House Republican proposes making PBMs fiduciaries
Rep. Nick Langworthy asked about duty of care at a committee hearing featuring three top PBM executives.
U.S. House Rep. Nick Langworthy suggested Tuesday at a House Oversight Committee hearing that pharmacy benefit managers should be health plan fiduciaries.
“Employers, unions and even state governments that sponsor self-insured health plans for their workers are considered fiduciaries,” Langworthy told three top PBM executives who appeared as witnesses. “Under federal law, they must make decisions that keep health plan costs low and that are in the best interests of patients.”
Today, the New York state Republican said, PBMs “charge unreasonable and excessive fees, steer plan participants to higher-costing prescription drugs and pocket rebates and discounts that should belong to the plan.”
PBMs can do those things partly because they have no fiduciary duty to the plans, he said.
The PBM executives — Dr. Patrick Conway, the chief executive officer of UnitedHealth’s OptumRx unit; David Joyner, the president of CVS Health’s CVS Caremark unit; and Adam Kautzner, president of Cigna’s Evernorth Care Management & Express Scripts unit — presented the PBMs’ argument that having a fiduciary duty would be a poor fit for PBMs’ role.
“The role of the PBM is to serve the customer, or the clients, that are managing the pharmacy benefits, so we do not have control over the benefit design that actually passes through to the member,” Joyner said.
The House Oversight Committee streamed the hearing live and has posted a recording on the web.
A PBM executive’s perspective: ”We certainly support complying with the contracts that we have with our customers,” Joyner said. “Our contract is to make sure that we’re delivering the lowest net cost and managing the overall pharmacy cost for our customers.
Joyner testified that PBMs are critical to helping employer plans and other payers cope with issues such as the high cost of the new GLP-1 agonist obesity-fighting drugs.
Three of the GLP-1 agonists now being used to treat obesity are Wegovy, Sazenda and Zepbound.
“Between skyrocketing demand and price hikes, the costs are simply overwhelming,” Joyner said. “If every adult with obesity received a GLP-1 prescription, the cost would surpass $1.2 trillion annually. That’s more than America spends annually on all drugs.”
PBMs v. NADAC: The mood at the hearing was not sympathetic to the PBMs’ perspective.
Rep. Jake Auchincloss, D-Mass., was one of several House members who do not normally serve on the House Oversight Committee but got special permission to come to the hearing to grill the PBM executives.
Auchincloss brought a list of the prices that a Massachusetts employer pays for certain drugs through its PBM arrangement and the government’s National Average Drug Acquisition Cost for the same drugs.
Auchincloss reported, for example, that teriflunomide, a multiple sclerosis drug, has a NADAC price of just $16 for a 30-day supply and a price of $6,229 when purchased through the employer’s PBM.
Market share: Rep Pete Sessions, R-Texas, noted that a few large PBMs control about 80% of the U.S. prescription market.
“I’m a strong proponent of the free enterprise system,” Sessions said. “Part of the free enterprise system, or at least capitalism, is opening markets up.”
Many House members see PBMs as limiting capitalism, Sessions said.
What it means: House Republican leaders had trouble summoning enough bipartisan or intra-party cooperation to move a financial services appropriations package through the House Rules Committee Monday.
But Republicans and Democrats were quick to unite in frustration about reports that PBMs seem to be limiting competition and driving up drug prices rather than using their negotiating power to lower overall costs.
The PBM fiduciary rule movement: California, Louisiana, Maine and New York state already impose a state-level fiduciary duty of care on PBMs, according to a recent U.S. Government Accountability Office report.
The list of companies that offer, or have offered, fiduciary PBM services includes Prescryptive, TransparentRx and US-Rx Care.
Related: To be, or not to be… a fiduciary: That is the question for PBMs
The Pharmaceutical Care Management Association maintains in a response to PBM fiduciary duty proposals that imposing a fiduciary duty on PBMs is unworkable.
“State-imposed fiduciary duties make no sense in the context of a detailed, negotiated, arm’s length contract between an employer and a PBM,” the association says. “Imposing such duties would override every provision of that contract and allow the PBM client (or in some cases a consumer as well) to challenge contract terms or specific PBM actions after the fact as ‘self-dealing’ or ‘imprudent.’”