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The chair of the highly effective Home Committee on Oversight and Accountability is threatening the leaders of the three largest pharmacy profit managers within the nation with steep fines — or jail time — for allegedly mendacity in a latest congressional listening to.
Chairman James Comer, R-Ky., despatched letters Wednesday to Patrick Conway, the CEO of UnitedHealth’s Optum Rx; Adam Kautzner, the president of Cigna’s Categorical Scripts; and David Joyner, the president of CVS’ Caremark arguing that statements they made in a July listening to contradicted committee findings and analysis by the Federal Commerce Fee.
Through the listening to, Conway, Kautzner and Joyner testified that their PBMs deal with affiliated and unaffiliated pharmacies equally when setting charges, negotiating contracts and telling sufferers the place to dispense their medicines.
These statements have been lies, suggests Comer’s letters, which cite committee and FTC proof to argue that PBMs improve income at their very own pharmacies on the expense of different companies.
Comer requested the executives to right their statements by Sept. 11 or face attainable authorized motion — together with as much as 5 years in jail, along with fines that would attain a whole bunch of 1000’s of {dollars}.
Categorical Scripts denied Comer’s allegations, whereas CVS stated it was reviewing the letter. UnitedHealth didn’t reply to a request for remark.
“We stand firmly behind Dr. Kautzner’s testimony and strongly refute and disagree with this letter’s allegations,” an Categorical Scripts spokesperson stated in an announcement.
Comer’s allegations
PBMs — influential middlemen within the pharmaceutical provide chain — are dealing with intense public ire for enterprise practices that critics say contribute to the excessive price of medicine within the U.S.
The Home Oversight Committee held a listening to this summer season that gave lawmakers a uncommon likelihood to quiz PBM executives immediately concerning the enterprise practices of their corporations, which negotiate rebates on medication with pharmaceutical corporations in alternate for placement on well being insurers’ formularies. PBMs additionally contract with pharmacies to dispense remedy.
Through the listening to, lawmakers on either side of the aisle put Conway, Kautzner and Joyner on the defensive over PBMs’ position in rising prices and shrinking affected person entry to medication.
Members of Congress — in addition to antitrust regulators within the FTC — have expressed explicit considerations concerning the appreciable market energy of Caremark, Categorical Scripts and Optum Rx, which collectively cowl virtually 80% of the U.S. prescriptions.
Their guardian corporations CVS, Cigna and UnitedHealth all embrace a significant PBM, well being insurer and pharmacy community. That vertical integration incentivizes and offers the conglomerates the power to offer owned pharmacies preferential therapy, together with directing sufferers to these websites and paying them larger charges, in response to a July report from the FTC.
Optum Rx, Caremark and Categorical Scripts even have sufficient leverage to strong-arm unaffiliated pharmacies into unfavorable contracts, the FTC discovered.
But Conway, Kautzner and Joyner testified throughout the July listening to that the PBMs don’t steer sufferers to affiliated pharmacies for medicines or pay affiliated pharmacies greater than different pharmacies of their networks.
Conway additionally testified that Optum Rx doesn’t have interaction in opt-out contracting, the place pharmacies can unknowingly have the phrases of their contract modified. Categorical Scripts’ Kautzner stated that the PBM permits unbiased pharmacies to barter their contracts, together with reviewing and suggesting modifications to a draft.
On Wednesday, Comer stated every declare was nonsense.
Testimony of equitable pharmacy reimbursement “contradicts each the Committee’s and Federal Commerce Fee’s (FTC) findings that CVS Caremark in addition to Categorical Scripts and Optum Rx, reimburse PBM-owned pharmacies at the next price than non-affiliated pharmacies,” the chairman wrote in his letter to CVS’ Joyner.
Comer cited a whistleblower e-mail obtained by the committee in addition to the FTC’s employees report that discovered PBM reimbursement for their very own pharmacies is notably larger than nonaffiliated pharmacies.
The committee additionally has proof that Caremark, Categorical Scripts and Optum Rx steer sufferers to owned pharmacies, in response to Comer. Categorical Scripts, for instance, makes use of information it receives from competing pharmacies to encourage sufferers to maneuver their prescriptions to its personal mail-order pharmacy, Comer wrote in his letter to Kautzner.
In the meantime, the committee and the FTC have reviewed proof discovering unbiased pharmacies don’t have the leverage to barter phrases when enrolling in PBMs’ pharmacy networks, and PBMs could make modifications with out them figuring out, the Kentucky congressman stated.
Comer cited an occasion the place an unbiased pharmacy unwittingly accepted an modification to their fee settlement with Optum Rx by merely submitting a declare.
PBMs keep that they save employer and well being plan shoppers cash, whereas making it simpler for customers to entry dear medication. The businesses as a substitute level to pharmaceutical corporations, which set the record value of remedy, as behind the the excessive price of many medication.
“We’re happy with the work our clinicians and groups do day by day to enhance well being and decrease the price of medicines for the tens of millions of People we serve,” the Categorical Scripts spokesperson stated.
Strain has been mounting on the federal authorities to behave to curb the excessive drug costs, at a time when roughly one-third of People report not taking remedy they want due to price. The Inflation Discount Act handed in 2022 gave Medicare the power to barter the value of sure medication, which is anticipated to scale back spending on the expense of pharmaceutical corporations’ income.
PBMs are additionally unlikely to sidestep reform, given ongoing congressional scrutiny within the type of hearings and legislative proposals to rehabilitate the pharmacy provide chain. Most payments have centered round injecting extra transparency into PBMs’ enterprise practices, one thing that business leaders have stated they’re open to.
“There may be intensified exercise round transparency, and we’re extremely supportive of transparency as long as it’s focused and constructive,” Cigna CEO David Cordani stated on a name with buyers final fall.
Nonetheless, extra lately Cordani has promised to be extra aggressive in defending Categorical Scripts from critics in Washington, a sentiment echoed by CVS CEO Karen Lynch in second-quarter earnings calls.
In shoring up the defenses round PBMs, executives need to shelter companies from change which are main drivers of income and revenue. Categorical Scripts, for instance, introduced in $26.6 billion in income within the second quarter — 44% of Cigna’s complete topline.
