During a Senate Judiciary Committee hearing on Tuesday, Sen. Josh Hawley (R-MO) slammed a claim made by Juan Carlos Scott, the President & Chief Executive Officer of the Pharmaceutical Care Management Association.
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00:00Mr. Scott, let me start with you. You represent the largest association of PBM companies, I think. Is that right?
00:08Yes, sir. I believe the only.
00:09The largest and only. Perfect. Now, just help me understand what it is your business is supposed to be doing.
00:16You're supposed to be making drugs cheaper for patients. Is that basically right?
00:21We're supposed to help employers and plan sponsors administer benefits at a more affordable point for the consumers.
00:27Okay. More affordable for consumers. That's patients. So you're supposed to be making drug prices. Would you say that you're succeeding?
00:33We've had success in managing the net cost of drugs across most categories of medications.
00:39And yes, in large part, but we have the challenge of ever escalating drug company list prices to work against.
00:46Okay. Let me translate that for you. I think the answer you're looking for is no. You're not succeeding at all.
00:51Look, let's look at some data. This data shows the percentage that Americans pay more than other countries for brand name drugs.
01:00In Canada, we pay 324% more than Canadians pay. 445% more than France and so on.
01:06On average, all together, we pay 422% more than all of these other countries.
01:16Now, either you're the worst negotiators in the history of the world or something's wrong with your business model. Which is it?
01:23Those, if I may, Senator, those are comparisons of list prices.
01:27Drug companies alone, as we talked about earlier, set the list price.
01:31The PBM is negotiating down the net cost.
01:34Look, this is, consumers are, you're not, you're not actually, you're not telling me that consumers aren't paying more in the United States than they are overseas, are you?
01:42I think the data would tell us that they are exposed to higher price points.
01:46And then it comes to an issue of benefit design.
01:49The plan decides what your copays are and what your exposure is.
01:52Yeah, and the benefit, here's the benefit design.
01:54The design of the plan benefits the insurance companies and you.
01:57It does not benefit the patients.
01:59Patients are getting screwed, if I may.
02:02We are paying two, three, four times more for drugs.
02:06People in my state can't afford insulin.
02:08They can't afford the most basic drugs.
02:10That's when they have plans.
02:11Plans that are managed by you.
02:12And you guys are getting rich off of it.
02:14I mean, absolutely filthy rich.
02:17The FTC's report, so this is the government report now, found that the top three PBM companies generated $7.3 billion in profits between 2017 and 2022.
02:31$7.3 billion.
02:35That's a lot of money.
02:36Why is it that nobody can afford their drugs in this country, but you're making $7.3 billion?
02:42That's more than the revenue of some nations.
02:45If I may, two points.
02:47One, you're not wrong that we need more competition among drug companies.
02:52The patent reforms that you all have advanced in this committee, the more we can have competition, we can leverage that to address that cost challenge that we have.
02:58I'm glad you say we need competition because don't you think the competition we really need is to break up this alliance between insurance companies and PBMs?
03:05No, sir.
03:05The biggest three PBMs are owned by the biggest insurance companies.
03:09You're like one huge giant pharma industry, a giant pharma series of monopolists, right?
03:18Why is it a good idea for the biggest PBMs to be owned by the biggest insurers, and now you're buying up pharmacies as well?
03:24Why should we allow that?
03:25Why should insurance companies, PBMs, also own pharmacies?
03:30How is that good for patients?
03:33It's good for patients and for plans because it's creating optionality in the market.
03:36It's creating optionality.
03:37In the state of Missouri just last year, we lost 73 independent pharmacies across my state in 19 different counties.
03:46Do you know that two entire counties in the state of Missouri now have, wait for it, zero pharmacies?
03:53Zero.
03:53Now, you are making $7.3 billion, you and the companies that you represent, and yet two whole
04:01counties in the state of Missouri have no pharmacies, 73 closed last year.
04:07Why shouldn't we be breaking you guys up?
04:10I mean, this looks like classic monopolist behavior.
04:13The patients are getting screwed.
04:14Missourians are getting screwed.
04:16You're getting rich.
04:16Respectfully, Senator, you keep citing a gross revenue number of the drug, every dollar spent on particular drugs.
04:22You're not making, you don't have profits?
04:25Profits are in the low single digits on every firm.
04:26Your profits are not better than they've ever been?
04:29I don't know on the trend over the years.
04:32Yes, you do.
04:32You know exactly.
04:33It is all laid out in the FTC report.
04:35You absolutely know the answer.
04:36Your profits have increased and increased and increased, and now you are buying up pharmacies, and you're buying up pharmacies, and you're putting independent pharmacies out of business, and you're doing it deliberately, because you are giving special rebates and lower costs to the pharmacies that you own, and you are directing patients to the pharmacies that you own, such that if they don't go to a pharmacy that you own, they have to pay higher costs.
04:59They have to pay out-of-network costs, right?
05:01You're nodding your head, Dr. McGonaghan.
05:03You've lived this, right?
05:04I have lived this.
05:05I live it every day.
05:06Yes.
05:07That's exactly what's happening.
05:08So, Mr. Scott, why don't we break you guys up?
05:12Can you agree?
05:13I mean, if you believe in competition, you just said a second ago, we need more competition, by golly.
05:17Well, let's do it.
05:18And we see it.
05:18Let's break up the PBMs.
05:19Let's pass a law that says PBMs cannot own pharmacies.
05:22You for that?
05:22No, sir.
05:23And we've seen that competition grow in the last five years by 18% in the PBM market by 9% in the last two years.
05:29Wait a minute.
05:29You've seen the number of pharmacies grow in this country?
05:33The number of PBMs, meaning it's a competitive marketplace.
05:36It's not a competitive marketplace.
05:37The biggest three PBMs own 80% of the business.
05:4280%.
05:43And you're, in turn, owned by the biggest insurance companies.
05:46The problem is there is no competition.
05:48It's a racket.
05:49It's a total racket.
05:51And the people who lose are the patients who cannot afford their prescription drugs.
05:54It's time for this Congress to do something about it.
05:57Now, Senator Welch.
05:58Thank you, Eric.
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