Press Releases

“In the 110^th Congress, when I was Chairman of the House Judiciary Committee, the Committee reported legislation that would have granted a limited antitrust exemption for independent pharmacies to allow them to collectively bargain as to the terms and conditions of reimbursements from pharmacy benefit managers.

“This legislation arose from the recognition that small, independent pharmacies struggle to compete against large pharmacy chains, particularly with respect to their ability to negotiate reimbursements from pharmacy benefit managers.

"Pharmacy benefit managers are the middlemen that administer the prescription drug benefit portion of health insurance plans for private companies, unions, and governments. 

“They are responsible for processing and paying prescription drug claims, contracting with pharmacies, and negotiating discounts and rebates with drug manufacturers, all for the ostensible purpose of keeping drug prices low for health plans.

"Today’s hearing gives us an opportunity to delve more deeply into the state of competition in the marketplace for pharmacy benefit managers and to consider its possible effects on consumers.

"To that end, we should keep the following in mind.

“As an initial matter, we should assess whether the market for pharmacy benefit managers is too concentrated and structurally problematic to maximize consumer benefits.

“Although estimates vary, most studies indicate that just three companies may control up to almost 80 percent of the pharmacy benefit manager market.

“Such concentration in any industry necessarily raises questions about whether the dominant firms can use their power to the detriment of their competitors and consumers.

“The largest pharmacy benefit managers also own retail pharmacy businesses, which can be in the form of a large national retail chain, specialty pharmacy business, or online mail-order pharmacies.

“According to some experts, these ownership arrangements create an inherent conflict of interest because a large pharmacy benefit manager can leverage its market power to benefit its retail pharmacy business by using exclusivity arrangements and providing more generous reimbursements, to the detriment of small, independent retail pharmacy competitors.

“Moreover, such concerns may be further exacerbated when the industry is relatively unregulated, as may be the case with pharmacy benefit managers.

“In addition, we should consider whether a lack of transparency with respect to the operations of pharmacy benefit managers helps or hurts competition.

“Some critics of pharmacy benefit managers assert that the lack of transparency makes it difficult to assess whether they are fully passing on whatever savings they may have obtained from drug manufacturers. 

“These critics contend that the substantial rise in profits for pharmacy benefit managers in recent years suggests that such savings are not, in fact, being passed on to consumers.

“Critics further assert that it is hard to know whether pharmacy benefit managers are providing fair reimbursements for generic drugs to small independent retail pharmacies given the lack of publicly available information about how pharmacy benefit managers determine such reimbursements.

“If these allegations are true, the lack of transparency may well make it difficult for health insurance plans to secure the lowest costs or the best quality service for consumers.

“Finally, we should consider whether stronger antitrust enforcement alone is sufficient to address these potential concerns.

“While some criticize what they see as lax antitrust enforcement in the pharmacy benefit manager marketplace, there is a broader question of whether more direct regulatory measures are needed beyond stronger antitrust enforcement.

“I ask our witnesses to address these points and look forward to their testimony.”

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Click HERE to read the testimony of Democratic witness, Brad Arthur, Independent Pharmacist and President of the National Community Pharmacist Association.