Collins statement on competition in health care

". . . consolidation across the health care and prescription drug markets has been rapidly increasing. Nowhere is this more prevalent than in the pharmacy benefit manager (PBM) marketplace. PBMs, in theory, should help bring down costs for consumers. However, they are not doing that."

WASHINGTON — Rep. Doug Collins (R-Ga.), Ranking Member of the House Judiciary Committee, made the following statement at today’s subcommittee hearing on competition in health care. Below are the remarks as prepared. Ranking Member Doug Collins: Thank you, Chairman Cicilline and Ranking Member Sensenbrenner for holding this hearing. Also, thank you both for your work on the CREATES Act. I believe this legislation is a good starting point, and I look forward to continuing to work with both of you to ultimately get this bill signed into law this term. Over the past decade, consolidation across the health care and prescription drug markets has been rapidly increasing. Nowhere is this more prevalent than in the pharmacy benefit manager (PBM) marketplace. PBMs, in theory, should help bring down costs for consumers. However, they are not doing that. There are only three major PBM companies, and they control 85% of the market, which yields each company a great deal of power. As these companies have consolidated horizontally, they have also merged vertically with major pharmacies and health insurers. That means a patient’s insurer has financial incentives to push the patient towards their pharmacies. This consolidation has enabled PBMs to engage in anti-competitive behavior by targeting competing pharmacies with unfair audits and under-reimbursement. These audits provide PBMs with the pharmacies’ acquisition costs and patient data. PBMs then use this data to steer patients to their own pharmacies and reimburse competing pharmacies at a much lower rate. This results in PBMs lining their wallets. It harms community pharmacies who have to decide between losing money and filling a prescription or losing customers to big-box pharmacies owned by PBMs. If you look at Ohio, CVS and OptumRx charged that state more than $400 million more than they paid out to pharmacies. PBMs also have immense control over patient formularies, allowing them to push patients to high-cost medications because these medications give the PBM higher rebates. As a result, PBMs increase patients’ copays and incentivize manufacturers to increase drug costs to pay PBMs higher rebate demands. So, PBMs are actually costing patients more money. PBMs’ role as intermediaries also allows them to extract rebates and price concessions from competing pharmacies and manufacturers without passing them on to patients. Due to the lack of transparency, these price concessions are often withheld from patients and payers, increasing PBM profits while failing to decrease drug costs. I recently introduced legislation called the Phair Pricing Act with Rep. Vincente Gonzalez (D-Texas) and Sen. John Kennedy (R-La.). This legislation will require PBMs to pass pharmacy rebates and price concessions on to patients at the point-of-sale. That will save patients an estimated $9.2 billion over 10 years. Key provisions from my legislation are also included in a proposed rule from Department of Health and Human Services Secretary Alex Azar. Additionally, states across the country, including my home state of Georgia, have realized the lack of transparency in this marketplace. Legislators are passing laws requiring transparency from PBMs regarding the rebates and price concessions they are receiving from pharmacies and manufacturers. These laws aim to ensure that patients are seeing the savings that PBMs claim to be negotiating on their behalf. In Georgia, another issue near and dear to my heart is the consolidation happening in the hospital marketplace, particularly in rural communities. These communities often already have few options for quality care. So, as hospital consolidation has increased over the past 10 years, rural communities have been hurt the most. At times these mergers and acquisitions can help rural communities by keeping facilities open. But often they result in full or partial closures and shifting patients from nearby facilities to those hours away. This doesn’t benefit patients; instead it hurts them because they are unable to receive the life-saving treatment they need. In some areas of my state, we have seen mergers limit emergency care, increasing patient travel time by hours. Imagine if a woman was in a difficult labor but had to travel hours to a health care facility. These changes can literally mean the difference between life and death. I’ve also seen hospitals acquire other pharmacy and physician practices in their area to steer patients away from their competitors. I am concerned that these practices will result in fewer options for patients, higher costs and lower quality of care. I commend this subcommittee for reviewing the consolidation and anti-competitive practices across the health care marketplace. I look forward to working with my friends across the aisle to find real solutions to these problems. We must decrease the costs of health care and prescription drugs while increasing patients’ access to the best care possible.