'Why Don't We Skip The Foreplay And Go Right To The Sex?': John Kennedy Gets Very Blunt At Senate Hearing

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At today's Senate Judiciary Committee hearing, Sen. John Kennedy (R-LA) spoke to witnesses and Sen. Chuck Grassley (R-IA) about prescription drug processes.

Transcript

00:00Thank you Senator Cohen. Senator Kennedy. Professor Sood, as I understand it 80% of the

00:10PBM market is controlled by three companies, three PBMs, that are vertically integrated.

00:17Is that right? That is correct. Does your research show

00:23that the prices that consumers pay are higher than they would be if those companies were not

00:33vertically integrated? So my research on Medicare Part D. Give me an answer. Partially.

00:43What do you mean partially? They're either higher or they're lower. So that's saying it's a partial

00:49price. What I find is that Medicare Part D premiums

00:53are higher as a result of vertical integration. Okay. Well then why don't we, I'm all for transparency

01:04Mr. Chairman. I want to say that. But why don't we skip the foreplay and go right to the sex

01:10and get rid, outlaw vertical integration for Part D. Would you accept an amendment to your bill like

01:21that? I don't want to answer that question right now because I want to study that.

01:29Would you support that Mr. Scott? Let me just guess what your answer is.

01:34No sir. And I can explain why. No. You speak Sanskrit. I mean, I'm sorry.

01:42You know, you're good at it. And I know your job is to protect the PBMs.

01:47And I might tell us I don't think PBMs are the only ones at fault.

01:50But you don't have unclean hands.

01:56Professor Sood, you say PBMs ought to be fiduciaries. To whom?

02:02To both the plan and their members.

02:08Well, what if the plan and the members' interests diverge? Who are they fiduciaries to?

02:15Ultimately, in principle, they should be fiduciaries to the members.

02:18Okay.

02:19So, for example, ERISA makes...

02:21I get it.

02:22Okay.

02:22I get it.

02:25Mr. Chairman, again, why don't we skip the foreplay and go right to the sex?

02:30Why don't we just amend your bill to require that PBMs have a fiduciary obligation to plan members?

02:41Well, I think that's been suggested.

02:44And I think there's part of that in our legislation, but probably not fully enough to satisfy you.

02:50Well...

02:51So let me look at what you want to add to it.

02:54Okay.

02:54I mean, I'm not criticizing your bill.

02:57I don't want my office to end up in Bethesda.

03:01So I'm not criticizing your bill.

03:03I like transparency.

03:05But we're just nibbling around the edges here.

03:08And with respect, Mr. Scott, your definition of a fiduciary is wrong.

03:15A fiduciary isn't somebody that controls the decision.

03:18You know that, and I know that.

03:19A fiduciary is somebody who has a legal obligation to give his client the best advice and to do what's best for his client.

03:29It doesn't replace agent with principal or vice versa.

03:35You know that, and I know that.

03:38Well, you need to talk to your lawyers.

03:40I may be wrong, but I doubt it.

03:45Let me go back to Professor Sood.

03:47Tell me two things you would do tomorrow to fix PBMs and result in lower prices for consumers.

04:03So I think the two things I would do is...

04:05Very specific.

04:06Yes.

04:07I would implement price transparency so that everyone knows what they're paying and...

04:14Okay, price transparency just tells us who's screwing them.

04:18Yeah.

04:18Okay.

04:18And then the fiduciary responsibility says, if you're getting screwed, I can take you to court.

04:24So I would do those two things.

04:26And those are, I think, better than banning particular practices because otherwise it's whack-a-mole.

04:33You ban spread pricing and something else will show up a year from now.

04:37Okay, I got 29 seconds.

04:39Do you have any other suggestions?

04:40I appreciate your straight talk.

04:42The other thing we can do is what I recommended is pass-through of rebates to patients.

04:49So suppose a drug...

04:50Say that again.

04:51So pass-through of rebates to patients.

04:53So for example, the list price of a drug is $50,000, but the rebate on the drug is $40,000.

05:00So when a patient is paying cost-sharing, suppose 10%, they should be paying on the post-rebate price.

05:08So which is the $50,000 less the $40,000 rebate.

05:12Right now what's happening is patients are paying cost-sharing on the $50,000.

05:16So this would immediately lower patient out-of-pocket costs.

05:22So as Dr. Kocher said, for the cancer patients...

05:26So you're saying that the PBMs are jacking up, are encouraging manufacturers to jack up the list price so they can jack up their rebates.

05:35And that...

05:35Is that right?

05:36Yes.

05:36That's illegal.

05:37And the jacked up...

05:38That's illegal.

05:39Yes.

05:40I don't know about that, but...

05:42I do.

05:42It's illegal as hell.

05:44Yeah.

05:45Before I call on Senator Arano, I want to remind my members we got a vote and they're enforcing the 30-minute rule.

05:52So I'm going to...

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