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Chairman Nadler Statement for the Markup of H.R. 2376, the Prescription Pricing for the People Act of 2019

Apr 30, 2019

Washington, D.C. –Today, House Judiciary Committee Chairman Jerrold Nadler (D-NY) delivered the following opening statement for the markup of H.R. 2376, the Prescription Pricing for the People Act of 2019:

 

“H.R. 2376, the ‘Prescription Pricing for the People Act of 2019,’ would require the Federal Trade Commission to conduct a comprehensive report on the state of competition in the drug supply chain.

 

“In particular, this study would focus on whether pharmacy benefit managers, or PBMs, have engaged in certain behavior for anti-competitive purposes, such as steering patients to pharmacies in which a PBM has an ownership interest, giving such pharmacies more favorable rates than it offers to competing pharmacies, or using its market power to depress the use of lower-cost prescription drugs.

 

“PBMs are responsible for administering prescription drug benefits through negotiations and contracts with drug manufacturers, health insurers, health care providers, and pharmacies.

 

“As leading economist Fiona Scott-Morton testified at a hearing on competition in the healthcare marketplace held by the Subcommittee on Antitrust, Commercial, and Administrative Law earlier this year, PBMs play a ‘dual role’ in the drug supply chain, facilitating price competition among branded and generic drug companies, while negotiating for lower prices in competitive markets. This role, she explained, is ‘critical because it is one of the few agents in our commercial pharmaceutical marketplace that creates price competition.’

 

“However, the PBM marketplace is highly concentrated—in fact, only 3 companies control the vast majority of the market—and the biggest PBMs also own the nation’s largest retail pharmacy chains.

 

“As a result of this concentration of market power and inherent conflict of interest, these firms have the incentive and the ability to leverage their dominance in the PBM marketplace to steer business to their own pharmacies and away from competitors, or to raise their rivals’ costs.

 

“There is also growing concern that some PBMs engage in anti-competitive contracting practices that lead to higher drug prices. This concern is exacerbated by the lack of transparency in the PBM marketplace.  It is difficult for the public to know whether cost savings achieved by PBM negotiations are ultimately passed onto consumers when the drug pricing process is shrouded in secrecy.

 

“The study required by this legislation will provide helpful guidance to Congress as it considers ways to lower drug prices, and I commend Ranking Member Collins for his leadership, and for his commitment to promoting greater competition in the drug supply chain.  I look forward to working with him on this issue, and I urge my colleagues to support this legislation.”

 

116th Congress