Statement of House Judiciary Committee Chairman Bob Goodlatte “The State of Competition in the Pharmacy Benefit Manager and Pharmacy Marketplaces”

Chairman Goodlatte: In late July, Chairman Marino (R-Pa.), Ranking Member Conyers (D-Mich.), Ranking Member Johnson (R-Ga.) and I announced a series of Committee hearings focused on competition in the health care marketplace. Today’s hearing is the third in this series, and will examine the competitive dynamics within the pharmacy benefit manager (PBM) and pharmacy markets. PBMs oversee the administration and management of prescription drug benefits. In that capacity, PBMs interact with nearly every step of the prescription drug supply chain. Consequently, they have the ability to extract lower prices for prescription drugs and have had some successes in doing so. However, notwithstanding pressure from PBMs, drug prices continue to rise. A recent Wall Street Journal investigation found that increases in drug prices routinely outpaced inflation and often by a significant amount.  These increases were found despite reduced demand for the drugs studied and even in the face of new, competing drugs. If true, this represents a troubling trend as Americans face a progressively aging population and an ever-growing amount of taxpayer money used to fund the purchase of prescription drugs. Through today’s examination of competition within the PBM and pharmacy markets, we should explore whether the proper economic incentives exist for PBMs and pharmacies to place a genuine check on rising drug prices. Another challenge facing the country and my constituents is affordable and accessible health care in rural communities. Independent pharmacies play a critical role in the delivery of personal prescription drug care, especially in rural areas. During my tenure in Congress, I have seen many community pharmacies in my district shutter their doors. While we should allow the free market to operate, we should also ensure that there is a level playing field for both large and small pharmacies. Today’s discussion will help shed some light on the nature of the competitive playing field in the pharmacy market. Since the enactment of the Affordable Care Act, I consistently have expressed concern that the law would compel consolidation across a number of health care industries. My fears appear to be coming true. Both the PBM and the pharmacy markets have experienced consolidation in recent years.  Indeed, Walgreens and Rite Aid recently announced their intent to merge, and CVS’ purchase of Target’s retail pharmacies is currently under review at the Federal Trade Commission. This Committee has held hearings on past PBM consolidation, including the merger between Express Scripts and Medco. While this hearing is not intended to review the details of any particular transaction, we should examine how these trends have impacted competition in both the PBM and pharmacy markets. Specifically, it will be helpful to learn what effects these transactions have had on prices paid by Americans for prescription drugs. Most importantly, we should explore whether market forces compelled these transactions or the Affordable Care Act and its regulatory progeny are prompting increased consolidation. We have an excellent panel of witnesses before us today who can provide us with first-hand perspectives of the competitive issues facing PBMs and pharmacies, and I look forward to hearing their testimony. I yield back the balance of my time. Click here to learn more about today’s hearing.