Guthrie, new chair of House health subcommittee, calls for more price transparency by pharmacy benefit managers and hospitals

By Melissa Patrick
Kentucky Health News

U.S. Rep. Brett Guthrie of Bowling Green is playing a priominent role as Congress investigates the role of pharmacy benefit managers in the growing cost of drugs.

PBMs are middlemen that negotiate drug prices with drug manufacturers and pharmacies, and design prescription drug benefits for health plans. 

On March 28, the House Energy and Commerce Committee's Subcommittee on Health, which Guthrie began chairing when Republicans took over the House in January, discussed the role that transparency and competition can play to help make health care more accessible and affordable.

Rep. Brett Guthrie (screenshot from March 28 committee meeting) 

"We are holding a bipartisan hearing to examine the rising costs of health care for patients and their families," Guthrie said in his opening remarks. "Rising cost of care for individuals is one of the single greatest threats to the overall economic security of Americans."

The hearing touched on some hidden aspects of the health-care system that Guthrie said drive up consumer costs, including hospital consolidation, lack of competition and practices of PBMs, which have been a hot topic in Kentucky for many years. 

Guthrie noted that the three largest PBMs have more than 80% of the market and have merged with insurance companies, specialty pharmacies, retail pharmacies, and even drug distributors.

“We should build on our bipartisan work to make pharmacy benefit managers be more transparent and ensure patients as well as employers are getting the best possible deal on their prescription drug benefits," he said. "This could also lead to greater access to biosimilars and generics when they come to market. Shining a light on middlemen who are making prescriptions more expensive is one important step to bolster competition and lower prices."

One focus of the meeting was "lack of compliance with two Trump-era rules created to require that hospitals and insurers follow through on various price transparency requirements," reports Gabrielle Wanneh of Inside Health Policy. One rule "requires hospitals to make their standard charges public through machine-readable files and make their payer-specific negotiated charges, including those for cash-paying patients, public for 300 shoppable services."

Another rule "requires insurance companies to disclose several machine-readable files, including a file on in-network rates for all covered services with in-network providers, a file containing allowed amounts and billed charges from out-of-network providers, and a file that covers the historical net price of covered prescription drugs, Inside Health Poliocy reports.

Guthrie said, “It is imperative for the Biden administration to conduct greater enforcement efforts on these rules to better serve patients with clear and actionable price information, ”Guthrie said. “It is also crucial for Congress to codify and strengthen these important transparency rules to support a more efficient price transparency regulatory environment.”

The day before Guthrie's committee met, Politico published a short primer that looked at the PBM issue from several angles. It noted that PBMs say they've been misunderstood, while Health and Human Services Secretary Xavier Becerra has said, "There is a growing concern that the middlemen … are skimming off a good deal of the money. We’re going to try to move to make sure that if there’s a middleman … that it’s done efficiently.”

Senate committees are also working on the issue, and the House Oversight and Accountability Committee has launched an investigation into the industry's effect on patients. The House Oversight committee is chaired by another Kentucky congressman, Rep. James Comer of the First District.

Kentucky lawmakers have been working on PBM issues for years, most recently passing 2020 Senate Bill 50 to make the state hire a single PBM to manage Kentucky Medicaid's prescription-drug business of more than $1 billion a year. Kentucky has saved at least $38 million from this move to one PBM. A 2019 state analysis found PBMs made $123 million through spread pricing.

That said, companion PBM bills were introduced in the House and Senate during the most recent legislative session and neither one of them were heard in their respective committees.