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'Why Don't We Skip The Foreplay And Go Right To The Sex?': John Kennedy Gets Very Blunt At Senate Hearing
Forbes Breaking News
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5/13/2025
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.
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00:00
Thank you Senator Cohen. Senator Kennedy. Professor Sood, as I understand it 80% of the
00:10
PBM market is controlled by three companies, three PBMs, that are vertically integrated.
00:17
Is that right? That is correct. Does your research show
00:23
that the prices that consumers pay are higher than they would be if those companies were not
00:33
vertically integrated? So my research on Medicare Part D. Give me an answer. Partially.
00:43
What do you mean partially? They're either higher or they're lower. So that's saying it's a partial
00:49
price. What I find is that Medicare Part D premiums
00:53
are higher as a result of vertical integration. Okay. Well then why don't we, I'm all for transparency
01:04
Mr. Chairman. I want to say that. But why don't we skip the foreplay and go right to the sex
01:10
and get rid, outlaw vertical integration for Part D. Would you accept an amendment to your bill like
01:21
that? I don't want to answer that question right now because I want to study that.
01:29
Would you support that Mr. Scott? Let me just guess what your answer is.
01:34
No sir. And I can explain why. No. You speak Sanskrit. I mean, I'm sorry.
01:42
You know, you're good at it. And I know your job is to protect the PBMs.
01:47
And I might tell us I don't think PBMs are the only ones at fault.
01:50
But you don't have unclean hands.
01:56
Professor Sood, you say PBMs ought to be fiduciaries. To whom?
02:02
To both the plan and their members.
02:08
Well, what if the plan and the members' interests diverge? Who are they fiduciaries to?
02:15
Ultimately, in principle, they should be fiduciaries to the members.
02:18
Okay.
02:19
So, for example, ERISA makes...
02:21
I get it.
02:22
Okay.
02:22
I get it.
02:25
Mr. Chairman, again, why don't we skip the foreplay and go right to the sex?
02:30
Why don't we just amend your bill to require that PBMs have a fiduciary obligation to plan members?
02:41
Well, I think that's been suggested.
02:44
And I think there's part of that in our legislation, but probably not fully enough to satisfy you.
02:50
Well...
02:51
So let me look at what you want to add to it.
02:54
Okay.
02:54
I mean, I'm not criticizing your bill.
02:57
I don't want my office to end up in Bethesda.
03:01
So I'm not criticizing your bill.
03:03
I like transparency.
03:05
But we're just nibbling around the edges here.
03:08
And with respect, Mr. Scott, your definition of a fiduciary is wrong.
03:15
A fiduciary isn't somebody that controls the decision.
03:18
You know that, and I know that.
03:19
A fiduciary is somebody who has a legal obligation to give his client the best advice and to do what's best for his client.
03:29
It doesn't replace agent with principal or vice versa.
03:35
You know that, and I know that.
03:38
Well, you need to talk to your lawyers.
03:40
I may be wrong, but I doubt it.
03:45
Let me go back to Professor Sood.
03:47
Tell me two things you would do tomorrow to fix PBMs and result in lower prices for consumers.
04:03
So I think the two things I would do is...
04:05
Very specific.
04:06
Yes.
04:07
I would implement price transparency so that everyone knows what they're paying and...
04:14
Okay, price transparency just tells us who's screwing them.
04:18
Yeah.
04:18
Okay.
04:18
And then the fiduciary responsibility says, if you're getting screwed, I can take you to court.
04:24
So I would do those two things.
04:26
And those are, I think, better than banning particular practices because otherwise it's whack-a-mole.
04:33
You ban spread pricing and something else will show up a year from now.
04:37
Okay, I got 29 seconds.
04:39
Do you have any other suggestions?
04:40
I appreciate your straight talk.
04:42
The other thing we can do is what I recommended is pass-through of rebates to patients.
04:49
So suppose a drug...
04:50
Say that again.
04:51
So pass-through of rebates to patients.
04:53
So for example, the list price of a drug is $50,000, but the rebate on the drug is $40,000.
05:00
So when a patient is paying cost-sharing, suppose 10%, they should be paying on the post-rebate price.
05:08
So which is the $50,000 less the $40,000 rebate.
05:12
Right now what's happening is patients are paying cost-sharing on the $50,000.
05:16
So this would immediately lower patient out-of-pocket costs.
05:22
So as Dr. Kocher said, for the cancer patients...
05:26
So 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.
05:35
And that...
05:35
Is that right?
05:36
Yes.
05:36
That's illegal.
05:37
And the jacked up...
05:38
That's illegal.
05:39
Yes.
05:40
I don't know about that, but...
05:42
I do.
05:42
It's illegal as hell.
05:44
Yeah.
05:45
Before I call on Senator Arano, I want to remind my members we got a vote and they're enforcing the 30-minute rule.
05:52
So I'm going to...
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