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 Warren2020 Democrat: 'My DM's are open and I actually read & respond' Group of wealthy Americans write open letter asking to be taxed more Inslee unveils plan to fight fossil fuel pollution MORE (Mass.) and Tina SmithTina Flint SmithHillicon Valley: House panel advances election security bill | GOP senator targets YouTube with bill on child exploitation | Hicks told Congress Trump camp felt 'relief' after release of Clinton docs | Commerce blacklists five Chinese tech groups Senate Democrats press regulators over reported tech investigations Democrats ask Fed to probe Trump's Deutsche Bank ties 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 TrumpConway defends herself against Hatch Act allegations amid threat of subpoena How to defuse Gulf tensions and avoid war with Iran Trump says 'stubborn child' Fed 'blew it' by not cutting rates 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.