, i was reading through this and kind of in the middle he made mention, 2300 independent pharmacies, the united states lost 2,300 pharmacies between just december of 2017 to 2020. in just three years. it scares me. as a business owner, former small business owner. i'm curious, dr. duane, do you think this is in part because it's so difficult for independent pharmacies to join p.b.m.'s that we've lost so many in three years? dr. duane: you know, it can sometimes be a lose-lose because if the p.b.m. offers a contract to us that's unsustainable and we take it, it runs us out of business quicker. if we decline a contract, that's

unsustainable, their affiliate pharmacies stand to gain those same members that i do not serve for that reason. so, yes, i think it is. mr. fallon: do you think it's fair to say, it seems to me p.b.m.'s -- we've seen as spending on drugs has decreased as a percentage of overall health care expenditures since 2009, but i think perhaps it could be the vertical integration that is -- that is not helpful in any regard. in the fall of 2022, express scripts said they'll reimburse more than two million tricare individuals. rural and independent pharmacies were dropped from the tricare networks, that's particularly concerning to me because i represent 10 rural counties. options for tricare patients and their families were reduced. especially, again, in rural communities. the tricare pharmacy network was temporarily reopened in november

of 2022 after significant congressional pressure. to my knowledge, no new pharmacies rejoined the networks. so mr. baker, you may not be able to speak to this from direct experience on the issue but i'd like for you to talk about how this impacts access and competition? it was reported that express scripts removed walmart, kroger, in favor of c.v.s., as the smaller p.b.m. competing with the big three, do you find it harder to compete in the market? mr. baker: we absolutely do, yes, sir, yeah. mr. fallon: have you seen evidence the big three playing favorites with or preferring pharmacies they own over other pharmacy options? mr. baker: i think we deal with the employees who have mandatory mail-in and special programs that's obvious, yes, sir. mr. fallon: and if we're removing competition from tricare networks, how does that improve service and lower costs? mr. baker: we agree that it does not do either of those things. mr. fallon: what's particularly

concerning to me is when you have three p.b.m.'s owning 80% of the market share and then 92% of americans participating in this, that is a very -- very concerning. and dr. duane, did you know kevin -- admiral kevin delaney, by the way? mr. fallon: no. he was a staple in jacksonville. you spoke in your opening statement how tricare covered patients are affected by p.b.m. pharmacy network changes. how is this impacting our veterans' community? dr. duane: it's terrible. i am not going to sugarcoat it. there was a story on the local nbc channel the week before last people were waiting days, sometimes weeks for their medicines. i don't think it's a fault of the navy base. they're working with as much as they can. what you mentioned the dropping of tens of thousands of pharmacies almost overnight and then you spoke to the reopening of the network. i can tell you that i examined that contract fairly and closely and i looked on any typical

brand of medicine we would have lost between $10 and $30 before we fill a medicine and that's the $10 or $12 it takes to make a medicine. that's sometimes $40 to $50 at that point. they have markedly reduced option now to get their medicine. the options that do exist in jacksonville are overburdened and overstressed as a result. and i think that ultimately that leads to poorer patient care and i don't think that can be argued. mr. fallon: well, mr. chairman, what i've seen here is a lot of more agreement than i've seen in the 2 1/2 years i've been in congress just today. i think we do have a mandate and we should be talking about solutions. i think these rebates, kickbacks, whatever you want to call them are something that probably we need to address and eliminate, prohibit moving forward. but this is something that we have an opportunity. let's do the right thing by the american people. let's work together and let's fix this. thank you very much and i yield back. chair comer: absolutely. thank you. the chair recognizes the gentlewoman from the chair

recognizes ms. brown from ohio for five minutes. ms. brown: thank you. i am glad this is regarding the dangers of a health care system that prioritizes profits over people. we cannot lose sight of the big picture. caring for the sick and providing lifesaving medications should not be a cash cow opportunity. it is staggering that last year alone pharma spent $8.1 billion on advertising while millions of americans still can't afford their medications. this kind of behavior by big pharma and big pharma -- and pharmacy benefit managers, or p.b.m.'s, squeezes those in greatest need who have the fewest resources. so dr. duane, i appreciated hearing your testimony about your work as an independent pharmacist. could you tell us why it's important patients have access to a local pharmacy they trust? dr. duane: yes.

thank you. so people need to be able to go to a pharmacy that they know will be able to take care of their complex medication regimens and i think the average person sees their pharmacist a lot more than they see their doctor. so i think it's very important that they have a variety of choice because someone needs to, just like any other health care practitioner, have a lechl of trust -- level of trust and confidence in the person they're receiving care from. ms. brown: thank you so much for that. i want to circle back. as stated by my colleague, rep bush, according to one of the studies in 2019, one in eight pharmacies closed between 2009 and 2015. this is deeply unfortunate, especially for those who rely on their neighborhood pharmacies for more than just their prescription pickup. now we heard from dr. duane when he responded to ms. bush's question but i want to ask you, mr. isasi, if you could

elaborate on how a closure of a community or independent pharmacy limits health care access or a patient living in a low-income or urban setting? mr. isasi: so important to say, pharmacists can play a critical role on people getting high-quality health care. there's wonderful examples across this country. north community care helps patients coming out of complex in-patient procedures and pharmacists played a key role in continuity of care in making sure you're ok. when you move people to mail-order pharmacies, you move people out of community-based settings you lose all of that context. for folks who are in underserved communities, they already have much less access to doctors, nurses, etc. pharmacists can be on the front line and be effective. it's a really concerning trend if we are creating financial incentives that are closing the access patients have to their pharmacists. ms. brown: thank you so much. according to the same