At Hearing, Senator Portman Highlights the Importance of Lower Costs and Transparency in Drug Pricing
WASHINGTON, D.C. – At a Senate Finance Committee hearing this morning, Senator Rob Portman (R-OH) questioned Pharmacy Benefit Manager (PBM) executives on practices involving certain PBMs in Ohio, the role that they play in the prescription drug supply chain, and ways to improve transparency in drug pricing. Portman has been active in examining all sides of the drug supply chain, in order to identify bipartisan ways to improve the system and to lower costs. Last year, the Permanent Subcommittee on Investigations, which Portman chairs, unveiled a report detailing how drug manufacturer kaléo exploited the opioid crisis by increasing the price of its naloxone drug EVZIO by more than 600 percent by 2016 (from the initial price of $575 per unit to $3,750 and then to $4,100 11 months later), launching a new distribution model planning to “capitalize on the opportunity” of “opioid overdose at epidemic levels.” After the report was made public, kaleo reduced the price from $4,100 to $178 per unit.
Senator Portman has introduced the REFUND Act which would enable Medicare to recoup money from drug companies who were paid for wasted medications, and provide savings to seniors enrolled in Medicare. He has also cosponsored bipartisan legislation designed to encourage competition in the prescription drug marketplace and put an end to the harmful patent strategies that block new drugs from coming to market.
Portman: “Thank you, Mr. Chairman and thank you all for being here today to shed light on a complicated area. I hear a lot of frustration back home over the cost of prescription drugs and for some people, they actually aren’t taking the prescription drugs they’re supposed to be taking because of those high costs. It’s affecting their health care. Everyone has a role to play in this along the chain from the manufacturer, to the pharmacy, to the consumer. One is the PBMs. You have a role to play in trying to lower costs and bring more transparency – that word has been used a lot here today – to the system. People have a right to know. In Ohio, as Mr. Rice and Mr. Prince probably know, there’s currently a lot of discussion about that. I’m sure you’ve probably seen the investigative reports from the Columbus Dispatch and other stories regarding disputes between the state and your respective companies.
“With regard to CVS, there have been some concerns that you’re withholding savings from the state Medicaid program and not providing equitable reimbursement to pharmacies. In regards to OptumRX, the state has raised concerns, again, regarding the company withholding savings from Medicaid and the Attorney General has also accused your company of failing to disclose certain rebates to the Ohio Bureau of Worker’s Comp that are contractually supposed to be passed along to the state and to the beneficiaries. I’m sure you’re aware of those allegations and the stories.
“First, I’d like to know what your answers are as to why the state and other stakeholders in the system would accuse you of hiding this kind of information. And again, getting back to my comment on transparency, wouldn’t transparency solve a lot of this? Particularly with regard to the rebate.”
Mr. Derica Rice, Executive Vice President and President of CVS Health and CVS Caremark: “Senator, I’ll go first. Let me start by first saying I absolutely share your interest in making sure that we bring the utmost level of transparency to not only the plans but also the members and the constituencies and consumers in your state as well as other states. The things that we’ve done, and I think it’s been validated through the independent audit report that was conducted as well, we’ve saved the state about $145 million. In the course of that we’ve now made a decision as of January of this year that we no longer have spread pricing. And as it relates to your commentary around pharmacy reimbursement, we reimburse the independent pharmacies far higher than the other major chains, including CVS pharmacy retailers as well. So, we try to bring a level of transparency such that people can make the right decisions and even to Senator Thune’s earlier comments about health care consumers needing to be able to act like consumers. We’ve also tried to be transparent at the patient level. The way we’ve tried to do that is equipping them with the data and visibility to it such that they can do the comparison shop. So today we have real-time benefits which enables a physician to, in their office with electronic health records, share with their patient the out of pocket cost.”
Portman: “I totally support that, I think that’s critical to getting cost down, ultimately. Consumers are pretty smart but I want to give Mr. Prince a chance to respond in regard to rebates. But, let me just say this. If Ohio government, which can bring the full weight of the government down on this issue to find out what the rebates ought to be, is having trouble getting information, how about the small businesses out there? I mean why shouldn’t these rebates be more transparent as to the beneficiaries which ultimately is the people I represent in terms of the Medicaid system?”
Mr. Rice: “If I could just share, Senator. We passed through 100 percent of the rebates and discounts.”
Portman: “Transparency has been the issue that we’ve not been able to resolve. Even in this case with the state of Ohio bringing pressure on the PBM system. Mr. Prince?”
Mr. John Prince, CEO of OptumRX: “Senator we believe we’ve delivered on our contract for the state and also for the Bureau. I’m not going to go into the details on the litigation here but I guess I would say overall that we’re working closely with them to resolve the matter and making sure we address the concerns with them. Overall as an organization we’re very focused on, from a rebate standpoint, point-of-sale discounts. We actually have made, as an organization, we’ve passed on 100 percent of the Medicare market, 100 percent on the Medicaid market and are committed in the commercial market to moving to everybody having point-of-sale discounts. We are not taking on additional customers in 2020 and beyond unless they do point-of-sale discounts.”
Portman: “Well again, that’s a matter of transparency also so people can see what it is and understand what they’re getting. Let me give one quick story here where PBMs, I think, play a constructive role. And this is with regard to an investigation we did in the Permanent Subcommittee on Investigations on the EVZIO product, which is a naloxone product, it’s a lifesaving thing in the opioid epidemic. This is a miracle drug that reverses the effects of an overdose. Kaleo, a company which provides this EVZIO product, had dramatically increased their price and they did it through kind of a loophole under the Part D Medicaid program saying that doctors should say it’s medically necessary. And in that case, the PBM actually was encouraging the lower price alternative and I think that’s what your role ought to be. In other words, you all stepped in as a PBM and said this life-saving care could be provided at a lower cost. Now when they found the loophole, frankly, the PBMs didn’t have any additional role to play and because the loophole is in our law, and we’re trying to fix that. And ultimately I would tell you the cost went down dramatically once we had shone some light on this. But, I give that as an example of where PBMs can play a positive role in the case of trying to keep drug costs down for beneficiaries.”