Pair of Dem senators probe drug pricing 'middlemen,' distributors over high costs

Pair of Dem senators probe drug pricing 'middlemen,' distributors over high costs
© Greg Nash

Democratic Sens. Elizabeth WarrenElizabeth Ann WarrenButtigieg jokes about holding town hall same night as 'Game of Thrones' finale Buttigieg defends appearing on Fox News: Many Americans don't hear Dems' message Warren offers to help Twitter user with her love life MORE (Mass.) and Tina SmithTina Flint SmithWhat if scientists, not politicians, called the shots on climate policy GOP Senate campaign arm hits battleground-state Dems over 'Medicare for All,' Green New Deal Hillicon Valley: Washington preps for Mueller report | Barr to hold Thursday presser | Lawmakers dive into AI ethics | FCC chair moves to block China Mobile | Dem bill targets 'digital divide' | Microsoft denies request for facial recognition tech MORE (Minn.) are probing nine drug distributors and pharmacy benefit managers (PBMs) over their role in high drug prices. 

Warren and Smith are asking the companies to respond to Secretary of Health and Human Services Alex Azar's comments that drug companies want to reduce prices but are being blocked by PBMs and drug distributors. 

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PBMs manage drug benefits for insurers and employers, trying to get the best deal for both parties, but critics have argued that they drive up costs by negotiating secret deals and rebates with drug manufacturers.

"These are extremely disturbing allegations by Secretary Azar," the senators wrote in letters to the companies.

"If they are true, these allegations suggest that PBMs and drug distributors are acting to maintain high list prices in order to maintain high profit margins, potentially raising antitrust concerns."

Specifically, Azar said several drug companies were looking at "substantial and material decreases of drug prices" but had been told by PBMs and distributors they could lose access to patients or be removed from lists of drugs covered by insurers, called a "formulary." 

PBMs and distributors get a percent of the list price, which critics say is an incentive to keep prices high.

Azar made the comments at a recent hearing when Warren pressed him on why drug companies had not cut their prices despite President TrumpDonald John TrumpTrump: 'I will not let Iran have nuclear weapons' Rocket attack hits Baghdad's Green Zone amid escalating tensions: reports Buttigieg on Trump tweets: 'I don't care' MORE promising "massive" price cuts. 

Warren and Smith wrote to the companies asking if it had engaged in any discussions with drug companies seeking to reduce their prices and how it responded to those efforts. 

The senators sent the letters to McKesson, CardinalHealth, AmericasourceBergen, all drug distributors, and Medimpact Healthcare Systems, OptumRx, Prime Therapeutics, Humana, CVS Health, Express Scripts, all PBMs.