Lawmakers expressed bipartisan support for controlling anticompetitive healthcare consolidation and high medical and drug costs during a House Ways and Means Health Subcommittee hearing Wednesday.
Still, they were split on policies Congress could implement after government reforms on drug prices were walked back.
“The problem we have is that even what I view as extremely modest and narrow reforms on Medicare price negotiation that were adopted last year ... even those are under attack,” said Rep. Lloyd Doggett, D-Texas. “The ability of this Congress to break free of the stranglehold of Big Pharma is just not there.”
Conversation about pharmacy benefit management consolidation dominated the hearing, with lawmakers pointing to the middlemen as drivers of rising healthcare costs.
Three PBMs — CVS Health, Cigna and UnitedHealthcare — represent 80% of the total market, and regulators have accused PBMs of leveraging their market power to drive up drug prices, with PBMs falling under recent scrutiny from federal and state governments.
“The PBMs were started out by a great idea, but they’ve absolutely extorted the American public in doing so with their actions,” said Rep. Greg Murphy, R-Md.
While lawmakers acknowledged that drug manufacturers also contribute to high prescription drug costs, they emphasized that recent measures targeted at combating rising drug prices, like portions of the Inflation Reduction Act, were pared back by lawmakers. That includes measures to prevent drug companies from raising prices faster than inflation in the commercial market and policies capping out-of-pocket insulin costs at $35 per month for patients with private insurance.
Nonetheless, lawmakers stressed that price transparency is critical to driving down rising prescription drug prices. Several witnesses and members of Congress said that drug manufacturers and PBMs obfuscate insight into prices, preventing potential Congressional reform.
“There’s no transparency,” said Joe Moose, an independent pharmacy owner. “When [PBMs] have their price, it’s a made-up price.”
Some representatives emphasized that price transparency was mandated in other sectors, like the automotive industry. Rep. Mike Kelly, R-Penn., displayed an enlarged version of a sample Monroney label window for a Chevrolet car and cited how car dealerships are federally required to show manufacturers’ suggested retail price, to argue the federal government could mandate transparency into drug prices.
However, Kelly acknowledged that he ultimately did not know how to regulate drug prices, calling it an “incredibly complicated issue.”
Lawmakers also pinpointed hospital and medical practice consolidation, driven both by large hospital systems and private equity firms, as a factor in high healthcare costs and poor rural healthcare access.
“I can’t think of any hospital merger where prices have not significantly increased afterwards,” said Barak Richman, a hearing witness and professor at Duke University. “Whatever the intentions are, when hospitals merge, prices go up.”
Witnesses suggested that the CMS could have an expanded role in regulating healthcare competition with the Federal Trade Commission as well, both for providing data on potential hospital mergers and controlling the “spigot for a lot of dollars” that flows from the CMS to hospitals.
“Simply from a purely analytical perspective, the CMS could offer a lot of insight and policy guidance,” Richman said.
Experts also criticized the role of Certificates of Public Advantages and their role in increasing hospital consolidation. COPAs shield hospital mergers from antitrust scrutiny in exchange for prolonged state oversight, but the FTC has warned against using the agreements, saying that COPAs result in higher prices, lower quality of care and lower wage growth for employees.
“We cannot make any progress on competition policy if state legislatures block antitrust measures from square one,” Richman said, adding that Congress could implement reforms and prevent state legislatures from protecting “their favorite” hospital mergers.
