Hearings to examine competition issues in the prescription drug supply chain, focusing on pharmacy benefit manager power play

Health Care Costs and Drug PricingSenate Judiciary · May 13, 2025 · 119th Congress
The Senate Judiciary Committee held this hearing to examine competition issues in the prescription drug supply chain, focusing on the market power of pharmacy benefit managers (PBMs). Begins at ▶ 0:04:38
Transcript
Highlights

Title

Senate Judiciary examines pharmacy benefit manager power in drug pricing

Purpose

The Senate Judiciary Committee held this hearing to examine competition issues in the prescription drug supply chain, focusing on the market power of pharmacy benefit managers (PBMs). Chairman Grassley and Ranking Member Durbin, joined by a bipartisan group of senators, questioned witnesses from a PBM, a physician, a community pharmacist, a PBM trade association, and an academic researcher about vertical integration, rebates, spread pricing, and independent pharmacy closures. Begins at▶ 0:04:38

Who spoke

• Chair Chuck Grassley (R-IA)▶ 0:04:38: Opened by saying the three largest PBMs control roughly 80% of the market and out-of-pocket drug costs hit $98 billion in 2024, a 25% increase in five years▶ 0:05:33; discussed his PBM Transparency Act with Sen. Cantwell and the Prescription Drug Pricing for the People Act▶ 0:08:55; later questioned witnesses on rural pharmacy closures and transparency▶ 0:49:41▶ 0:52:41.

• Sen. Dick Durbin (D-IL), Ranking Member▶ 0:10:59: Said Americans pay the highest drug prices in the world, roughly four times more than peer countries▶ 0:11:27; blamed Elon Musk's opposition for killing bipartisan PBM reform in the December continuing resolution▶ 0:16:30; pressed Mr. Scott on why PBMs redirected Dr. Kircher's patient to an owned pharmacy▶ 0:58:03.

• Dr. Sharon Faust, Chief Pharmacy Officer, Navitus Health Solutions▶ 0:22:17: Described Navitus as a "pass-through" PBM that passes through all rebates and discloses administrative fees▶ 0:23:41; cited a biosimilar deal offering a 97% point-of-sale discount, $29,000 off list price per pill▶ 0:24:38; urged transparency-focused rather than ownership-prohibiting legislation▶ 0:26:04.

• Dr. Kircher, medical oncologist, Northwestern Medicine▶ 0:26:47: Recounted a 46-year-old rectal cancer patient whose chemotherapy was redirected to a PBM-owned specialty pharmacy and delayed two weeks while his symptoms worsened▶ 0:28:33; said this redirection happens with about 60% of prescriptions▶ 0:28:33; described a PBM substituting a biosimilar she prescribed with a costlier brand-name drug▶ 0:31:17.

• Dr. Randy McDonough, President, American Pharmacists Association / Iowa pharmacy owner▶ 0:32:54: Described a patient whose $728.35 medication was reimbursed at only $10.33▶ 0:34:19; said his six-pharmacy corporation's net income was -$150,000 last year and one converted pharmacy lost -$80,000 in Q1▶ 0:36:08▶ 0:37:11; said 25% of prescription claims at his closed pharmacy paid below zero▶ 1:58:44.

• Mr. JC Scott, President and CEO, Pharmaceutical Care Management Association (PCMA)▶ 0:39:07: Said PBMs deliver $148 billion in annual savings and operate in a market of more than 70 PBMs▶ 0:39:37; argued restricting PBM-pharmacy affiliation would raise costs, not lower them▶ 0:40:58; under pressure from Sens. Hawley and Welch, acknowledged reimbursement terms are set in PBM-negotiated contracts and declined to support banning PBM ownership of pharmacies▶ 1:40:03.

• Dr. Neeraj Sood, Professor, USC Schaeffer Center▶ 0:44:13: Said about $40 of every $100 in drug spending goes to the supply chain, and PBMs/pharmacies earn excess returns compared to the S&P 500▶ 0:45:07; found vertically integrated PBMs raise Medicare Part D premiums for beneficiaries▶ 0:47:40; recommended fiduciary duty, price transparency, rebate reform, antitrust scrutiny, and full data access for PBM clients▶ 0:48:02.

• Sen. Mike Lee (R-UT)▶ 1:01:13: Asked how smaller PBMs compete against the vertically integrated "big three" controlling about 80% of the market▶ 1:01:48.

• Sen. Sheldon Whitehouse (D-RI)▶ 1:05:29: Argued a "PBM done right" is the main structural counterforce to pharma's pricing power and warned against letting Big Pharma shift blame onto PBMs▶ 1:06:36; asked Scott to confirm drug companies set list prices▶ 1:09:52.

• Sen. Thom Tillis (R-NC)▶ 1:11:24: Criticized Congress for "talking past each other" without addressing the whole value chain, citing a 60% reduction in small-molecule research after ACA reforms▶ 1:11:55; said he can't get transparency auditing TRICARE's PBM▶ 1:12:49; proposed convening a bipartisan workgroup▶ 1:16:02.

• Sen. Chris Coons (D-DE)▶ 1:17:17: Said Delaware overpaid $24 million from 2018-2020 due to PBM practices and praised the reconciliation bill's spread-pricing ban▶ 1:17:42; asked about barriers to accessing life-saving medications▶ 1:18:37.

• Sen. John Kennedy (R-LA)▶ 1:23:10: Confirmed with Dr. Sood that vertical integration raises Medicare Part D premiums▶ 1:23:54; pushed for outlawing vertical integration in Part D and challenged Sood's definition of fiduciary duty▶ 1:26:24.

• Sen. Mazie Hirono (D-HI)▶ 1:29:05: Asked whether structural divestiture of PBM-owned pharmacies should be considered▶ 1:29:31; questioned witnesses on eliminating spread pricing▶ 1:31:59.

• Sen. Josh Hawley (R-MO)▶ 1:34:54: Cited a chart showing Americans pay 422% more than other countries for brand-name drugs and an FTC finding of $7.3 billion in profits for the top three PBMs from 2017-2022▶ 1:37:13; said Missouri lost 73 independent pharmacies last year, leaving two counties with none▶ 1:38:30; pressed Scott to support banning PBM ownership of pharmacies▶ 1:40:03.

• Sen. Peter Welch (D-VT)▶ 1:40:53: Noted Vermont has only 126 independent pharmacies, many struggling with DIR fee clawbacks▶ 1:41:16; pressed Scott on how pharmacies can survive being reimbursed below agreed prices▶ 1:42:27.

• Sen. Marsha Blackburn (R-TN)▶ 1:46:30: Said Tennessee has lost 120 independent pharmacies since 2010▶ 1:46:30; cited a state report finding one PBM profited over $30 million through spread pricing on 550+ drugs and failed to timely reimburse 265 pharmacy claims▶ 1:48:59.

• Sen. Richard Blumenthal (D-CT)▶ 1:52:46: Cited a Kaiser Family Foundation survey finding only one in five of 2,142 surveyed employers actually received rebates▶ 1:53:16; pressed Scott on reconciling PBM rebate-pass-through claims with that data▶ 1:54:01.

• Sen. Katie Britt (R-AL)▶ 1:57:02: Said Alabama lost over 225 independent pharmacies between 2015-2018, about one per month▶ 1:57:32; asked McDonough about the impact of PBM clawbacks on rural health access▶ 1:58:02.

• Sen. Cory Booker (D-NJ)▶ 2:02:54: Said Congress knows how to solve the PBM problem and inaction is "complicity," calling the situation "corporate violence"▶ 2:03:58; cited FTC findings that the big three PBMs marked up life-saving drugs by thousands of percent and made over $7.3 billion in six years▶ 2:05:31; cited 326 pharmacy closures since Congress dropped bipartisan PBM reform in December 2024▶ 2:06:40.

• Sen. Adam Schiff (D-CA)▶ 2:08:40: Described his insurer switching him off a working medication, likely for rebate reasons, with an appeal he was told he'd lose▶ 2:09:00; cited a 56% increase in California health plan prescription drug spending from 2017-2023 and asked how much stems from industry consolidation▶ 2:10:05; adjourned the hearing▶ 2:10:53.

Key moments

• Dr. Kircher testified a PBM redirected her cancer patient's chemotherapy prescription to a pharmacy it owned, causing a two-week delay while his bowel symptoms worsened, and said this redirection happens in about 60% of prescriptions her team writes▶ 0:28:33.

• Dr. McDonough said his pharmacy was reimbursed $10.33 for a medication that cost $728.35 to dispense, and that his six-pharmacy corporation posted a net loss of over $150,000 last year▶ 0:34:19▶ 0:36:08.

• Sen. Hawley confronted Mr. Scott with an FTC finding that the top three PBMs generated $7.3 billion in profits from 2017-2022 while Americans pay 422% more than other countries for brand-name drugs, and Missouri lost 73 independent pharmacies with two counties left with none▶ 1:37:13▶ 1:38:30.

• Sen. Blackburn cited a Tennessee state investigation finding one PBM profited more than $30 million through spread pricing across 550+ drugs and failed to timely reimburse 265 pharmacy claims affecting 40 pharmacies▶ 1:49:30.

• Sen. Blumenthal cited a Kaiser Family Foundation survey of 2,142 employers finding only one in five actually received PBM rebates, contradicting PBM claims of 95-98% pass-through; Scott attributed the discrepancy to a recent shift toward pass-through models▶ 1:53:16▶ 1:55:15.

• Dr. Sood testified vertically integrated PBMs raise Medicare Part D premiums for beneficiaries, and that PBMs and pharmacies consolidated in one entity earn excess returns well above the S&P 500 average▶ 0:46:04▶ 2:10:26.

• Sen. Kennedy sharply challenged Mr. Scott's opposition to outlawing vertical integration in Part D and disputed Dr. Sood's definition of fiduciary duty as legally incorrect▶ 1:24:26▶ 1:26:24.

• Sen. Booker called PBM practices "corporate violence" and a "moral obscenity," citing 326 pharmacy closures since Congress abandoned bipartisan PBM reform in the December 2024 spending bill▶ 2:07:05▶ 2:07:52.

• Sen. Whitehouse argued PBMs remain a necessary structural counterweight to pharmaceutical companies' pricing power, warning that Big Pharma's ad campaigns aim to shift political blame onto PBMs▶ 1:06:36▶ 1:08:31.

• Dr. Sood recommended requiring PBM cost-sharing be based on post-rebate rather than list prices, illustrating with a hypothetical $50,000 drug with a $40,000 rebate where patients currently pay cost-sharing on the full list price▶ 1:28:16.

Metadata

CommitteeSenate Judiciary
Chamber / CongressSenate · 119th Congress
DateMay 13, 2025
TypeMeeting
Witnesses
(none listed in event metadata)
Videosenate-isvp
Transcript372 caption blocks · 16,055 words · 2:11:31 runtime
EventCongress.gov 336946