Dear Colleague,
On Monday, President Trump resurrected an idea from his first administration to bring Most Favored Nation drug pricing to the United States. The plan seeks to bring down drug prices by linking them to the lowest prices paid in other developed countries. During his press conference, President Trump singled out the PBMs as a big part of the problem. "We're going to totally cut out the famous middlemen," he said. "Nobody knows who they are, but they're rich."
In a statement we issued that afternoon, I applauded any efforts by the president to rein in PBMs. It was early 2019 when I began pointing out the connection between high drug prices in the U.S. and PBMs. "It is not a coincidence that the United States pays more for drugs than any other country, and we are the only country in the world in which PBMs are hired to control drug prices. We believe those two facts are directly related." I also wanted to make crystal clear that the executive order's concept of a mechanism through which American patients can buy their drugs directly from manufacturers can only work if pharmacists are at the center of the relationship. "We support a system that cuts out the PBM middlemen, where patients can access lower drug prices via essential local pharmacists, who are the medication experts on the health care team," I said. "However, no part of this effort should bypass patient safety and effectiveness by going around the pharmacist. Moving towards a more transparent, cost-plus payment model for drugs has always been a goal of NCPA."
As the administration works to flesh out the president's policy, the NCPA team will work closely with the agencies to ensure the needs of patients and pharmacists are reflected in the final product.
As if his week wasn't going badly enough, PCMA head JC Scott found himself before a hearing of the Senate Judiciary Committee on Tuesday. Senators used the PCMA CEO as a human punching bag and whaled away. In his opening statement, he tried to preempt the obvious criticism that his biggest members behave like monopolies. He laughably said that "the PBM market is competitive." I immediately thought about the viral social media question of whether 100 men could win a fight against a silverback gorilla. The answer is no, but it would be more competitive than the PBM market. My second thought was about a more credible statement, the first FTC interim PBM report showing that just six PBMs control nearly 95 percent of the prescription drug market. So much for competition.
The committee's ranking member, Sen. Dick Durbin (D-Ill.), called him out directly. "Mr. Scott, the bottom line is this: you argue that PBMs give us competition, choice, and flexibility, and the evidence is absolutely to the contrary."
Sen. John Kennedy (R-La.) had a doozy of a question, which I would do disservice trying to describe here so watch it for yourself. At the end of it, he asked why Congress doesn't just ban vertical integration in the Medicare Part D program.
Sen. Josh Hawley (R-Mo.) asked Mr. Scott whether PBMs have been successful at reducing drug costs. He then produced a chart making President Trump's point from the day before (and mine since 2019)—that Americans pay vastly higher prices for drugs than people in other countries. "Either your members are the worst negotiators in the world, or there's something wrong with your business model," he said.
Yes. There is something terribly wrong with the PBM business model. President Trump and members of both parties all agree that the PBMs are out of control. But the time for hearings and press conferences is over. It's past time for the politicians to take action.
Best,
B. Douglas Hoey, Pharmacist, MBA
NCPA CEO
