Senior Care Pharmacy Coalition (SCPC) Commends Oversight & Government Reform Committee Leaders for Examining Drug Pricing Practices

DATE: February 4, 2016

Lawmakers Raise Significant Concerns about Abusive PBM Pricing Practices 

Washington, DC – The Senior Care Pharmacy Coalition (SCPC) today commended House Oversight and Government Reform Committee Chairman Jason Chaffetz (R-UT) and Ranking Member Elijah Cummings (D-MD) for holding today’s hearing, “Developments in the Prescription Drug Market,” to examine exorbitant drug price increases and growing questions about abusive pharmacy benefit manager (PBM) pricing practices.

“Chairman Jason Chaffetz (R-UT) and Ranking Member Elijah Cummings (D-MD) are diligent, serious lawmakers committed to ensuring that real competition in the prescription drug marketplace can continue to benefit the consumers most in need of the medications that enhance and save lives,” said Alan Rosenbloom, SCPC President & CEO.

The SCPC commended U.S. Rep. Buddy Carter (R-GA) for calling attention to three key concerns regarding Pharmacy Benefit Manager pricing practices:

First, the PBM marketplace is excessively concentrated.  Three PBMs account for 78 percent of the market.  

Second, PBMs unfairly dominate both the prices paid to manufacturers to acquire drugs and, particularly through Maximum Allowable Cost (MAC) pricing, the payments made to independent pharmacies.  This “spread pricing” is exacerbated by PBM delays in raising payments to pharmacies when drug prices spike and the overall effect is that, in the last few years, PBM profits have doubled.  

Third, there exists a significant conflict of interest when pharmacies are owned by PBMs or vice versa.  Mr. Carter provided several examples from personal experience demonstrating such conflicts and also noted that Turing’s distribution relationship for Daraprim, the drug for which the company raised prices 5,000 percent, had been exclusively through a pharmacy chain that also owns a PBM.

“We thank Rep. Carter (GA-1) for raising important questions about questionable PBM pricing practices, and their dubious claims that MAC pricing reflects actual market conditions,” added Rosenbloom.  “The more Congress investigates and places a spotlight on PBMs, the more it will become clear they are merely posing as benevolent actors in the pharmaceutical marketplace – and we will continue to showcase data and research in 2016 validating this reality.”

Ranking Member Cummings also expressed his concern about PBM practices, and stated his strong desire to work with Mr. Carter to more fully investigate and publicize these practices.  “We also are grateful to the Ranking Member for his recognition of these suspect practices and applaud his willingness to shed light on these issues, which are of particular importance to independent long term care (LTC) pharmacies, the patients they serve and the quality of those services,” concluded Rosenbloom.

In November, SCPC released a MAC Pricing Analysis, conducted by Avalere Health, which reveals increasing reimbursement inequities for LTC pharmacies driven by MAC pricing methodologies, which are used to pay for a substantial majority of drugs dispensed by independent LTC pharmacies to patients in LTC facilities.