Healthcare

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

Democratic Sens. Elizabeth Warren (Mass.) and Tina Smith (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. 

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 Trump 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. 

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