Lowering Health Care Costs for All Americans: An Examination of the Prescription Drug Supply Chain

Health Care Costs and Drug PricingHouse Energy and Commerce Subcommittee on Health · February 11, 2026 · 119th Congress
The Energy and Commerce Health Subcommittee convened this hearing to examine the prescription drug supply chain — from manufacturers and PBMs to wholesalers, GPOs, pharmacies, and employers — as part of an "affordability series" following recent PBM reform legislation and a prior hearing with insurance executives. Begins at ▶ 0:14:54
Transcript
Highlights

Title

Examining costs, transparency, and consolidation in the drug supply chain

Purpose

The Energy and Commerce Health Subcommittee convened this hearing to examine the prescription drug supply chain — from manufacturers and PBMs to wholesalers, GPOs, pharmacies, and employers — as part of an "affordability series" following recent PBM reform legislation and a prior hearing with insurance executives. Nine witnesses representing generics, PhRMA, biotech, PBMs, wholesalers, group purchasing organizations, employers, community pharmacists, and academia testified about drug pricing, consolidation, and formulary practices. Members also sparred over expiring ACA premium tax credits, secret "most favored nation" drug-pricing deals with the Trump administration, and turmoil at the FDA and NIH. Begins at▶ 0:14:54

Who spoke

• Chairman Morgan Griffith (R-VA)▶ 0:14:54: Framed the hearing around the "black box" of the drug supply chain and touted the newly passed PBM reform law▶ 0:17:33; later pressed PBM witness David Marin on whether the FTC should break up the top three PBMs controlling 80% of the market▶ 1:16:33 and questioned Marin about list-price gaming with manufacturers▶ 1:17:31.

• Rep. Diana DeGette (D-CO), Ranking Member▶ 0:18:52: Credited the Inflation Reduction Act with a 56% Medicare discount on Eliquis and a 71% discount coming for GLP-1 drugs▶ 0:20:06; criticized secret administration drug-pricing deals▶ 0:20:59 and H.R. 1's $8.8 billion carve-out from Medicare negotiation▶ 0:21:58; later grilled Lori Reilly on the confidentiality of MFN deals▶ 1:21:10.

• Chairman Brett Guthrie (R-KY), Full Committee Chair▶ 0:24:27: Highlighted vertical integration since the 2017 supply-chain hearing and the launch of TrumpRx▶ 0:26:16; pressed James Gelfand on why employers can't negotiate better PBM deals despite their size▶ 1:26:20.

• Rep. Frank Pallone (D-NJ), Full Committee Ranking Member▶ 0:27:16: Attacked Republicans for a "$9 billion" Keytruda carve-out from Medicare negotiation▶ 0:28:07 and criticized RFK Jr.'s handling of vaccines amid a measles outbreak▶ 0:29:31; later pressed Reilly and Rachel Sachs on whether secret MFN deals have produced any verified price drops▶ 1:34:53.

• Lori Reilly, COO, PhRMA▶ 0:33:38: Said half of every drug dollar goes to middlemen, with PBMs taking $170 billion a year▶ 0:36:10, and that 1,400+ medicines are excluded from top PBM formularies▶ 0:36:56; testified she has no knowledge of MFN deal terms because PhRMA is a trade association▶ 1:21:40.

• John Crowley, President/CEO, Biotechnology Innovation Organization▶ 0:39:11: Shared his family's experience developing a Pompe disease treatment▶ 0:39:40; said 50% of every drug dollar goes to middlemen and criticized insurer "delay and deny" practices▶ 0:41:56; warned MFN policies risk "importing socialized medicine"▶ 0:41:33.

• John Murphy, President/CEO, Association for Accessible Medicines▶ 0:43:41: Said generics/biosimilars generated $467 billion in savings in 2024▶ 0:43:41 but now represent only 12% of drug spending versus 27% a decade ago▶ 0:44:30; noted 57% of covered Part D generics aren't on generic formulary tiers▶ 1:50:27.

• David Marin, President/CEO, Pharmaceutical Care Management Association▶ 0:48:05: Acknowledged PCMA had "failed" to communicate PBMs' value and said the industry saved $300+ billion for 289 million people last year▶ 0:51:01; repeatedly declined to endorse breaking up the top three PBMs▶ 1:16:56 or explain a cited 77,000% markup on tadalafil▶ 1:59:15.

• Chip Davis, President/CEO, Healthcare Distribution Alliance▶ 0:52:44: Said distributors handle 96% of medicines moving through the supply chain▶ 0:53:35 and save the system roughly $70 billion annually▶ 0:55:47; defended wholesaler diversification into provider networks as demand-driven, not ownership▶ 1:29:27.

• Angie Boliver, President/CEO, Healthcare Supply Chain Association▶ 0:57:21: Said traditional healthcare GPOs deliver 12–18% annual provider savings▶ 0:58:17 and distinguished them from PBM-owned "rebate aggregator" GPOs, which the FTC has said don't perform traditional GPO functions▶ 1:00:56; confirmed her members' GPOs are all U.S.-based▶ 1:52:18.

• James Gelfand, President/CEO, ERISA Industry Committee▶ 1:01:24: Said PBM margins run 31% versus 6% for wholesalers and 3% for pharmacies▶ 1:03:39; described a major employer offered a disinterested-formulary arrangement being told "no" by all three big PBMs▶ 1:28:33; called for PBMs to be legal fiduciaries▶ 1:05:21.

• B. Douglas Hoey, CEO, National Community Pharmacists Association▶ 1:05:47: Said pharmacy deserts now affect one in eight neighborhoods and 5,200 pharmacies have closed in four years▶ 1:07:31; explained spread pricing inflates costs while pharmacies are reimbursed below acquisition cost▶ 2:22:10; called for breaking up vertically integrated insurer-PBM-pharmacy conglomerates▶ 1:10:22.

• Rachel Sachs, Professor of Law, Washington University in St. Louis▶ 1:10:41: Said the top three PBMs process nearly 80% of prescriptions and three wholesalers control 98% of the market▶ 1:12:59; testified NIH grants fell about 24% and FDA's drug center lost roughly 19% of staff, with 90% of senior leadership turnover▶ 1:24:00▶ 1:24:58; said TrumpRx offers no evidence of meaningful savings, citing branded prices hundreds of dollars above generic alternatives▶ 1:35:12.

• Rep. John Joyce (R-PA)▶ 2:08:09: Cited the Humira biosimilar launch as evidence PBMs prefer higher-rebate, higher-list-price drugs over lower-cost alternatives▶ 2:08:39; got Gelfand to confirm wholesaler vertical integration into oncology practices raises patient out-of-pocket costs▶ 2:12:55.

• Rep. Lori Trahan (D-MA)▶ 2:13:54: Focused on U.S. competitiveness with China in clinical trials and biomedical innovation▶ 2:15:30; asked Crowley about the importance of platform technologies like mRNA for pandemic preparedness▶ 2:17:58.

• Rep. Troy Balderson (R-OH)▶ 2:19:10: Asked Crowley how FDA could modernize clinical trials, including centralized IRBs▶ 2:19:36; asked Hoey about rural pharmacies facing "take it or leave it" PBM contracts▶ 2:21:18.

• Rep. Marc Veasey (D-TX)▶ 2:24:36: Argued TrumpRx duplicates existing cash-discount programs like GoodRx and omits cheaper generics, citing a $336 brand drug versus a $10 generic through Cost Plus Drugs▶ 2:27:31; got Sachs and Murphy to agree brand purchases via TrumpRx could cost consumers more▶ 2:28:00.

• Rep. Ashley Hinson / Miller-Meeks (R-IA)▶ 2:30:05: Pressed Gelfand on whether her transparency/premium bill would lower employer costs▶ 2:31:04 and questioned Marin and Boliver about offshore PBM-owned GPOs▶ 2:31:51.

• Rep. Kim Schrier (D-WA)▶ 2:02:52: Called EpiPen prices "outrageous" and demanded manufacturers lower them▶ 2:03:17; raised concerns about FDA's refusal to review Moderna's mRNA flu vaccine and threats to the Vaccine Injury Compensation Program▶ 2:03:41▶ 2:05:48.

• Rep. Buddy Carter (R-GA)▶ 1:57:17: A pharmacist by background, cited FTC findings that PBMs marked up tadalafil by roughly 77,000% over acquisition cost▶ 1:58:12; pressed Marin on whether PCMA would adopt the FTC's Express Scripts settlement terms industry-wide▶ 2:00:09.

• Rep. Doris Matsui (D-CA)▶ 2:04:58: Described a constituent denied buprenorphine coverage by Aetna/CVS Caremark despite 11 years of sobriety, forced to pay $700 out of pocket▶ 4:05:22; pressed Marin on PBM formulary denials for addiction medication▶ 4:06:21.

• Rep. Jennifer McClellan (D-VA)▶ 3:59:41: Cited that women pay nearly 30% more out-of-pocket for prescriptions than men▶ 4:00:00; asked Sachs about strengthening Medicare drug-price negotiation and international reference pricing▶ 4:01:38.

• Rep. Robin Kelly / other members (various): Additional members including Reps. Dingell, Bilirakis, Aragón, Landsman, Cammack, Langworthy, Mullin, Allen, and Auchincloss also questioned witnesses on PBM transparency, biosimilar interchangeability, rural pharmacy closures, and AI in healthcare oversight throughout the afternoon session.

Key moments

• Reilly testified PBMs take one of every four dollars spent on brand medicines — about $170 billion a year — while manufacturers face generic competition within 13 years▶ 0:34:57▶ 0:36:10.

• Marin admitted PCMA had "failed" to explain PBMs' value and said the industry has "allowed other sectors... to misrepresent us"▶ 0:48:49▶ 0:49:07, but repeatedly declined to say the FTC should break up the top three PBMs controlling 80% of the market▶ 1:16:33.

• Carter cited an FTC finding that the big three PBMs marked up tadalafil from a $27 pharmacy acquisition cost to $2,106 reimbursement to affiliated pharmacies — a roughly 77,000% markup — which Marin could not explain▶ 1:58:45▶ 1:59:15.

• DeGette and Pallone repeatedly pressed Reilly on secret "most favored nation" pricing deals between drugmakers and the Trump administration; Reilly confirmed her trade association has no knowledge of the terms▶ 1:21:40, and Sachs testified there's no evidence the deals lower costs, noting TrumpRx branded prices can run hundreds of dollars above generic alternatives available via Cost Plus Drugs or GoodRx▶ 1:35:12.

• Gelfand said an ERISA member employer asked a big-three PBM to let a disinterested third party design its formulary and was told "no," with the PBM confident the other two big PBMs would refuse as well▶ 1:28:33.

• Sachs testified NIH issued about 24% fewer grants than the prior average and the FDA's drug center lost roughly 19% of staff, with about 90% of senior leadership turnover in one year▶ 1:24:00▶ 1:24:58.

• Hoey said PBM spread pricing and specialty-pharmacy steering directs 70% of specialty drug dollars — over $180 billion — through PBM-owned mail-order pharmacies▶ 1:09:52.

• Veasey argued TrumpRx duplicates existing cash-discount tools and omits cheaper generics, showing a $336 TrumpRx price for a drug with a $10 generic equivalent through Cost Plus Drugs▶ 2:27:31▶ 2:28:00.

• Matsui recounted a constituent 11 years in opioid recovery who was denied her prescribed buprenorphine by Aetna/CVS Caremark and forced to pay $700 out of pocket for it▶ 4:05:50▶ 4:06:21.

• Boliver noted the FTC has distinguished traditional U.S.-based healthcare GPOs from PBM-owned "rebate aggregator" GPOs that "do not perform traditional GPO functions," some of which are based overseas▶ 1:00:56▶ 1:01:24.

Metadata

CommitteeHouse Energy and Commerce Subcommittee on Health
Chamber / CongressHouse · 119th Congress
DateFebruary 11, 2026
TypeHearing
Witnesses
John Murphy — President and CEO, Association for Accessible Medicines
Rachel E. Sachs — Professor of Law, Washington University in St. Louis
Lori Reilly, Esq. — Chief Operating Officer, PhRMA
John Crowley — President and CEO, Biotechnology Innovation Organization
David Marin — President and CEO, Pharmaceutical Care Management Association
Angie Boliver — President and CEO, Healthcare Supply Chain Association
Chester “Chip” Davis, Jr. — President and CEO, Healthcare Distribution Alliance
James Gelfand — President and CEO, The ERISA Industry Committee
B. Douglas Hoey — Chief Executive Officer, National Community Pharmacists Association
Videoyoutube
Transcript468 caption blocks · 34,551 words · 4:08:07 runtime
EventCongress.gov 118954