NCL on Upcoming Congressional Hearings with UnitedHealth Group CEO Andrew Witty

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April 30, 2024

Media contact: National Consumers League – Melody Merin, melodym@nclnet.org, 202-207-2831

Washington, DC – Tomorrow, the Senate Finance Committee and House Energy and Commerce Committee will hear from UnitedHealth Group CEO on the insurance company’s cyberattack that put millions of medical records and patient privacy at risk.

The cyberattack is, of course, cause for concern, but there are also several other ways major insurance companies like UnitedHealth Group are hurting consumers. These companies have taken over the prescription drug marketplace – they are integrated with the pharmacy benefit managers (PBMs) who gatekeep our prescriptions, limiting access and increasing out-of-pocket costs.

Here are the top questions American consumers deserve answers to:

  • How will your company work to not only protect patient data going forward, but also protect patient choice and power in their healthcare decision-making?
  • Can you explain the relationships and makeup of UHG, Optum Rx, and Optum Health? How does this vertical integration give consumers a fair choice when it comes to their health when there is a clear incentive to keep patients – and thus profit – in the UHG family?
  • UnitedHealth Group’s PBM Optum Rx claims to benefit consumers by negotiating rebates with drug manufacturers – why, then, aren’t consumers experiencing lower costs at the pharmacy counter?
  • How much does Optum Rx collect each year in rebates from drug manufacturers? How much profit does the UHG corporation rake in from prescription drug purchases?
  • Is UHG aware of the significant health and financial challenges that prior authorization requirements impose on consumers and their families?

The insurance industry is riddled with poor incentives that ultimately hurt consumers. Lawmakers have an opportunity this week to shine a light on these problems. We need bipartisan reforms to give consumers more power when it comes to their prescriptions, and ultimately, their health.

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About the National Consumers League (NCL)

The National Consumers League, founded in 1899, is America’s pioneer consumer organization.  Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad.  For more information, visit nclnet.org.

Not so fast, PBMs: You aren’t fooling consumers

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By Robin Strongin, Senior Director of Health Policy

A recent op-ed, “It’s Time for Facts in the PBM Debate” by the president of one of the nation’s largest pharmacy benefit managers (PBMs), is at odds with the reality of what consumers are facing when we go to the pharmacy.

In his commentary, David Joyner paints a rosy picture of how the largest PBMs lower drug prices. Meanwhile, consumers across the country are being hit with higher out-of-pocket costs and a lack of understanding about what goes into the costs for their medicines. This opaque system results in consumers running into several issues trying to access more affordable drug options.

The PBMs aren’t fooling anyone.

In Joyner’s own company, a whistleblower brought suit over the PBM’s scheme to keep lower-cost generics off its formularies for Medicare beneficiaries, pushing seniors to more expensive drugs (for which the PBM had negotiated higher profits for itself). The whistleblower said she was told by company executives that the financial benefits of this manipulation outweighed the possibility of getting caught.

More recently, community pharmacies in Iowa filed a lawsuit against CVS Health and its Caremark PBM claiming that they violated antitrust laws and illegally collected fees from pharmacies filling Medicare prescriptions. We’ve seen this behavior often force trusted, and long-established local pharmacies out of business.

What’s most concerning is that such questionable PBM behavior can have tragic results beyond pharmacy closures. In Wisconsin earlier this year, a young man with severe asthma died after he was informed at the pharmacy that his inhaler was no longer covered by insurance and he couldn’t afford the hefty out-of-pocket cost.

We can’t let this happen to another person. Consumers deserve more transparency. They deserve accountability in this middlemen PBM system. Most of all, we all deserve better than to be inundated with large PBM falsehoods.

Even as these mega-PBMs assure us that they are patient advocates, they are fighting tooth and nail in Congress and state legislatures to block measures that would take the necessary steps to ensure that consumers – and not the PBMs themselves – actually benefit.

Those are the facts in the big PBM debate.

NCL responds to Senators Crapo, Wyden announcement on needed PBM reforms

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March 14, 2024

Media contact: National Consumers League – Melody Merin, melodym@nclnet.org, 202-207-2831

Washington, DC – The National Consumers League (NCL) today released a statement following Senators Ron Wyden (D-OR) and Mike Crapo (R-ID) recent press conference announcing their push to include bipartisan PBM reforms in the broader funding package.

The following statement is attributable to NCL Chief Executive Officer, Sally Greenberg:

“For far too long now, PBMs have been taking advantage of our drug pricing system, finding ways to increase their profits without delivering value to consumers. Now, after years of investigations, pharmacy closures and high out-of-pocket costs, our leaders are doing something about it. By disconnecting Medicare prescription drug costs from PBM profits, this legislation will address one of the many ways PBMs use the system to their financial advantage. Congress has a huge opportunity to help seniors better afford and access the medications they need. We urge Congress to get this done without delay.”

Learn more about NCL’s work to address the PBM problem here.

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About the National Consumers League (NCL)

The National Consumers League, founded in 1899, is America’s pioneer consumer organization.  Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad.  For more information, visit nclnet.org.

Copycat versions of expensive drugs may look the same, but the impact on consumer pocketbooks is far from identical

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By Sally Greenberg, Chief Executive Officer, National Consumers League

To a scientist, a biosimilar medicine is designed to work like a brand-name medicine, with the molecular structure operating in a highly similar way in both therapies. The biosimilar medicine looks the same to a doctor, too, who can expect similar clinical results.

For many patients, though, the cost of the two medicines hit the pocketbook in hugely different ways. Today, many insurance plans ask patients to pay a percentage of the list price of certain medicines out of pocket – a practice called “coinsurance” – rather than a flat copay.

Even if that coinsurance percentage is the same no matter the drug, patients can pay vastly different amounts if one drug has a higher list price than another.

This has become a quiet crisis for patients using the anti-inflammatory medicine Humira, the best-selling medicine in history. Humira carries a list price of about $7,000 a month, though insurance companies, through savvy negotiation, pay far less.

For patients with coinsurance – the specifics vary by insurer, but it’s usually around 25% of a medicine’s list price, with some plans setting a maximum per-prescription price – that could add up to more than $1,500 a month out of their own pockets to get a medicine they cannot do without. That’s a huge burden, but not a huge surprise to those who have witnessed their health insurance benefits become less and less generous.

Fortunately, there are new options. Biosimilar versions of Humira are now available that have a list price of close to $1,000 a month. For patients with a 25% coinsurance, the medicine costs $250 out of pocket.

That should be a no-brainer for consumers. Who wants to pay six times more?

Unfortunately, due to our ultra-complicated health care system, almost no one uses the cheaper biosimilar. In part, that’s because insurance companies like more expensive medicines because they can make more money from these drugs, and there are few policies in place designed to protect patients from this kind of behavior.

Doctors, too, may miss opportunities to offer patients lower-cost options. After all, when the brand-name product and biosimilar are both technically “covered” by a patient’s insurance, it seems like it shouldn’t matter which product is selected.

The truth is that because insurance benefits are all over the place, it does make a difference for some patients. A huge difference. Thousands of dollars’ worth of difference.

The good news is that there are efforts that can make this easier for consumers and their physicians. Industry, government, and advocates can commit to boosting education so that more Americans can understand their health plan.

Such an educational effort could also include a focus on coinsurance to ensure that no consumer ever gets surprised when they have to pay a percentage of an inflated cost.

But educational efforts only go so far. We cannot rely on solutions based around asking doctors and consumers to assume primary responsibility for navigating a broken system. Fixing this problem for good requires policymakers to act.

First, Congress needs to address the role the pharmacy benefit managers – the middlemen known as “PBMs” that determine how drug benefits are designed – have played in creating the distorted market structure that has led to health plan strategies designed to push costs onto consumers.

Bipartisan legislation has been introduced that would begin to correct this convoluted market and put an end to patients needlessly overpaying to pad the profits of PBMs, but congressional leaders need to prioritize reform. There may be few areas of consensus on Capitol Hill, but this is one of them, and it’s time to turn good ideas into law.

Second, meaningful market incentives need to be established to drive biosimilar uptake. This happened in the generics market decades ago, where clear incentives have driven generic drug penetration to the point where 91% of all prescriptions are for generic drugs.  Unlike biosimilars, patients who take generics see clear cost savings, which is a great motivator.

But no such incentives exist in the U.S. biosimilar market, offering an opportunity for Congress to create similar incentives where both patients and physicians share in the savings available from these lower-cost biosimilars.  Only then will consumers, and the U.S. health care system more broadly, realize the enormous potential of a sustainable biosimilars market.

Our health care system is complicated on purpose. Complexity makes it hard for consumers to see good deals, even when they’re right in front of them. That’s the scenario playing out with biosimilar versions of Humira: even if the drugs may be the same, the impact on patients may not be.

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About the National Consumers League (NCL)

The National Consumers League, founded in 1899, is America’s pioneer consumer organization.  Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad.  For more information, visit nclnet.org.

PBMs claim new programs will save consumers money. Let’s take a closer look.

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By Robin Strongin, Senior Director of Health Policy

Consumers have known for quite some time now that the prescription drug pricing system is essentially a black box. Dealings among drug manufacturers, health insurers and pharmacy benefit managers (PBMs) establish which drugs insurance will cover and make accessible to consumers. What’s more, the prices that consumers pay for those medicines vary wildly – often leading to high out-of-pocket costs for us all.

Two of the three major PBM companies that are in the middle of this drug pricing web recently announced that they are establishing new programs (CVS’s CostVantage and Express Scripts’ ClearNetwork) that set transparent formulas for drugs with a pre-set markup and a flat fee for the PBMs. On paper, this sounds like a great idea.

But consumers would be wise to take these claims with a healthy grain of proverbial salt. We know PBMs continue to find new ways to put themselves over patients (more on that here) and we must demand answers to the issues the PBMs are still skirting. For example:

  • Will these new programs actually make prescription drugs more affordable and reduce out-of-pocket costs at the pharmacy counter? Notably, both Express Scripts and CVS Health have acknowledged that employers and plan sponsors may not save any money from this move. There is no sign either that consumers will be able to get the drugs they need for a fair price.
  • While the companies boast increased transparency, they still have not shared – nor said they will share – how much they are paying to acquire the drugs that will be dispensed to patients. PBM clients have long sought this information, but it appears that data will still be hidden in the black box.
  • In the case of CVS Health, the changes the company announced will only be effective at CVS-owned pharmacies. It will not affect how CVS will reimburse millions of prescriptions at the local and independent pharmacies it doesn’t own. A cynic might say this is just another mechanism by CVS to drive more patients to its own pharmacies.

Most notably, nothing CVS Health and Express Scripts have announced will change one of the pervasive anti-consumer elements of the drug pricing system. In their dealings with drugmakers, they can still cut deals that will determine which medicines get preferential placement. This means PBMs could continue to push consumers toward higher-priced drugs and limit access to more affordable generics and biosimilars.

It’s no coincidence that Congress is getting closer to passing PBM reform legislation that would mandate transparency, force the PBMs to pass their negotiated savings from drugmakers to consumers and remove the incentives for PBMs to push consumers to higher-priced drugs. One might say that these moves by CVS and Express Scripts are cosmetic attempts to ward off legislation by touting their own self-reforms.

But, as with so much that goes on in the drug pricing game, these “reforms” may not be what they seem. We need Congress to step in for consumers to help ensure we’re no longer facing a big disadvantage at the pharmacy counter.

Learn more about the PBM problem at nclnet.org/pbms.

NCL statement on PBMs and new GAO report

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September 18, 2023

Media contact: National Consumers League – Melody Merin, melodym@nclnet.org, 202-207-2831

WASHINGTON, DC – The National Consumers League (NCL) today released a statement following a recently released U.S. Government Accountability Office (“GAO”) report on Medicare Part D rebates.

The following statement is attributable to NCL Chief Executive Officer, Sally Greenberg:

“Investigation after investigation, report after report, and study after study prove that pharmacy benefit managers (“PBMs’) do not provide benefits to consumers. To the contrary, we believe PBMs, who are middlemen, drain billions of dollars that should be going into the pockets of patients and consumers and help them defray their healthcare costs. The evidence mounts that PBMs, which once had a noble purpose, have lost their way and become profit centers unto themselves, adding costs to our drug supply system at the expense of patients. This latest report by GAO underscores that our nation’s seniors – often our most vulnerable patients who rely most on medications – pay the highest price for PBM practices.

“In just one year, GAO found that the PBMs collected almost $50 billion in rebates from prescription drug manufacturers under the Medicare Part D program alone. These savings should go directly to Medicare beneficiaries, but for the nearly 80 of the highest rebated drugs analyzed, GAO found that seniors paid more than $20 billion, while their plan sponsors — often vertically integrated with PBMs — paid only $5.3 billion. PBMs are able to enrich themselves because they control access to prescription drugs, block competition, conduct business in the shadows, and pocket discounts meant for patients. PBMs simply driving up out-of-pocket costs for Medicare beneficiaries to the tune of millions of dollars.

“Congress has an opportunity to enact meaningful PBM reforms to prevent such behavior. We urge our leaders in Congress to closely examine the findings of the GAO report, and put a stop to the practices of PBMs to profit off of vulnerable patients. In doing so, our elected representatives will put money back in the pockets of patients and help them to better afford the medications they need.”

Learn more about NCL’s work to address the PBM problem at nclnet.org/pbms.

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About the National Consumers League (NCL)
The National Consumers League, founded in 1899, is America’s pioneer consumer organization.  Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad.  For more information, visit nclnet.org.

Financing the healthcare of tomorrow playlist: Tracks for consumers and policymakers

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By Robin Strongin, Health Policy Director

July 12, 2023

My husband has advanced Lewy Body Dementia and one of the few things we can still enjoy together is listening to music. We used to curate playlists for all kinds of music. We even put together playlists to mark special occasions (like our daughter’s wedding). Really, any topic became fair game for a playlist.

I was invited to speak at the Patients Rising Disrupting Healthcare Summit summer conference in Washington DC. My panel topic was Financing the Healthcare of Tomorrow. As I was preparing my presentation, I spoke with Michael Capaldi, Executive Director, the Institute for Gene Therapies. Mike is an expert on gene and cell therapies, and these therapies are definitely the healthcare of tomorrow, although thankfully, we are beginning to see the promise of these therapies today. When we talked about my presentation, he said, “you know, Robin, patients are really at a crossroads:  on the one hand, they are much more educated and empowered about their care, but some of the new therapies on the horizon are so complex, the cost and time commitments to innovate in these areas are so high, that groups like the National Consumers League [i]are in position to help patients and caregivers understand these complexities.”

And that’s when it hit me. A playlist. My colleague had me at Crossroads. If you’re a fan of delta blues, like my husband and me, then you know Robert Johnson and his classic, Crossroads.  The rest of my remarks rounded out my Financing the Healthcare of Tomorrow Playlist: Tracks for Consumers and Policymakers, which include:

Crossroads (Robert Johnson)—Robert Johnson’s haunting work reminds me of the difficult choices health policymakers have to make when it comes to healthcare financing—of course research and innovation are expensive—the diseases for which there are no cures, the conditions crying out for prevention, are complex and require decades of research, a deep understanding of basic science, and navigating an unpredictable regulatory path. Too many diseases and too few resources lead to heartbreaking trade-offs. Patients also have difficult choices to make when it comes to paying for their care. We shouldn’t have to be making deals with the devil—as Robert Johnson sings about in Crossroads. Instead, we need to reframe the questions we ask, review how we prioritize funding streams, and think creatively about financing mechanisms. Rather than question if society spends too much on healthcare, we should be asking how can we spend it more efficiently? How do we adequately incentivize all involved in funding transformational innovation? How do we make sure patients can afford and access the treatment they need?

I Am Woman (Helen Redding)—it gets really old but here we are, still talking about, and working on, closing the gender gap—in raising capital for venture funding for women-lead innovation teams; and in awarding grants to women lead research teams. Did you know, that according to the NIH Database monitoring NIH grants, grants awarded to women lead teams in 2022 numbered 19,028 and in the same year men won 31, 560 NIH grants? Progress yes, but not good enough. Not even close. Why is this important?  Because the teams with funding ask the research questions. The more diverse the research teams, the broader the array of diseases that are studied. More cures for more people.

Your Cheatin’ Heart (Hank Williams, Jr.)—I want to be careful and not paint all hospitals with the same brush but I would be remiss not to point out that too many hospitals are behaving badly: taking huge advantage of their nonprofit status, aggressively placing liens on patients who can’t afford their care, engaging in abusive debt collection activities, and worse, denying care; manipulating the 340B program designed 30 years ago to enable true safety-net providers to help low-income and other vulnerable patients access more affordable medicines and healthcare services. Some entities participating in the 340B program have taken advantage of the program’s current lack of clarity at the expense of the patients that the program is meant to serve.

Bad to the Bone (George Thorogood) – When it comes to taking advantage of our healthcare system, one major player in the drug pricing process might be considered “bad to the bone” – pharmacy benefit managers, or PBMs. PBMs continue to find ways to increase their profits while consumers are forced to pay high out-of-pocket costs for the prescription medicines they need. Although they were intended to help negotiate savings on medicines (which would be good), they are not passing along discounts to patients and are actually incentivized to steer patients to higher cost medicines – b-b-b-b-bad to the bone if you ask me!

Party Like It’s 1999 (Prince)—Shakespeare asked, What’s in a name? Fair question. Reminds me to also ask, what’s in a definition and when is it time to update it? How we defined value, quality (as in value of care, quality of care) and other terms in 1999, needs to be reevaluated on an ongoing basis. New innovations, insights, and understandings necessitate we revisit how we define, measure, and update the terms and metrics used to make decisions that affect healthcare financing. A great example comes from another colleague[ii]  who has co-authored and published compelling work on a “paradigm shift in managing high blood pressure.” He and his colleagues make the case that “Abandoning the view that hypertension is a disease in favor of regarding it as a cause of a disease and hence, adopting a population-based preventive approach would encourage the development of simpler guidelines.” Refreshed decades old thinking that could yield the elusive results the status quo has not achieved seems worthy of a party, like its 2023.

I Will Survive (Gloria Gaynor) and Stayin’ Alive (The Bee Gees)—Really, isn’t this what we are all trying to do?

A Change Is Gonna Come (Sam Cooke)—for patients like my husband, for our family, and for all the other patients and caregivers, change cannot come soon enough.  I pledge to do everything possible to advocate for meaningful change and help Patients Rising.

[i] I direct health policy for National Consumers League

[ii] Wald, Nicholas J., Wald, David S., Kellermann, Arthur L., “When Guidelines Cause Hypertension,” Commentary, The American Journal of Medicine, 2018, pp. 1402-4.

The National Consumers League sent a letter urging Senate Committee on Commerce, Science and Transportation to ensure that consumers get a fair deal at the pharmacy

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February 21, 2023

Media contact: National Consumers League – Katie Brown, katie@nclnet.org, 202-823-8442

Washington, D.C. – The National Consumers League (NCL) sent a letter urging Senate Committee on Commerce, Science and Transportation to ensure that consumers get a fair deal at the pharmacy. When it comes to the high out-of-pocket costs consumers face at the pharmacy counter — often for lifesaving medications — consumers today have an unfair disadvantage.

“With three PBMs controlling nearly 80 percent of all prescription drug claims, it is timely that lawmakers are looking at PBMs’ role in driving up the cost of drugs to consumers and patients,“ said Sally Greenberg NCL Chief Executive Officer. “We are encouraged to see the committee looking into the workings of PBMs and we are supportive of your efforts to hold these entities accountable.”

Beyond addressing the antitrust issues and increasing transparency of PBM revenue streams, we encouraged legislators to:

  • Remove medication barriers: PBMs should not be allowed to limit access to the medicines doctors prescribe.
  • Require PBMs to pass on savings directly to consumers: PBM rebates should be shared so that consumers can benefit from more affordable out-of-pocket costs. Additionally, patient cost-sharing should be based on the net cost of the drug, not the list price.
  • Ensure simple, single administrative PBM fees: PBMs too often tack on arbitrary fees to local pharmacies, with many independent and community pharmacies struggling to stay in business, this trickles down to the consumers, resulting in increased prices and pharmacy closures, leading to many communities facing pharmacy deserts.
  • Ensure PBM profits are not tied to the costs of medications: The system currently incentivizes PBMs to favor medicines with higher list prices so that they can negotiate larger rebates and/or steer patients to medicines with higher price tags to increase their own profits.

With the many evolving ways PBMs too often put profit over consumer interests, it is crucial that federal consumer protection agencies like the FTC have the tools needed to address the PBM problem.

To view the full letter, click here.

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About the National Consumers League (NCL)
The National Consumers League, founded in 1899, is America’s pioneer consumer organization.  Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad.  For more information, visit nclnet.org.

NCL Director of Health Policy testifies at Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights on how consolidation in the marketplace harms consumers

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June 16, 2022

Media contact: National Consumers League – Katie Brown, katie@nclnet.org, (202) 207-2832

Washington, D.C. – On Wednesday, June 15, 2022, the National Consumers League’s Director of Health Policy Jeanette Contreras provided oral testimony to the Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights on how consolidation in the marketplace harms consumers.

In her testimony, Ms. Contreras discussed the importance of consumers having choices for safe goods and services at a fair price, a core principle of NCL’s advocacy work. Touching on several issues impacting consumers in the U.S. – such as the infant formula shortage, consolidation of the airline industry, primary ticketing market for live events, and the unfair business practices of pharmacy benefit managers (PBMs) – Ms. Contreras reiterated the need for competition in the marketplace and enacting stronger antitrust laws, all of which help protect U.S. consumers.

Her testimony appears below.

June 15, 2022

Good afternoon Chairwoman Klobuchar, Ranking Member Lee, and members of the Subcommittee. My name is Jeanette Contreras. I am the Director of Health Policy at the National Consumers League. I appreciate the opportunity to testify remotely today- due to COVID.

Founded in 1899, NCL is America’s oldest consumer advocacy organization. A core principle of our advocacy is that the marketplace should encourage competition to guarantee that consumers have choices for safe goods and services at a fair price. Monopolies harm competition, leaving consumers with fewer options at higher prices. Monopolistic practices are especially harmful when they occur in the health care arena, where they can exacerbate health disparities.

We share the concerns of new parents regarding the recent shortage of infant formula. Our hearts go out to those parents who have lost babies or whose infants suffered devastating health consequences from contaminated formula. At NCL, we believe all goods and services sold to consumers should be safe and meet all legal requirements- including regulatory guidelines set forth by the FDA.

NCL applauds the FDA and the Administration for adopting a multifaceted approach to increase the supply of infant formula, including temporarily allowing foreign manufacturers to sell their products in the U.S. Additionally, we believe invoking the Defense Production Act to prioritize getting needed inputs to infant formula manufacturers was sound policy. These measures are helping to solve the immediate logistical problem of getting formula onto store shelves across the country.

While addressing the immediate formula shortage is most urgent, we are also troubled that it took the FDA almost four months to act on a whistleblower complaint sent to the agency. This complaint should have received immediate attention given the gravity of the allegations against the Abbott facility. We support a full investigation and, if warranted, bringing criminal and civil charges against those who falsified data. NCL also recommends that the U.S. create a single food safety agency and dedicate an office to overseeing the safety and supply of infant formula.

It should concern every American that one manufacturer controls 40% of the U.S. infant formula market. Only three companies — Abbott, Mead Johnson, and Nestle — control 98% of the industry.

Consolidation in the infant formula industry is a major contributor to the current crisis, but it is only one of many cases where market concentration in recent decades has limited competition and harmed consumers.

For example, NCL continues to raise concerns about the consolidation of the airline industry. Due to weak enforcement of existing antitrust laws, from 2005 to 2015, the number of major U.S. airlines declined from nine to four. And today they control more than 80 percent of the domestic U.S. market.

Our antitrust laws have also failed to protect consumers who attend live events. After merging with Ticketmaster in 2010, Live Nation Entertainment controls roughly 80% of the primary ticketing market in the U.S. As anyone who has purchased tickets recently can attest, this has led to an increase in add-fees and the basic price of tickets.

Stronger antitrust enforcement would be especially beneficial for curtailing anti-competitive conduct in the health care industry, where we’ve seen consolidation lead to higher costs for consumers without an increase in quality or access to care. We are pleased that the Biden administration is looking into how hospital prices increase after acquisitions. We are also hopeful that the ongoing review of DOJ & FTC merger enforcement guidelines will result in more action by those agencies.

NCL also applauds the recent FTC decision to open an investigation into the unfair business practices of pharmacy benefit managers or PBMs. NCL works tirelessly to raise awareness of the outsized role that PBMs play in driving up prescription drug prices for consumers. According to a recent report, the three biggest PBMs controlled roughly 77% of all U.S. prescription drug claims in 2020. And a recent Senate Finance Committee report found some PBMs are getting a 70% rebate on insulin, while out-of-pocket costs for this life-saving medication continue to rise.

These cases are just a few examples of how monopolies and anti-competitive practices have become a problem for consumers. To ensure crises like today’s formula shortage do not happen again, market consolidation must be addressed so that the temporary shutdown of a single factory does not result in the collapse of an entire supply chain.

Whether it is baby formula, airline travel, live event tickets, or pharmaceutical sales, the lack of competition is having increasingly negative impacts on consumer welfare and requires urgent action.

Chairwoman Klobuchar, Ranking Member Lee, thank you for holding today’s hearing and inviting NCL to speak about this important issue. I look forward to answering your questions.

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About the National Consumers League (NCL) 

The National Consumers League, founded in 1899, is America’s pioneer consumer organization. Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. For more information, visit www.nclnet.org.

 

The National Consumers League applauds the FTC’s decision to investigate PBMs

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June 14, 2022

Media contact: National Consumers League – Katie Brown, katie@nclnet.org, (202) 207-2832

Washington, DC— NCL is deeply concerned by the lack of transparency and accountability surrounding pharmacy benefit managers (PBMs). The pervasive power of PBMs in the pharmaceutical industry has raised out-of-pocket costs for consumers and made it more difficult for them to receive essential medical treatment. NCL believes that the FTC’s investigation into PBMs represents a significant first step to addressing these issues.

The PBM system was originally intended to work on behalf of employers, health plans, labor unions, and states, to negotiate with drug manufacturers and process prescription drug claims. However, as their power and influence in the market has grown, there are major concerns that PBMs have increasingly prioritized profits, with consumers paying the price.

With the highest profit rates of any corporations in the prescription drug supply chain, PBMs have pocketed more than $450 billion in revenue in 2020, a stark $150 billion increase from eight years ago.  More concerning is that now, just three PBMs account for approximately 77 percent of all equivalent prescription claims.

PBMs often demand that drug companies provide them “rebates” or discounts to offer medicines as part of a drug benefit plan. While implemented to lower consumers’ out-of-pocket costs, these theoretical consumer savings seem to be nonexistent. In addition, to increase profits, PBMs intentionally steer consumers to higher-priced drugs, regardless of patient and treatment considerations.

As the most prominent PBMs have vertically integrated with the largest health insurance companies, they are employing monopolistic-like practices to increase prescription prices, limit consumer choice, and stifle market competition. NCL is encouraged that the FTC is taking preliminary action to hold PBMs accountable. In addition to this investigation, policy-makers and the FTC must continue to address the lack of regulatory oversight with the utmost urgency.

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About the National Consumers League (NCL) 

The National Consumers League, founded in 1899, is America’s pioneer consumer organization. Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. For more information, visit www.nclnet.org.