Chris Coons Asks Witness About Reimbursement Process From PBMs To Independent Pharmacies

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During a Senate Judiciary Committee hearing on Tuesday, Sen. Chris Coons (D-DE) questioned Juan Carlos Scott, the President & Chief Executive Officer of the Pharmaceutical Care Management Association, about pharmacy benefit managers reimbursing independent pharmacies.

Transcript

00:00Senator Goulds. Thank you, Chairman Grassley, Ranking Member Durbin, for convening this,

00:05and thank you to the panel for your important work. Let me ask a few questions, if I might.

00:11In my small state of Delaware from 2018 to 2020, Delawareans footed the bill for over 24 million

00:18in unnecessary prescription drug payments, largely due to the practices that have been the focus of

00:24this hearing. And as a state, we have now enacted a series of PBM reform laws, notably all passed

00:32unanimously through our state legislature. I don't think that happens very often in any state.

00:37So I'm glad that PBM reform has some level of bipartisan support in Congress, including bills

00:43led by Chairman Grassley and other members of this committee. In fact, a ban on so-called spread

00:48pricing was one of the only provisions that I was glad to see in the House Republicans' reconciliation

00:53bill. Of course, I would have chosen to use the billion dollars in savings to fund community

00:58health centers and combat the opioid epidemic, not to give bigger tax cuts. But I'm glad for the

01:03opportunity to discuss what reforms could bring transparency, lower drug prices, and improve

01:09patient access. If I could, Dr. Kirshner, thank you for your work on pancreatic cancer disease that's

01:17impacted my family specifically. I've received substantial outreach from Delawareans about the

01:23need for PBM reform from clergy to breast cancer survivors. How do PBM practices make it harder for

01:30patients struggling with cancer treatment to access life-saving medications?

01:36There's a couple different ways, and the patients don't know that a PBM is even involved.

01:42But where the rubber hits the road for them is the disconnect between my prescription pad and them

01:49receiving the drug. Some black box happens sometimes when we can't fill it at our specialty

01:57pharmacies, and that might be different within different specialties. So these are for highly

02:02complex chemotherapy drugs. And so patients, when we can't use our own pharmacy, really negatively are

02:12impacted.

02:13I've seen that directly personally with three family members who've died of cancer. But thank you for

02:19your work and for raising that issue today. If I could, to Mr. Scott and Dr. McDonough, I've seen reports

02:26as high as 80% of rural and independent pharmacies receive reimbursement below the cost of procuring

02:33and dispensing some drugs. The owner of an independent pharmacy in southern Delaware told me he can no

02:38longer even afford to stock certain expensive treatments for HIV, GLP-1s. His reimbursements after

02:46PBM fees are unpredictable, and he can't afford to lose money every time he dispenses one of these.

02:53Mr. Scott, why isn't there greater transparency into the reimbursement process? And Dr. McDonough,

02:58how could greater transparency help level the playing field, particularly for independent pharmacies

03:04and rural pharmacies?

03:06I'll go first and briefly to say, understand the mechanics of how this works, because there is

03:11transparency when the pharmacy is choosing to contract to be part of a PBM's recommended network,

03:16and more than 80-85% of those independent pharmacies are actually empowering a wholesaler,

03:23through their PSAO, pharmacy services administrative organization, to negotiate on their behalf.

03:28You have three big wholesalers controlling 90% of the market, they're selling the drugs to the

03:32pharmacy, and they're negotiating these contracts on their behalf, and that is the starting point

03:36for determining how the reimbursement is going to flow to a pharmacy and a network.

03:40I think transparency is key. You know, when you think about the physician writing the prescription,

03:48and then the end user being the patient, and normally fill it at a pharmacy, there's a lot of stuff that

03:53happens in between, right? And where things are getting siphoned off and everything else and fees.

03:57And I think, one, spread pricing we know is real. We, as an independent pharmacy, we had a local employer

04:06who approached us and asked us if we would be willing to do direct contracting with them.

04:13I was lucky that this CEO had had experience in the insurance agency area, and he said that, you know,

04:20I want to see what you, if you give us a direct price, what that would do. That's been five years

04:25ago. They stay with us. They've saved a heck of a lot of money. Patients are happy because they get

04:31to go to a pharmacy that's going to provide services for them, and we actually made some money where we

04:36could stay open. So I do think transparency all along the line to find out what's going on.

04:41But I also think when we talk about rebates, that's so opaque. What do we have to do to really

04:47understand about rebates? And do we need rebates? I mean, that's a broad and a radical thing of thinking

04:53about, but let's just start from the very scratch and saying, you know, can we do something where we know

04:58our actual cost? I couldn't tell you what my actual cost is because of rebates. So I do think we have to

05:04have a lot more transparency. Ms. Faust, Dr. Faust, to follow up on the point Dr. McDonough just made, should all

05:11PBMs be required to operate with the same level of transparency as yours when it comes to selecting

05:16drugs and obtaining rebates? And what other practices could PBMs learn from your company?

05:24Yeah, we believe wholeheartedly in transparency and passing through rebates, especially as it relates

05:31to passing that savings through to the client. All PBMs should have transparency across the entire

05:38drug supply chain. And so that would be a great first step around rebates.

05:44Thank you to all the witnesses today. Thank you.

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