[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]




                     COMPETITION AND TRANSPARENCY:
                       THE PATHWAY FORWARD FOR A
                      STRONGER HEALTH CARE MARKET

======================================================================= 


                                HEARING

                               Before The

                         SUBCOMMITTEE ON HEALTH,  
                     EMPLOYMENT, LABOR, AND PENSIONS

                                 of the

                     COMMITTEE ON EDUCATION AND THE 
                               WORKFORCE
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             FIRST SESSION
                               __________


             HEARING HELD IN WASHINGTON, DC, JUNE 21, 2023

                               __________

                           Serial No. 118-15
                               __________

  Printed for the use of the Committee on Education and the Workforce 
  
  
  
  
  
  
  
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        Available via: edworkforce.house.gov or www.govinfo.gov         
                                 ______

                  U.S. GOVERNMENT PUBLISHING OFFICE 

55-562 PDF                WASHINGTON : 2024  














                COMMITTEE ON EDUCATION AND THE WORKFORCE

               VIRGINIA FOXX, North Carolina, Chairwoman

JOE WILSON, South Carolina           ROBERT C. ``BOBBY'' SCOTT, Virninia, 
GLENN THOMPSON, Pennsylvania           Ranking Member 
TIM WALBERG, Michigan                RAUL M. GRIJALVA, Arizona
GLENN GROTHMAN, Wisconsin            JOE COURTNEY, Connecticut
ELISE M. STEFANIK, New York          GREGORIO KILILI CAMACHO SABLAN,
RICK W. ALLEN, Georgia                 Northern Mariana Islands
JIM BANKS, Indiana                   FREDERICA S. WILSON, Florida 
JAMES COMER, Kentucky                SUZANNE BONAMICI, Oregon
LLOYD SMUCKER, Pennsylvania          MARK TAKANO, California
BURGESS OWENS, Utah                  ALMA S. ADAMS, North Carolina
BOB GOOD, Virginia                   MARK DeSAULNIER, California
LISA McCLAIN, Michigan               DONALD NORCROSS, New Jersey
MARY MILLER, Illinois                PRAMILA JAYAPAL, Washington
MICHELLE STEEL, California           SUSAN WILD, Pennsylvania
RON ESTES, Kansas                    LUCY McBATH, Georgia
JULIA LETLOW, Louisiana              JAHANA HAYES, Connecticut
KEVIN KILEY, California              ILHAN OMAR, Minnesota
AARON BEAN, Florida                  HALEY M. STEVENS, Michigan
ERIC BURLISON, Missouri              TERESA LEGER FERNANDEZ, New Mexico
NATHANIEL MORAN, Texas               KATHY MANNING, North Carolina
JOHN JAMES, Michigan                 FRANK J. MRVAN, Indiana
LORI CHAVEZ-DeREMER, Oregon          JAMAAL BOWMAN, New York
BRANDON WILLIAMS, New York           
ERIN HOUCHIN, Indiana

                       Cyrus Artz, Staff Director
              Veronique Pluviose, Minority Staff Director 
              
                                 ------                                

        SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR, AND PENSIONS

                      BOB GOOD, Virginia, Chairman

JOE WILSON, South Carolina           MARK DeSAULNIER, California
TIM WALBERG, Michigan                  Ranking Member
RICK ALLEN, Georgia                  JOE COURTNEY, Connecticut
JIM BANKS, Indiana                   DONALD NORCROSS, New Jersey
JAMES COMER, Kentucky                SUSAN WILD, Pennsylvania
LLOYD SMUCKER, Pennsylvania          FRANK J. MRVAN, Indiana
MICHELLE STEEL, California           PRAMILA, JAYAPAL, Washington
AARON BEAN, Florida                  LUCY McBATH, Georgia
ERIC BURLISON, Missouri              JAHANA HAYES, Connecticut
LORI CHAVEZ-DeREMER, Oregon          ILHAN OMAR, Minnesota
ERIN HOUCHIN, Indiana                KATHY MANNING, North Carolina 














                         C  O  N  T  E  N  T  S

                              ----------                              
                                                                   Page

Hearing held on June 21, 2023....................................     1

                           OPENING STATEMENTS

    Good, Hon. Bob, Chairman, Subcommittee on Health, Employment, 
      Labor, and Pensions........................................     1
        Prepared statement of....................................     4
    DeSaulnier, Hon. Mark, Ranking Member, Subcommittee on 
      Health, Employment, Labor, and Pensions....................     7
        Prepared statement of....................................     9

                               WITNESSES

    Sachdev, Gloria, President and CEO, Employers' Forum of 
      Indiana....................................................    11
        Prepared statement of....................................    13
    Monahan, Christine, Assistant Research Professor, Georgetown 
      University Center on Health Insurance Reforms..............    24
        Prepared statement of....................................    26
    Tripoli, Sophia, Senior Director of Health Policy............    36
        Prepared statement of....................................    38
    Scott, JC, President and CEO, Pharmaceutical Care Management 
      Association................................................    52
        Prepared statement of....................................    54
    Baker, Greg, CEO, AffirmedRX.................................    65
        Prepared statement of....................................    67

                         ADDITIONAL SUBMISSIONS

    Chairman Good:
        Statement from the American Hospital Association dated 
          June 21, 2023..........................................    98
        Letter signed by multiple Gastroenterology Organizations 
          dated June 16, 2023....................................   105
        Supplemental statement submitted by JC Scott dated June 
          21, 2023...............................................   112
        Letter from the National Association of Manufacturers 
          dated June 20, 2023....................................   113
        Statement from Representative Earl L. ``Buddy'' Carter 
          dated June 21, 2023....................................   119
        Statement from AHIP dated June 21, 2023..................   122
        Letter from Better Solutions for Healthcare..............   126
        Drug prices report.......................................   127
        Statement from Patient Rights Advocate.org dated July 5, 
          2023...................................................   151
    Scott, Hon. Robert C. ``Bobby'', a Representative in Congress 
      from the State of Virginia:
        Blog from American Academy of Pediatrics dated August 10, 
          2022...................................................   153
        Article from American College of Cardiology dated October 
          14, 2022...............................................   157
        Letter requesting a hearing to examine illegal employment 
          of children dated June 6, 2023.........................   159
        Statement from the U.S. Department of Justice dated March 
          31, 2022...............................................   162
        Report from EDLABOR.HOUSE.GOV............................   166
        Article from NPR dated August 26, 2022...................   175
        Article from Scientific American dated May 12, 2022......   194
        Article from The Tennessean dated October 31, 2022.......   201

                        QUESTIONS FOR THE RECORD

    Response to question submitted for the record by:
        Ms. Christine Monahan....................................   205
        Dr. Gloria Sachdev.......................................   221
        Mr. JC Scott.............................................   231
        Ms. Sophia Tripoli.......................................   236

 
                     COMPETITION AND TRANSPARENCY: 
                       THE PATHWAY FORWARD FOR A 
                      STRONGER HEALTH CARE MARKET

                              ----------                              


                        Wednesday, June 21, 2023

                              House of Representatives,
            Subcommittee on Health, Employment, Labor, and 
                                                  Pensions,
                      Committee on Education and the Workforce,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:19 a.m., 
Rayburn House Office Building, Room 2175, Hon. Bob Good 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Good, Walberg, Allen, Comer, 
Burlison, Chavez-DeRemer, Houchin, Foxx, DeSaulnier, Wild, 
Jayapal, Hayes, Manning, and Scott.
    Staff present: Cyrus Artz, Staff Director; Nick Barley 
Deputy Communications Director; Mindy Barry, General Counsel; 
Michael Davis, Legislative Assistant; Cate Dillon, Director of 
Operations; Isabel Foster, Press Assistant; Daniel Fuenzalida, 
Staff Assistant; Sheila Havenner, Director of Information 
Technology; Meghan Heckelman, Intern; Taylor Hittle, 
Professional Staff Member; Claire Houchin, Intern; Alex Knorr, 
Legislative Assistant; CJ Mahler, Professional Staff Member; 
John Martin, Deputy Director of Workforce Policy/Counsel; 
Hannah Matesic, Director of Member Services and Coalitions; 
Rebecca Powell, Staff Assistant; Seth Waugh, Director of 
Workforce Policy; Brittany Alston, Minority Operations 
Assistant; Nekea Brown, Minority Director of Operations; Ilana 
Brunner, Minority General Counsel; Daniel Foster, Minority 
Senior Health and Labor Counsel; Carrie Hughes, Minority 
Director of Health & Human Services Policy; Stephanie Lalle, 
Minority Communications Director; Raiyana Malone, Minority 
Press Secretary; Kota Mizutani, Minority Deputy Communications 
Director; Veronique Pluviose, Minority Staff Director; Jessica 
Schieder, Minority Economic Policy Advisor; Banyon Vassar, 
Minority IT Administrator.
    Chairman Good. The Subcommittee on Health, Employment, 
Labor, and Pensions will come to order. I note that a quorum is 
present, so without objection, the Chair is authorized to call 
a recess at any time. I would like to make an opening 
statement.
    While everyone seems to recognize that healthcare costs in 
the United States are continuing to rise at alarming rates, it 
seems that no one wants to take responsibility. The hospitals 
blame the insurance companies. The health insurance companies 
blame the drug manufacturers, the drug manufacturers blame 
employers, the employers blame the pharmacy benefit managers or 
PBMs, and on it goes.
    The American people do not want finger pointing. They want 
quality healthcare that they can afford. Today, this 
Subcommittee will dig deep into two broad policy ideas that 
have the potential to drive down costs, expand choice, and 
empower consumers.
    All sectors of our healthcare system are plagued by market 
consolidation, and a lack of transparency. Until these issues 
are addressed patients will remain victims of a broken, 
exploitive healthcare system. Hospitals are a prime example. 
Market consolidation is a proven healthcare cost driver, and 
hospitals are consolidating at a rapid rate. From 1998 to 2021, 
1,887, 1,887 hospitals merged.
    Twenty years ago, we had around 8,000 hospitals in this 
country, and now we have about 6,000. Not only do hospitals buy 
each other, but they also buy the physicians' offices nearby. 
Physicians' offices were traditionally independent practices 
reserved for checkups and screenings, but they are slowly being 
replaced by outpatient facilities.
    Hospitals already have an advantage over other industries. 
Emergency medical care is a unique service when a patient needs 
care, they do not have the time or ability to shop around for 
options. Hospitals have a monopoly, and as a result there is no 
accountability regarding billing practices once a hospital 
takes control.
    This is a major reason why employer sponsored insurance 
pays two to three times what Medicare pays for hospital 
services. One solution is to bring transparency and require 
hospitals to disclose where and what they charge. Hospitals 
should not be rewarded with high reimbursement rates for using 
incorrect billing addresses.
    They should not charge hospital fees for services occurring 
in doctor's offices miles away. In some places, patients are 
getting x-rays from their family doctor, and being slapped with 
higher hospital facility fees just because the hospital is now 
the owner of the family doctor's practice.
    Location should not increase the price for the same 
service. For too long, medical prices have been shrouded in 
mystery, and patients have lived in fear of how much their 
medical bills will end up costing them. The Trump 
administration issued a rule to require hospitals to give 
employers and consumers accurate pricing data.
    Hospitals were required to file this information, but only 
25 percent of hospitals fully complied. The Trump 
administration issued the Transparency and Coverage Rule to 
ensure that patients received the pricing information they need 
from their plans. This rule has been very successful, but there 
are improvements that can be made.
    First, Congress should ensure the data that insurers are 
submitting is highly accurate, and useable. Many of the files 
currently submitted are too large and cannot be used by 
employers and academics. We must push for standardized data and 
make it useable so employers can effectively meet their 
fiduciary obligations.
    Second, Congress must codify the Transparency and Coverage 
Rule to ensure the administration enforces requirements that 
plans submit drug pricing data. Without this critical 
information, employers and patients will be left in the dark 
when it comes to navigating the complexities and costs of the 
drug supply chain.
    Consolidation and coverups are not only a factor for 
hospital services, but they are a problem for pharmaceuticals 
too. Drug makers have a large role in determining drug prices, 
but the role of PBMs must also be addressed due to their 
significant influence over what patients pay at the pharmacy 
counter. Three PBMs own a massive 80 percent of the market. 
Additionally, the big three are all subsidiaries of Fortune 500 
healthcare companies that also own insurers, pharmacies, and 
most recently physicians, giving them even more influence over 
prescription benefits.
    PBMs are also operating in a black box. Nobody knows the 
details of the rebate deals they negotiate with drug 
manufacturers creating perverse incentives for PBMs to choose 
more expensive drugs with larger rebates. If they truly pass 
rebate savings to consumers, like PBMs say they do, this would 
be a non-issue.
    Without transparency, the PBM business model is ripe for 
abuse. Giving consumers choice works. The Trump Transparency 
and Coverage Rule has already helped some large employers save 
millions by rooting out waste in their health plan. Patients 
would benefit from more transparency from PBMs too. Corruption 
thrives in darkness, and as a conservative I believe that for 
good governance we ought to strive for more transparency.
    At a minimum, you should be able to expect transparency 
from your elected representatives, and we in turn, need to 
demand it from our Nation's healthcare industry. These types of 
reforms have had widespread, bipartisan support, and I look 
forward to today's discussion and charting a path forward on 
robust healthcare reform to bring costs down for all Americans.
    With that, I yield to the Ranking Member for his opening 
statement.
    [The statement of Chairman Good follows:]
     
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    Mr. DeSaulnier. Thank you, Mr. Chairman. I am delighted to 
hear your comments in our conversations about this subject 
matter. I am grateful to be here today. We are having the first 
of hopefully many bipartisan hearings on how we can lower 
healthcare costs for workers, families, and businesses by 
promoting transparency and competition.
    I will say as a progressive, I agree with you. I believe in 
transparency. As we work to lower costs for all Americans, 
particularly consumers, it is important that we raise the 
quality of healthcare as well. These issues go hand in hand--
value. Regrettably, the United States is an outlier when it 
comes to healthcare spending and quality outcomes.
    As a share of gross domestic product, the U.S. spent nearly 
twice as much as the next closest developed country, Germany, 
in 2021. Over the past 5 years, average premiums for families 
have risen 22 percent in the United States. Unfortunately, it 
is clear we are not getting what we are paying for as 
Americans.
    While our spending is No. 1 in the world, our health 
outcomes, unfortunately, are not. Americans do not get what 
they pay for when it comes to healthcare. One fundamental 
problem as the Chairman has said, is transparency. This limits 
our ability as policymakers to improve our healthcare system. 
It makes it harder for patients to find affordable, high-
quality, healthcare providers.
    It prevents employers from meeting their obligation to 
ensure that their workers' premium dollars are spent prudently. 
Transparency is also essential for fostering meaningful 
competition as the Chair has said, which keeps healthcare costs 
in check for both consumers and employers.
    Over the past few years, Democrats and Republicans have 
made bipartisan progress to address these issues. In 2020, we 
came together to pass the No Surprises Act and the Consolidated 
Appropriations Act of 2021 in the CAA. These bipartisan 
achievements show that Democrats and Republicans can work 
together to lower healthcare cost for American workers and 
families.
    However, there is still an urgent need for further action. 
Evidence on the ground suggests that some requirements of the 
CAA may not be working as intended. For example, despite the 
CAA's new disclosure requirements for group health plan service 
providers, entities such as pharmacy benefit managers or PBMs, 
and third-party administrators, often fail to disclose their 
compensation to plan fiduciaries.
    Similarly, despite the prohibition on gag clauses under the 
CAA, third-party administrators and other service providers 
throw up roadblocks that prevent plan fiduciaries from using 
the information to lower costs and improve quality.
    I also hope to explore ideas for changing the incentives of 
PBMs to make sure they act in the best interest of clients. As 
a minimum, we should all agree that employes and consumers 
deserve to know how the rebates PBMs receive from drug 
manufacturers impact their decisions that raise costs for 
workers and families.
    Finally, Mr. Chairman, I look forward to learning more 
about improvements that can be made to the transparency in 
coverage regulations of the Affordable Care Act, and how to 
improve hospital billing policies. Without transparency and 
meaningful competition, healthcare costs will be driven by who 
has the most market power, not who provides the highest quality 
services.
    As a result, the price we pay will continue to rise while 
the quality of what we receive in healthcare will decline. 
Last, I want to note something that you mentioned, that 
promoting transparency and competition alone will not solve the 
problem of high costs of healthcare.
    As the issue of surprise medical billing shows, we cannot 
fully address market failure without a more direct action to 
ensure our constituents have access to affordable, high-quality 
care. It is my hope that this is only the first of many 
conversations about how we can make our healthcare system work 
for American patients and their families.
    I want to thank you again, I want to thank our witnesses, 
and I look forward to a robust and constructive conversation. I 
yield back.
    [The statement of Ranking Member DeSaulnier follows:]
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]  
    
    

    Chairman Good. Thank you, Mr. DeSaulnier. It sounds like 
competition and transparency are the themes of the day, and I 
look forward to this time together as well. Pursuant to 
Committee Rule 8(c) all members who wish to insert written 
statements into the record may do so by submitting them to the 
Committee Clerk electronically in Microsoft Word format by five 
o'clock, 14 days after the date of this hearing, which is July 
5, 2023.
    Without objection, the hearing will remain open for 14 
days. The hearing record will remain open for 14 days to allow 
such statements and other extraneous material referenced during 
the hearing to be submitted for the official hearing record. We 
will now turn to the introduction of our distinguished 
witnesses.
    Our first witness is Dr. Gloria Sachdev, who is the 
President and CEO of Employers Forum of Indiana. Our second 
witness is Ms. Christine Monahan, who is an Assistant Research 
Professor at Georgetown University Center on Health Insurance 
Reforms.
    Our third witness is Ms. Sophia Tripoli, who is the 
Director of Healthcare Innovation at Families USA. Our fourth 
witness is Mr. JC Scott, who is the President and CEO of the 
Pharmaceutical Care Management Association, and finally, we 
have Mr. Greg Baker, who is the CEO of AffirmedRX, located in 
Louisville, Kentucky.
    I thank all of you for being here today, and we look 
forward to your testimony. Pursuant to Committee rules, I would 
ask that each of you limit your oral presentation to a 5-minute 
summary of your written statement, and I would also like to 
remind the witnesses to be aware of their responsibility to 
provide accurate information to the Subcommittee. We will first 
recognize Dr. Sachdev for 5 minutes.

       THE STATEMENT OF DR. GLORIA SACHDEV, PRESIDENT AND 
                CEO, EMPLOYERS' FORUM OF INDIANA 

    Ms. Sachdev. Thank you, Chairman Good and Ranking Member 
DeSaulnier. I really appreciate the opportunity to be up here 
before this Committee today. My name is Gloria Sachdev, and I 
serve as President and CEO of the Employers' Forum of Indiana. 
My testimony today and my comments represent my own views, not 
those of forum members or organizations.
    Indiana employers, large and small, are deeply invested in 
the well-being of their employees and their ability to receive 
the highest quality for the best price. Employers provide 
health insurance coverage to retain and recruit employees. They 
understand a healthy workforce is a productive workforce, and I 
appreciate this Committee's interest in helping working 
families and employers.
    Just a few stats, as I expect my co-panelists will have 
some to share as well. Nationally, employer-sponsored health 
insurance covers 179 million people, representing 55 percent of 
the U.S. population. While Medicare spending on healthcare is a 
hot topic in Congress, working families and their employers are 
paying on average 2.5 times what Medicare is paying for the 
same services at the same hospitals.
    If a particular hospital is charging a Medicare patient 
$1,000.00 for an MRI, the private sector for employers and 
employees is $2,500.00 for the same MRI at the same hospital. 
Some employers are paying $8,000.00 for that MRI at a different 
hospital. These high hospital prices harm workers and employers 
as it takes money away from other aspects of their lives and 
businesses.
    Thankfully, some hospitals have lower prices and high 
quality, and that is where we all want to go. We all want to go 
to the best quality at the best price. We need more easily 
accessible price and quality data, which can be achieved by 
codifying the Transparency and Coverage Act, excuse me, and 
adding a few additional pieces to make the data more robust and 
usable.
    Sadly, high healthcare prices have resulted in one in 8 
adults in the U.S. being in collections for medical debt. One 
in 8 adults are in collections for medical debt. In Indiana, 
one in 6 adults are in collections due to medical debt. This is 
tragic. Being in collections ruins one credit score, which then 
makes it difficult to get a car loan, or a home loan, and thus 
can cause generational harm.
    I would like to share a bit about some recent successes in 
Indiana and thoughts on how you can help. Per the RAND 2022 
price transparency study, employers in Indiana were paying the 
fourth highest hospital facility prices in the country. Over 
three times what Medicare was paying for the same services.
    As such, the Indiana House Speaker and Senate President Pro 
Tempore wholeheartedly committed to addressing hospital prices 
in 2023. With bipartisan support House-enrolled Act 1004 passed 
and includes many of the things that were just mentioned during 
these opening comments, including prohibiting hospitals from 
billing additional hospital facility fees for off-campus 
services.
    Just because a hospital buys a physician clinic in a strip 
mall does not mean they should be allowed to add on hospital 
facility fees when nothing about the service, doctor, or 
location has changed. Tacking on hospital facility fees can 
easily double the price for no reason. We should pay the same 
amount for the same service regardless of who owns it.
    I was honored to support our leadership by providing them 
with hospital price, quality, and cost data. This data allowed 
them to stand strong and do what is in the best interest of 
people despite fierce, and I mean fierce, opposition. 
Prohibiting unwarranted facility fees was not just passed in 
Indiana, but also in Colorado in 2023.
    Texas had a bill too, but unfortunately it died. 
Connecticut, Maine, Massachusetts, and North Carolina have 
bills currently in progress, or they did at least as of last 
week. There is bipartisan Federal interest, too. There is the 
House PATIENT Act and the Senate SITE Act, among others.
    While hospital prices are high, I would be remiss not to 
mention that drug price transparency is desperately needed in 
the entire drug supply chain, particularly in the PBM space. I 
am a pharmacist by background and training, managed patients 
for 12 years in physician office clinics, and really have seen 
firsthand the detriment that these high hospital prices and 
drug prices are causing to patients.
    In closing, as we explore the pathway forward for a more 
functional healthcare market, let us not forget the human 
aspect of our decisions. Every American deserves access to 
affordable, high-quality healthcare that meets your unique 
needs.
    By embracing competition and transparency, we can lay the 
foundation upon which evidence-based policy and purchasing can 
occur to create a healthcare system that ensures a healthier, 
more prosperous future for our Nation.
    Thank you, Chairman Good and Committee members, for your 
attention.
    [The Statement of Dr. Sachdev follows:]
     
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

    
    Chairman Good. Thank you, Dr. Sachdev. Now we will hear 
from Ms. Monahan.

    STATEMENT OF MS. CHRISTINE MONAHAN, ASSISTANT RESEARCH  
      PROFESSOR, GEORGETOWN UNIVERSITY CENTER ON 
      HEALTH INSURANCE REFORMS

    Ms. Monahan. Good morning, Chairman Good, Ranking Member 
DeSaulnier, and members of the Subcommittee on Health, 
Employment, Labor, and Pensions. My name is Christine H. 
Monahan, and I am an Assistant Research Professor at the Center 
on Health Insurance Reforms within Georgetown University's 
McCourt School of Public Policy.
    I am honored to testify today regarding competition and 
transparency in our healthcare markets. Consolidation in the 
U.S. healthcare system is growing--to the detriment of everyone 
who uses and pays for healthcare. In both the provider and 
insurer markets, we have seen significant horizontal and 
vertical consolidation over the past decade, contributing to 
rising prices for healthcare.
    The expansion of large health systems with multiple 
hospitals, outpatient departments, and physician practices 
under the same roof has been significantly increasing what 
commercial insurers, and ultimately consumers and employers, 
pay for care. One egregious example of this is the addition of 
outpatient facility fee charges for healthcare services that 
can be safely and effectively provided outside of a hospital.
    These charges often come as a surprise to patients who go 
in for a routine doctor's visit, and they can lead to 
significantly higher out-of-pocket costs than consumers have 
traditionally paid for such care. Some states, from Connecticut 
to Maine, to Indiana, have started to tackle this issue by 
prohibiting these charges in certain circumstances.
    A handful of private insurers and at least one State 
employee health plan have also taken steps to limit these 
charges and protect consumers from these bills. One challenge 
to targeting and implementing these reforms, however, is a lack 
of transparency in the claims providers submit to insurers 
which can obscure where care was actually provided.
    For example, a State or insurer may want to end hospital 
facility fee charges for care provided in off-campus 
departments or physician offices, since this care inherently 
does not need to be provided in a hospital setting. All of the 
claims from a hospital system may look like they are coming 
from the main campus of a hospital.
    There are simple reforms the Federal Government can take to 
address this issue and set the stage for additional action to 
limit what commercial insurers pay for care in these 
circumstances, and ultimately move toward site neutral 
payments, as we are seeing in Medicare. These reforms include 
requiring that each separate facility or office where care is 
provided, like a hospital off-campus department, acquire a 
unique national provider identifier, or NPI, and that both the 
hospital and all healthcare practitioners include this NPI on 
their claims for any care they provide there.
    This would give insurers, as well as regulators and 
policymakers relying on claims data, a much better sense of who 
is charging outpatient facility fees, and when they are 
charging them, and take appropriate action.
    More broadly, it would also allow insurers to better tailor 
other reimbursement decisions based on the location of care, 
considering factors like quality and cost. Let us not be naive 
about how far relying solely on private insurers to contain 
costs will get us.
    They too have consolidated horizontally and vertically, and 
it is often in their interest to not push back strongly against 
provider prices. This may be because the providers charging the 
highest rates are considered must-have providers for their 
networks, or these providers have demanded that their insurer 
include anti-competitive clauses in their contracts.
    The major insurers also have little incentive to use what 
negotiating power that they do have. This is a particular 
problem in the employer-sponsored insurance market, the 
majority of which is insured through self-funded health plans 
with the major insurers serving as third-party administrators, 
or TPAs.
    In this role, the insurers have little incentive to 
negotiate competitive provider reimbursement rates due to the 
relative market power and information monopoly vis-`-vis 
employers. What is more, employer contracts with TPAs and 
pharmacy benefit managers or PBMs are often rife with hidden 
fees and overpayments, while the consultants and brokers 
employers hire to help arrange the contracts are taking in 
massive commissions.
    This is all happening despite the fact that employers, as 
plan sponsors, have a legal duty under ERISA to act solely in 
the interest of plan members, and to ensure that they are 
paying reasonable compensation to service providers and no 
more.
    Thankfully, the employer community is starting to awaken to 
these problems due in large part to recent efforts by Congress 
and the executive branch to bring more transparency to our 
healthcare system. More still needs to be done to give 
employers the information they need to become more prudent 
purchasers in this system.
    This includes codifying and strengthening Federal price 
transparency rules, revisiting the Consolidated Appropriations 
Act's ban on gag clauses, and clarifying and expanding service 
provider disclosure requirements.
    Given their critical role and power in the system, it is 
also worth exploring whether entities like TPAs and PBMs 
themselves should be treated as plan fiduciaries when 
performing functions where it is more important that they act 
in the best interest of plan members than their own business 
interests. Thank you for your time. I welcome your questions.
    [The Statement of Ms. Monahan follows:]
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
    

    
    Chairman Good. Thank you, Ms. Monahan, and now we will hear 
from Ms. Tripoli for her testimony.

      STATEMENT OF MS. SOPHIA TRIPOLI, SENIOR DIRECTOR OF 
                        HEALTH POLICY 

    Ms. Tripoli. Chairs Good and Foxx, Ranking Member 
DeSaulnier and Scott, members of the Committee, thank you for 
the opportunity to testify today. It is an honor to be with 
you. On behalf of Families USA, a leading national non-partisan 
voice for healthcare consumers, working to ensure the best 
health and healthcare are equally accessible and affordable to 
all, I want to thank you for this critical discussion on 
healthcare affordability, transparency, and competition.
    Today's hearing is urgently needed. Our healthcare system 
is in crisis, evidenced by a lack of affordability and poor 
quality. It will take all of us working together across 
political parties from rural and urban communities alike to fix 
it.
    Every person in the United States should have high-quality 
healthcare that prevents illness, allows them to see a doctor 
when needed, and keeps their families healthy at a price they 
can afford.
    Almost half of all Americans are foregoing medical care due 
to the cost. A third say that the cost of care affects their 
ability to secure basic needs, like food and housing, and over 
40 percent of American adults, 100 million people, face medical 
debt. Every American knows we pay too much for the healthcare 
that we get.
    Healthcare accounts for one-fifth of our Nation's economy, 
yet our health is not better. Our moms and babies die at high 
rates, and a quarter of a million people a year are killed by 
the healthcare system, from medical errors, infections, and the 
like.
    Over the last 40 years, workers' wages have remained 
virtually stagnant, while employer health insurance premiums 
have risen dramatically, crippling the ability of working 
people to earn a living wage. 90 percent of large employers now 
say healthcare costs threaten the ability to provide healthcare 
benefits to employees.
    This crisis is driven by misalignment between the business 
interests of the healthcare sector, and the health and 
financial security of our Nation's families. The healthcare 
sector siphons money out of workers' paychecks and into 
building C-suites of big healthcare corporations to increase 
healthcare prices, rewarding building local monopolies and 
price gouging, instead of promoting the health and well-being 
of our Nation's families.
    The economic freedom of American families is eroding right 
before our eyes. We cannot afford to retire when we want, live 
in the homes of our choice, send our kids to college, or even 
meet basic needs like paying for rent or heat. Healthcare 
industry consolidation has eliminated competition and allowed 
monopolistic prices to push our Nation's families to the brink 
of financial ruin.
    Nowhere is this clearer than looking at the prices of drugs 
and hospital care. For more than a decade, drug prices 
increased 20 percent per year, far exceeding inflation. Just 
since 2015, hospital prices increased 31 percent nationally, 
accounting for one-third of U.S. healthcare spending, and 
growing more than four times faster than workers' paychecks.
    These higher prices are passed on to families as annual 
increases in insurance premiums and cost sharing become profit 
margins for large healthcare corporations. Particularly 
concerning is that healthcare is one of the only sectors in the 
U.S. economy where consumers are blinded to prices until after 
they have received a service and a subsequent bill.
    This lack of transparency is a major barrier to the 
healthcare sector competing based on fair prices and high-
quality care. It does not have to be this way. We know what is 
driving the crisis and how to fix it. Solutions can be deployed 
right away to end these pricing abuses, restore competition, 
and make healthcare more affordable.
    We urge the Committee to consider well-vetted, bipartisan 
solutions to increase price transparency, address hospital 
billing practices, and payment differentials that drive 
consolidation and increase costs, and limit anti-competitive 
behavior in provider and health plan contracts.
    Ultimately, the sector's economics must change to align 
with the health and financial security of the American people. 
Congress has overwhelming support to do this. 93 percent of 
Americans agree that we pay too much for the quality of 
healthcare we get. I would like to finish my remarks with the 
story of Brittany Tesso and her son, Roman, from Aurora, 
Colorado to illustrate the impact of these abusive pricing 
practices on people.
    Roman's pediatrician referred him to a hospital to receive 
an evaluation for speech therapy. Because of the COVID-19 
pandemic, the Tessos met with a panel of specialists via 
videoconference. The specialists, who appeared to be calling 
from their homes, observed Roman speaking, playing, and eating.
    Later, Mrs. Tesso received a $700.00 bill for the 1-hour 
video appointment. Then she received another bill for nearly 
$1,000.00. Thinking it was a mistake, Mrs. Tesso called the 
hospital. Despite the fact that the Tessos never stepped foot 
inside the hospital, he was told the bill was a facility fee, 
designed to cover the costs of being seen in a hospital-based 
setting.
    This is a national scandal. This Committee has the power 
and responsibility to stand up for our Nation's families and 
stop pricing abuses driven by big healthcare corporations. I 
thank the Committee for your time, and I look forward to 
answering any questions.
    [The Statement of Ms. Tripoli follows:]
    
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    Chairman Good. Thank you, Ms. Tripoli, and now we will hear 
from Mr. Scott.

         STATEMENT OF MR. JC SCOTT, PRESIDENT AND CEO,  
          PHARMACEUTICAL CARE MANAGEMENT ASSOCIATION 

    Mr. JC Scott. Good morning, Chairman Good, Ranking Member 
DeSaulnier, and members of the Subcommittee. Thank you for the 
opportunity to testify. The questions the Subcommittee is 
raising today on transparency and competition in healthcare 
markets are important, and we agree that thoughtfully applying 
these tools to the prescription drug market is aligned with 
what should be our ultimate objective: securing greater 
affordability, which translates into greater access to 
medications and better health outcomes.
    Too often, what we are trying to solve gets lost in all the 
rhetoric and misinformation around this issue, and we lose 
focus on how to do better for patients, employers, and other 
payers. I hope today's discussion can stay focused on positive 
solutions, and the legislative proposals avoid the unintended 
consequences of increased cost and limited choices for 
employers and patients.
    Efforts to lower drug costs must start with an 
understanding that drug prices are set by drug companies and 
that in the prescription drug market, as in many markets, 
competition is vitally important. Lawmakers must ensure that 
the misuse of the patent protections originally put in place to 
balance rewarding innovation and ensuring affordable access for 
patients is not blocking competition and keeping prices high.
    Pharmacy benefit companies both harness that drug company 
competition, and also compete with each other for employers and 
health plan sponsors to hire them. Our companies are hired to 
administer prescription drug plans for more than 275 million 
Americans who have health coverage through public and private 
employers, labor unions, retiree plans, and Federal programs.
    Our company secures savings through negotiations with drug 
companies, serving as the only actor in the private market 
putting downward pressure on drug costs. Pharmacy benefit 
companies also partner with over 60,000 lower cost, higher 
quality pharmacies on behalf of employers.
    In addition, pharmacy benefit companies promote a variety 
of clinical programs to improve medication adherence and 
healthcare outcomes. To be clear, no employer, union, or other 
plan sponsor is under any obligation to hire or use a pharmacy 
benefit company, but virtually all choose to do so because it 
brings them significant savings and enables them to better 
serve the patients in their plans.
    The employers choose how to best use those savings, whether 
to lower premiums, lower cost at the pharmacy counter, or make 
benefits more robust. This is a key point. The pharmacy benefit 
company delivers the savings and the employer decides how to 
use them. Employers and other plan sponsors select a pharmacy 
benefit company through a transparent and highly competitive 
bidding process, with 73 full service pharmacy benefit 
companies operating today, and new entrants with competing 
models coming into the market regularly, employers can choose 
to contract with a company that best meets their unique needs.
    In the last 2 years, we have seen close to 9 percent growth 
in the number of pharmacy benefit companies competing in the 
market. Employers and plan sponsors may choose a pharmacy 
benefit company based on scale and ability to negotiate deep 
discounts. Others prioritize innovative care management 
programs or different levels of service.
    The various pharmacy benefit companies in the market 
compete fiercely based on the strengths of their individual 
business models and innovative offerings. As part of their bid 
requests, employers determine what information, transparency, 
and audit rights they need, and those are memorialized in their 
contracts.
    Our companies provide a broad array of actionable 
information on price and quality, so employers can make 
informed decisions on how to design their benefits and how to 
deploy the value delivered by their pharmacy benefit company. 
Our companies offer additional data and information, including 
tools with real time information on cost and drug coverage, to 
patients and doctors to help informed prescribing decisions. In 
recent years, Congress has added more requirements for pharmacy 
benefit companies to report to Federal agencies, as well as 
public reporting.
    These laws included guardrails to prevent enabling drug 
companies from raising costs, and we supported that approach. 
We also supported enacted legislation to provide Congress with 
access to claims data to inform oversight and policymaking.
    As we work on our mission to lower costs, the principles of 
informed employer choice and flexibility in selecting a 
pharmacy benefit company, designing the benefit, and choosing 
how best to use the savings, are key to keeping the private 
market evolving and delivering more affordable drug coverage.
    Given that, and to avoid increasing costs for employers and 
patients, we would caution against policies that have the 
government dictating and locking in terms of private business 
contracts, limiting choices for employers, or otherwise 
narrowing how we can achieve more affordability for patients.
    PCMA and the companies we represent are proud of our record 
in constraining prescription drug cost growth, improving access 
to medications, and helping improve health outcomes, and we 
look forward to working with this Subcommittee, and 
constructively engaging to build on this record.
    Thank you for inviting me to testify today, and I look 
forward to the conversation.
    [The Statement of Mr. JC Scott follows:]
    
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    Chairman Good. Thank you, Mr. Scott. Finally, we will hear 
from Mr. Baker.

          STATEMENT OF MR. GREG BAKER, CEO, AFFIRMEDRX

    Mr. Baker. Good morning, Chairman Good, Ranking Member 
DeSaulnier, and distinguished members of the House 
Subcommittee. I would like to thank you for the invitation to 
speak here today and discuss this increasingly important topic 
of competition and transparency in healthcare.
    My name is Greg Baker. I am first and foremost a 
pharmacist. I am also the CEO of AffirmedRX, which is a 
transparent PBM I founded, and we are headquartered in 
Louisville, Kentucky. I have spent 30 years working in 
different areas of healthcare, mostly pharmacy. The last 11 of 
which, working directly with jumbo self-funded employers who do 
design and develop their own pharmacy benefit programs.
    Our goal at AffirmedRX is to partner with these employers 
to deliver patient-centric pharmacy benefits with a mission to 
improve healthcare outcomes by bringing clarity, integrity, and 
trust to pharmacy benefit managing. As a pharmacy benefit 
management company though, and consistent with our corporate 
values, we are not members of PCMA.
    PCMA does not represent who we are as an organization. We 
have founded a new not-for-profit organization with numerous 
other PBMs, who also do not want to be represented by PCMA, 
called Transparency RX. Just as transparency offers a better 
way on managing prescription drug benefits, Transparency RX 
represents a step forward to sound policy solutions, 
galvanizing true affordable prices as a counterweight to the 
status quo and the stale and outdated ideas of traditional PBMs 
and their lobby.
    At a high level then, this may come as a surprise to some 
at the outset. I would like to embrace many of the much needed 
reforms gaining steam in Congress on a bipartisan basis. PBMs, 
especially traditional ones, and especially the big three, 
deserve scrutiny and reform.
    More importantly in my opinion, their approach is a central 
feature to sustaining unnecessarily high drugs costs in 
America. We have a broken system which hides profits and 
inflates prescription costs, harming the interest of diverse 
communities, working families, and seniors.
    With my expertise being in the pharmacy benefit space, I 
will focus my comments on competition and transparency within 
this industry here today. I have thoroughly read the 
testimoneys of my fellow witnesses. I find it interesting that 
many of us call out the increase in cost and the decrease in 
quality of healthcare.
    While some of the fellow witnesses here also talk about the 
savings that PBMs always generate. We save 145 billion dollars 
as an industry, supposedly, over the course of the next 10 
years. I always think about that in the context of my wife 
going shopping. I love my wife to death, she always goes 
shopping and comes home and tells me how much money she saved 
me, which I know really means she cost me a lot of money in the 
first place. I am sure she really enjoyed that thing she 
bought, but when you leave with savings I worry.
    I always worry about organizations that want to talk about 
how much you save. Additionally, there is a lot of conversation 
around these savings saying we promote generic drugs as an 
industry. That also is a falsehood. You can look at any 
traditional PBM formulary that is publicly available online, 
and consistently see where brand drugs are put in place on the 
formulary over generic drugs.
    When you consider the fact that of the 160 plus Americans 
who take private insurance, 55 percent of those people have a 
coinsurance or a high deductible plan. That means they are 
subject to a higher cost at the pharmacy counter. That is not 
acceptable in our opinion.
    Biosimilars is a very consistent theme within the pharmacy 
benefit industry today as well. We consistently see a lot of 
the traditional PBMs picking higher cost biosimilars, over the 
lower cost versions as well. Last, it has been noted that there 
is a transparent and highly competitive marketplace out there 
for these jumbo and self-funded employers to pick their 
benefits.
    I challenge that contention as well. There is an awesome 
article that Bob Herman and Staten News put out just yesterday 
talking about the collusion that could exist between benefit 
consultants who are helping these benefit employers and their 
PBMs based off of back-end payments that are not transparent.
    In closing, I would like to go back to my Kentucky roots. I 
started practicing in Kentucky in the late 90's. That is when 
Oxycontin came out. It was a great drug, we thought at the 
time, because we had been told that for years.
    Twenty years down the road, we all know how bad Oxycontin 
was for our society. At the same time, opioids kill about 
80,000 people in America today. Over 100,000 people in America 
die every year because they are not adherent to their 
medicines. The No. 1 reason people are not adhering to their 
medication is because of cost.
    I look forward to having further conversation working with 
the Committee to bring more transparency and competition to 
this PBM marketplace and look forward to your questions today. 
Thank you, Chairman.
    [The Statement of Mr. Baker follows:]
    
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    Chairman Good. Thank you, Mr. Baker. Under Committee Rule 
9, we will now question witnesses under the 5-minute rule. I 
will wait to ask my questions at the end and therefore 
recognize Mr. Walberg from Michigan for 5 minutes.
    Mr. Walberg. Thank you, Mr. Chairman, and thanks to the 
panel for being here. As I understand it, Mr. Chairman, you 
have a document from our colleague Representative Buddy Carter 
to submit to the record on this issue. I will leave that to 
you.
    The United States spends more on healthcare as a percentage 
of the economy than any other developed nation, and CBO 
projects that spending will continue to grow. A recent NFIB 
survey showed that while employers by and large believe 
offering health benefits is important, 98 percent of small 
businesses are concerned that healthcare costs will become 
unsustainable within the next five to 10 years, if they are not 
already.
    I thank the Committee for holding this bipartisan hearing 
today on what the Federal Government can do about the high cost 
of healthcare. Mr. Baker and Mr. Scott, many employers say they 
are not able to obtain accurate cost and pricing information 
despite laws which mandate that third-party entities provide 
this information to plan sponsors.
    Many PBMs say that employers can receive cost and quality 
information at any time through an audit. What is the 
disconnect? Mr. Scott first, then I will go to Mr. Baker.
    Mr. JC Scott. Thank you for choosing one to go first, so we 
did not just sit here for 5 minutes. Thank you for the 
question. I would start by saying at PCMA, all PBMs, all 
pharmacy benefit companies, are welcome at our table as long as 
there is alignment around the mission of preserving the free 
market and the approach that does not have government dictating 
terms or asking Congress to come in and prefer one business 
model over another.
    We have a fairly simple set of principles, where we are not 
here to advocate for one company to get a favorable approach 
over another. One thing that is consistent across our members 
is that they are hired by employers who choose to use them 
under no obligation, and that they want those employers to have 
all the information that they need to make informed choices 
about how to design their benefits, so that they can best serve 
the patients that they represent.
    All of that is built into the request for a proposal, or 
RFP process, and I still have not fully understood where the 
RFP process may be failing some employers who are expressing 
that sentiment to you, Congressman. That is how PBMs compete, 
when they put in those RFPs, the kind of information that a 
given employer may need.
    If there is more work to be done in that space to make sure 
the client is informed, we would be happy to work with the 
Committee on that.
    Mr. Walberg. Mr. Baker.
    Mr. Baker. Yes. Thank you for your question, and I think 
you are spot on. In general, we consistently work with jumbo 
self-funded employers who do not have access to their data. I 
do not know of one employer who knows at the claim level how 
much they are getting back in rebates from the pharmaceutical 
manufacturers.
    While I do appreciate the comments of my esteemed 
colleague, Scott, I do not agree that there is a competitive 
marketplace that is working today. I think the status quo has 
existed for the last 15 or 20 years. I think that consultants 
and PBMs are focused on how they continue to drive profit at 
the detriment of the American public, and that data that you 
are asking for we agree should be present to all self-funded 
employers and it is not today.
    Mr. Walberg. Okay. Thank you. Dr. Sachdev, would you care 
to comment as well since you mentioned in your written 
testimony that employers have trouble accessing their own price 
and quality data. Then second, how are third party entities 
circumventing current data sharing requirements?
    Ms. Sachdev. Thank you so much for the question. I would 
concur with Mr. Baker that none of our employers have seen any 
pharmaceutical claims data at the drug level. When they get 
rebate information, they get it in aggregate, so that is not 
helpful to the employer because then they cannot shop for it.
    They are told if you want to change the formulary, and this 
might be a little in the weeds here, but if you want to change 
the formulary, then you are going to, you know, that might 
impact the rebates that we give you. They might have, let us 
say I do not know, 500 drugs that they are covering, maybe 
more, and we would want to see what the rebates are at the drug 
level.
    We do not get that level of information at the drug level. 
No employer I know gets that level of information from the 
largest PBMs. Regarding your question about audits, the audit--
the language in these contracts is confusing, and they put a 
lot of restrictions on the audit. Yes, you can do an audit, but 
they might, and it can vary depending on the contract, that 
they might restrict audits, so the audits need to be unfettered 
access.
    If the employer has fiduciary responsibility to do what is 
in the best interest of the client, they should be able to 
audit their own claims data all day long as many times as they 
want. They have restrictions on who the auditor can be, how 
many times per year they can do an audit. Maybe it is just once 
a year, or maybe twice a year.
    How far back they can even look at their claims data. Maybe 
only 1 year back, so they cannot compare data over time. What 
drug classes they can even look at, et cetera, et cetera. There 
are just all these restrictions.
    Mr. Walberg. I thank you all for your answers. I have 
further questions that I will submit for the record, and I 
yield back.
    Chairman Good. Thank you, Representative Walberg. Our 
Ranking Member DeSaulnier has also elected to defer to the end, 
so we will recognize Representative Wild from Pennsylvania.
    Ms. Wild. Thank you, Mr. Chairman. Greetings everybody. 
There has been a lot of discussion for decades now about 
pharmaceutical prices generally, but recently the even more 
common subject of discussion is shortages of medications.
    Adderall has been written about in all the major 
newspapers. I just looked online, there is a list of hundreds 
of medications that are apparently in short supply. What I have 
been told by a number of my constituents, and by the way, I am 
in Pennsylvania. Pennsylvania 7 in the Lehigh Valley, but it is 
probably typical across the country, is that they find that 
when they go to the local pharmacy with their script, and the 
pharmacy says, ``I'm sorry, we're out of that medication, we're 
not going to be able to fill it until we don't know when'', 
they are then advised by their insurance company that if they 
get their medications by mail order, they will likely be able 
to fill it, and indeed. Optum RX, I believe, is the PBM for 
United Healthcare. CVS, I think is affiliated with either Aetna 
or Cigna. First and foremost, and I am going to ask you first, 
Mr. Baker, why is it that PBMs are able to supply medications 
when local pharmacies cannot, when there is a shortage?
    Mr. Baker. Yes, thank you for the question. I cannot 
specifically address that. I am not exactly sure. Usually the 
pharmacy supply chain, the bigger actors might get more limited 
quantities than say a small independent would, so it could be 
the fact that they just got a tighter supply relationship with 
the wholesaler.
    Ms. Wild. The bigger pharmacies may get a smaller supply. 
Is that what you said?
    Mr. Baker. The bigger. No. The bigger pharmacies would have 
better access to the wholesalers limited amount of medication.
    Ms. Wild. Okay. Are you saying that a PBM is sort of the 
biggest pharmacy of all, and therefore they are likely to have 
more?
    Mr. Baker. That would be my contention, yes ma'am.
    Ms. Wild. Mr. Scott, what are your thoughts on that?
    Mr. JC Scott. Yes. I agree with your concern. I would 
reflect my mom lives down in Pensacola, Florida and suffers 
from depression and has encountered exactly the situation that 
you have just described. It is a real issue. As Mr. Baker 
implied, I think it does get to the wholesaler relationship 
with the pharmacy, what is the acquisition, how much are they 
purchasing and making available in terms of that supply.
    Ms. Wild. It is the reason that say Walmart is able to have 
large supplies. I am not even going to talk about medications, 
of certain products that a smaller retailer might have trouble 
buying.
    Mr. JC Scott. It is all about that relationship with the 
wholesaler.
    Ms. Wild. It is all about that relationship. The result of 
that, if I am correct, is not only that the consumer is then 
forced into the mail order or PBM model, but also that it 
continues the problems of the small, local independent 
pharmacies staying in business, which let us face it, small, 
local independent pharmacies are almost a thing of the past.
    I can tell you that in my district many of them have closed 
much to the sadness and detriment of many consumers around my 
district who had personal relationships with their local 
pharmacist and were able to talk to him or her about 
interactions, and that kind of thing, which of course, when you 
are doing mail order, you do not have.
    That just really concerns me, and I am trying to figure 
out--based on your answers, PBMs have greater purchasing power, 
right? That is because they have so many.
    Mr. JC Scott. Some pharmacies have greater purchasing power 
than others, and it depends on the relationship with the 
wholesaler, and the pharmacy services administrative 
organization, the PSAO, that represents about 83 percent of 
independent pharmacies.
    Ms. Wild. Who exactly is a client or customer of a PBM? Is 
it the ultimate consumer, or is it the employer who holds the 
insurance plan?
    Mr. JC Scott. The employer or retiree plan, government 
program, union plan is who hires the pharmacy benefit company 
to do the work to serve the patients they represent.
    Ms. Wild. Let me just ask you then the Consolidated 
Appropriations Act of 2021, which we passed last year. I was 
proud to vote for it, indicates that pharmacy benefit managers 
are described as covered service providers who must provide 
information to responsible plan fiduciaries. You are familiar 
with that requirement?
    Mr. JC Scott. Yes, Congresswoman.
    Ms. Wild. Do you believe that PBMs provide plan 
fiduciaries, meaning somebody within the employer, with enough 
information to ensure that the compensation they are paying is 
reasonable?
    Mr. JC Scott. Yes. I believe our companies all comply with 
the requirements of the law.
    Ms. Wild. Now you are shaking your head. How about you?
    Mr. Baker. I think it was a carefully worded answer that 
they are complying with law, yes. What they are doing is they 
are aggregating numerous employers' data and they are sending 
it in to comply with CAA. That data is not going to the 
employer to make the right decision.
    Ms. Wild. Thank you. Unfortunately, my time has run out. I 
have many more questions I would love to submit, and with that 
I yield back.
    Chairman Good. Thank you, Ms. Wild. Now we will recognize 
Mr. Allen from Georgia for 5 minutes.
    Mr. Allen. Thank you, Mr. Chairman, and thank you for 
holding this important hearing, and thank you to our witnesses 
for providing us the expertise that we need to address this 
critical situation. Obviously, there is no private healthcare 
system in this country.
    The government has its fingers in every area of healthcare. 
What is happening to our healthcare system, it has become a 
complex, expensive made, fueled, a heavy-handed regulation, 
provided consideration and a lack of transparency. You are 
going to hear that over and over again today. The growth in 
healthcare spending is expected to outpace growth in gross 
domestic product over the next 10 years, forcing insurance 
premiums and out of pocket costs to remain too expensive for 
working families.
    We cannot sustain what is happening with the costs, rising 
costs of healthcare. Dr. Sachdev, many in Congress, and you are 
going to hear more. We are going to drill down here about PBMs, 
and the consolidation of PBMs. This consolidation is taking 
away options for plan sponsors and patients. This includes what 
seems to be a push toward practices like mail order 
prescriptions, and the use of larger retail pharmacies, rather 
than on local community pharmacies.
    While that may work for many Americans, I value options, 
and I think the American people want options in healthcare, the 
healthcare market, because they have actually a relationship 
with their pharmacist. Do employees have flexibility when 
designing their prescription drug benefit programs?
    Ms. Sachdev. Thank you so much for the question. Was your 
question, just to clarify, do employers have options when yes, 
designing their drug benefit programs?
    Mr. Allen. Yes.
    Ms. Sachdev. They do have options. Self-funded employers 
have benefit options, the options have become limited now 
because there's been so much consolidation in the PBM space, as 
Chairman Good mentioned, three big PBMs represent 80 percent of 
the market right now.
    In some, because there has been so much consolidation 
between PBM and insurance companies and mail-order pharmacies, 
and physician groups, some insurance companies', PBMs say, if 
you are going to use our insurance company, you have to use our 
PBM. That is a real problem.
    Mr. Allen. Yes. That is what I wanted to hear.
    Ms. Sachdev. While there appears to be choice, there are 
limited choices.
    Mr. Allen. Of course, what choices do employers have when 
working with pharmacy benefit managers, meaning that those 
pharmacy benefit managers can dictate to the employee if you 
want this cost of health insurance you have to use my mail 
order service.
    Ms. Sachdev. That is correct.
    Mr. Allen. Okay. Dr. Tripoli, or Ms. Tripoli, one of the 
main drivers of rising healthcare costs is increasing 
consolidation among hospitals and hospital systems, including 
horizontal, vertical, and cross market integration. In fact, 
hospital care services make up about 31 percent of our national 
healthcare expenditures, and hospital spending growth is 
projected to accelerate 9.3 percent in 2023.
    That is precisely why one of my main goals of the Healthy 
Future Task Force last Congress was to increase choices through 
competition, which meant addressing matters such as site 
neutral rules, physician on hospitals and consolidation. What 
impact does consolidation among hospitals have on prices and 
access to care?
    Ms. Tripoli. Thank you very much for the question. I would 
say the single biggest driver right now of rising premiums and 
increased cost sharing for consumers is increased 
consolidation, particularly among in the provider market among 
hospitals, that directly drive-up prices and results in higher 
costs to the employers, which of course gets shifted onto 
employees and consumers in the form of stagnant wages, and 
higher premiums and cost sharing.
    Mr. Allen. A large part of my district is rural. What has 
this hospital consolidation--has--it impacted our rural 
communities?
    Ms. Tripoli. I would say it has a very similar impact in 
terms of consolidation. We are seeing consolidation across the 
country, across U.S. healthcare markets within them. 90 percent 
of metropolitan statistical areas are now considered highly 
concentrated hospital markets. All for the same purpose of 
increasing prices and generating the highest priced volume of 
services that hospitals can.
    Mr. Allen. Okay. I have some additional questions, and 
Chairman I will submit that to our panel later.
    Chairman Good. Thank you, Mr. Allen. We will now hear from 
Ms. Jayapal from Washington. Are we--actually, we will go with 
Ms. Manning for 5 minutes.
    Ms. Manning. Thank you, Mr. Chairman. Mr. Scott, I 
represent Caswell County, a rural county in North Carolina that 
has only one pharmacy for the entire county. A small, 
independent pharmacy that is family run, and is struggling to 
stay open because they make so little money on the 
prescriptions they fill.
    I understand that PBMs negotiate with insurance companies 
over how much patients pay for their medications at the 
checkout counter, and also how much pharmacists make for the 
prescriptions that are filled. Generally, chain and corporate 
pharmacies have better buying power, and receive better 
reimbursements from PBMs. Is that true? Do PBMs negotiate how 
much pharmacies get paid per prescription filled?
    Can independent pharmacies get paid less per prescription 
than the big chain pharmacies?
    Mr. JC Scott. PBMs negotiate with pharmacies to incentivize 
higher quality and lower cost, and about 40 percent of 
pharmacies that are part of PBM networks on average are 
independent pharmacies. What we have seen, the data we have 
seen, is that often the independent is getting paid slightly 
more than the chain.
    Ms. Manning. You are saying that what I have read in 
articles that affect independent pharmacies is not true. That 
independent pharmacies get paid more than chain pharmacies.
    Mr. JC Scott. On average that is the data that we have 
seen.
    Ms. Manning. Why is it that from 2003 to 2018, more than 
1,200 independently owned rural pharmacies closed in the United 
States?
    Mr. JC Scott. The data from the community pharmacy lobby, 
NCPA, actually shows that across the country there has been a 
steady increase over the last 10 years in the number of 
independent pharmacies. Now, I would recognize--
    Ms. Manning. Not necessarily in rural areas?
    Mr. JC Scott. That is across the country. I think the rural 
question is the one to focus on because often times, not only 
is that the only pharmacy, it is the only access point of care 
for patients, and it seems certainly for our industry, we 
believe we need to empower pharmacies to do more for patients, 
be able to practice at the top of their license.
    We experienced some of this during COVID. That they can 
deliver more value to the patient, and as a side effect of 
that, develop more revenue stream for the pharmacy.
    Ms. Manning. If we had more transparency, we would be able 
to tell whether large chain pharmacies get more per 
prescription filled than small, independent pharmacies?
    Mr. JC Scott. That data is available. I guess the point I 
am making is we need to adjust the law to allow the pharmacies 
to do more for patients.
    Ms. Manning. Okay. That does not really go to how much 
pharmacies get paid per prescription filled. That is a separate 
issue. What you are saying is let pharmacies do more, so they 
can make money other ways.
    Mr. JC Scott. Correct.
    Ms. Manning. That does not really address the question of 
whether small, independent pharmacies actually get paid less 
than large pharmacies.
    Mr. JC Scott. I would be happy to followup with you on that 
data that we have seen.
    Ms. Manning. Okay. Let me ask you another question. In your 
testimony, you detail a variety of services that your member 
PBMs provide beyond negotiating for lower drug costs. For 
example, you said that PBMs provide clinical support in the 
form of services to plan and release, provide internal clinical 
expertise to support business operations, and assemble clinical 
experts to evaluate drug therapies, and make coverage 
recommendations to plan sponsors.
    Are these all duplicative services that simply add to the 
costs of our healthcare system? For example, when you say that 
you assemble clinical experts to evaluate drug therapies and 
make coverage recommendations to plan sponsors, doesn't the FDA 
already evaluate the safety and effectiveness of every drug 
before they approve a drug for use?
    Mr. JC Scott. That is correct. We are adding to that value 
proposition of what the FDA does, and often times the pharmacy 
benefit company, for a given patient, who I think of my dad's 
experience at the end of his life. Alzheimer's, cancer, 
multiple doctors, multiple medications, doctor's offices not 
always communicating with each other.
    The PBM was able to act to see if there's going to be any 
problematic medication interaction for him as the patient.
    Ms. Manning. The PBM does that, not the pharmacy?
    Mr. JC Scott. Often times the pharmacy may not have 
visibility into every place the patient has gone to fill a 
script, or a medication has been prescribed.
    Ms. Manning. Are doctors----
    Mr. JC Scott. The payer may.
    Ms. Manning. Are doctors already evaluating which 
medications they want their patients to use?
    Mr. JC Scott. Absolutely, we provide information to empower 
them, but my dad's cancer doctor, and my dad's doctor who was 
helping him treat Alzheimer's at the end of his life may not be 
communicating across all the prescriptions that they are 
refilling.
    Ms. Manning. I am glad your dad had a good experience, but 
I have to tell you when I was using an eye medication that I 
had gone through multiple trials with my doctor to get used to 
save my sight, and my pharmacy benefit manager told me I could 
not use that drug until I failed forward. That was not a good 
result for me, and people all across the country have the same 
experience. My time is expired, I yield back.
    Chairman Good. Thank you, Ms. Manning. Now we will go to 
Mr. Burlison from Missouri for 5 minutes.
    Mr. Burlison. Thank you, Mr. Chairman. Thank you for having 
this hearing. I think it is very important. I think the 
American people want to understand why their healthcare costs 
are sky high. Sadly, I think, and I will say this. I think 
their healthcare costs are sky high because of this place.
    This place regulates the hell out of the healthcare 
industry to the point where there is no choice, right? We 
talked about the driving costs that we have consolidation. Well 
normally, if people are making obscene profits in any 
marketplace that would be a great opportunity for a new 
entrant.
    We have regulated the healthcare industry to such an extent 
that no one can enter into the market to compete and provide 
more choices. Now, the one thing that I have seen, because I 
served on a board at Missouri Consolidated, where it was my 
responsibility as the board to buy the health insurance for 
over 100,000 lives. You know what?
    What we did, we found that using a PBM dramatically drove 
down our costs for the entire group, okay? I have heard 
testimony here that it is a false choice. I can tell you when 
you are actually writing the checks, it is not a false choice. 
It did save money. It is good to hear that there are choices.
    Mr. Baker, I am going to ask you. Your PBM model works 
differently. Can you describe that?
    Mr. Baker. Yes. I think it is functionally three different 
things. One, we do think profits are a problem in driving bad 
decisionmaking in healthcare, so we are not a for-profit entity 
like a C corp or a public--
    Mr. Burlison. Do you think profits are evil or something?
    Mr. Baker. I think if everybody knows what you are paying 
for an item, and the American consumer can make a decision on 
that profitability that they are contributing to, that is fine. 
That does not exist in the pharmacy benefit space.
    Mr. Burlison. Okay. We can have a long conversation about 
that. My question at the end of the day is when a company like 
Missouri Consolidated, or other businesses are choosing a PBM 
at the end of the day, they just want to know what you cost, 
and what they are getting back from it.
    Why are you--to me the question is if American Airlines 
were here and they were, you know, had one rate, and their 
mileage system is different than United, which it is. Can you 
imagine the scenario where American would have the temerity to 
come to Congress and say our mileage system is better and more 
transparent, therefore everyone should--all--the other airlines 
should have to move to our business model. Can you imagine 
that?
    Mr. Baker. I do not imagine that, but in the pharmacy space 
it is fundamentally different. I know if I want to buy a flight 
to come here to Washington, DC. I can look at American site, I 
can look at United's site and I can make a decision on costs.
    Mr. Burlison. I beg to differ. At the end of the day, Mr. 
Baker, you are competing with other PBMs, correct?
    Mr. Baker. Correct.
    Mr. Burlison. The businesses that are making these choices, 
they are deciding based on quality and costs, correct?
    Mr. Baker. I do not always agree with that statement.
    Mr. Burlison. To me, it is regulatory capture to come to 
Congress and abdicate that your competitors participate and run 
their businesses the exact same way. With that, Mr. Scott, let 
me ask this. We have talked about the consolidation. What kind 
of things can be done? I am intrigued by the idea that you had 
to let pharmacies do more. Can you elaborate on that?
    Mr. JC Scott. Yes. Thank you for the question. Think back 
to all of our collective experience during COVID where we had 
to go to get our testing, where we had to go to get our 
vaccinations. The rules were eased to allow us to use the 
pharmacy as a site of care. There are so many things that a 
licensed pharmacist should be able to do, and particularly in 
rural counties where your doctor's office, your hospital may 
not be close, administering vaccines, administering shots, 
checking your blood pressure, some of those routine healthcare 
screenings where they can add value by interacting with the 
patient.
    Mr. Burlison. Right.
    Mr. JC Scott. Instead of simply the revenue model being 
primarily the pill in the bottle, which remains critically 
important, but we think there is so much more they can do, 
which adds revenue for them and value for the system.
    Mr. Burlison. My time is getting close, but it appears to 
me that just the common theme is that centralization causes 
skyrocketing costs. In my opinion, decentralization could be 
the answer, but with that we have to trust mid-level providers 
to do more. We have to trust pharmacists to be able to 
administer some of the healthcare that patients need.
    Then my last question, Ms. Tripoli, has to do with 
transparency. If I am going to go shop for where I am going to 
have dinner tonight, I can see on Yelp amazing information, 
costs, the value, the ratings of different restaurants. Why can 
we not get to that point in healthcare?
    Ms. Tripoli. Part of the reason is because of the way that 
prices are negotiated, and the way they are set is in closed-
door negotiations between plans and providers. That price, the 
negotiated rate, is buried in the proprietary contract, never 
to be seen by the public. Now, with these regulations, 
transparency in coverage and hospital price transparency, we 
are seeing for the first time what the actual underlying price 
of a healthcare service is, so now we can actually get the data 
and look at it, pull it down and understand where are prices 
needlessly high, where are they competitive, and we can make 
more informed policy decisions.
    Mr. Burlison. Thank you. Sadly, my time has expired.
    Chairman Good. Thank you, Mr. Burlison, and now we will 
hear from Ms. Jayapal from Washington.
    Ms. Jayapal. Thank you, so much Mr. Chairman. Recently, two 
of the largest health clinics serving my district were bought 
by United Health Group, a prime example of consolidation of our 
healthcare system. United Health then demanded a significant 
increase in payments from another health insurer, during tense 
negotiations in a highly consolidated health market.
    As a result, over 19,000 of my constituents were notified 
that they would likely lose access to their doctor. As hospital 
consolidation in situations like this are becoming more common 
nationwide, it is just important that we take a look at the 
impacts of hospital consolidation on people's health and 
medical cost.
    Seattle is not alone in experiencing these hospital 
mergers, and we have seen a concerning increase of mergers 
across the country. A recent report by the New York Times found 
that areas with the highest rate of hospital consolidation had 
prices go up between 11 and 54 percent.
    Ms. Tripoli, can you describe what typically happens when 
there is a high rate of hospital mergers in a region?
    Ms. Tripoli. Absolutely. It really comes down to when you 
see increased concentration in a market, it gives greater 
negotiating power over being able to set prices, essentially. 
What we have seen in the hospital business model is a complete 
shift, and it is based on two things. Buying up local 
competition, so you can gain more negotiating leverage over how 
to demand higher prices and generating high volumes of high-
priced services.
    The result of course, the prices get passed on, 
particularly in the commercial market, to employers. We see 
stagnant wages. We see increased premiums and cost sharing for 
consumers, and we are stuck with unaffordable healthcare care. 
Rising levels of medical debt.
    Ms. Jayapal. One of the things that we hear from the 
hospital industry, they often claim that hospital mergers 
increase the quality of care. Is that true?
    Ms. Tripoli. I think what the data shows us is that that 
typically is a claim, but the data shows us that quality either 
stays the same, or in many cases gets worse.
    Ms. Jayapal. It is really not true at all. Hospitals also 
claim that mergers lead to lower healthcare costs. Is that 
true?
    Ms. Tripoli. That is definitely not true.
    Ms. Jayapal. Definitely not true. Ms. Monahan, these 
hospital practices often lead to people losing access to their 
medical providers. What do experts say about the impact of 
losing access to your care provider and then having to find new 
providers, new specialists?
    Ms. Monahan. I think it is a huge problem for consumers, 
and one thing that we see, for example, it is kind of this 
intersection of hospitals merging and acquiring physician 
practices, and then how the insurers have to respond. One 
example is that you know, insurers are trying to lower costs, 
and so they will say, you know, if you go to an independent 
practice, it will cost you less than if you go to this now 
hospital owned location.
    That puts the consumers in a really tight spot because they 
may want to prefer to continue to see the doctor they have been 
seeing, maybe they are in the middle of a course of chemo. They 
now have to pay maybe several hundred dollars more for every 
time that they go in because the hospital owns this practice 
now and is charging a lot more for that.
    Ms. Jayapal. It really reduces freedom of choice to see the 
doctors and specialists that you want. Representative Spartz 
and I have championed bipartisan efforts to expand antitrust 
enforcement to nonprofit hospitals through our legislation, the 
Stop Anticompetitive Healthcare Act. Ms. Tripoli, can you tell 
me a bit about how increased antitrust enforcement would affect 
competition in the healthcare system?
    Ms. Tripoli. Yes, and thank you for your legislation. It is 
very exciting to see. As I understand it, the FDC currently 
does not have the ability to intervene and investigate mergers 
and acquisitions among non-profit hospitals in particular. As 
far as consolidation, we are seeing increased consolidation 
across all types of hospitals, non-profit, for profit.
    Giving FDC the authority to actually be able to investigate 
would go a long way in helping us to address the parts of the 
markets that are still not consolidated.
    Ms. Jayapal. I really appreciate that, and I invite all of 
my colleagues on both sides of the aisle to join our bipartisan 
legislation. Hard-working Americans are bearing the brunt of 
increased healthcare costs from hospital consolidation, and I 
think it is really important that we work to prohibit these 
anticompetitive practices in healthcare.
    Also go further, in my view, and enact a universal single 
payer healthcare system that would remove insurance middlemen 
who often perpetuate anti-competitiveness. I have that bill of 
course, it is Medicare for All Bill. The only competition in 
healthcare should be providers competing to provide the best 
possible care for their patients.
    That should be the only objective, the only goal. I thank 
you all for your work, and I yield back Mr. Chairman.
    Chairman Good. Thank you, Ms. Jayapal. Now we will 
recognize Ms. Houchin from Indiana.
    Ms. Houchin. Thank you, Mr. Chairman. Thanks to the 
witnesses for coming to testify before us today. This is an 
important opportunity for us to focus on issues pertaining to 
transparency in the cost of healthcare. Dr. Sachdev, as a 
fellow Hoosier, you know, that Indiana has recently passed 
important legislation as you noted in your opening statement, 
such as AGA 1004.
    Requiring at least 85 percent of each drug rebate, which is 
probably defined to include fees and other remuneration, to go 
to certain patients at the point of sale at the pharmacy 
counter, or ERISA exempt employers get 100 percent of the 
rebates.
    You mentioned in your testimony several policy ideas 
addressing PBMs. Could you talk through your ideas that you 
think this Committee should consider legislating, and how 
Indiana is leading in this regard?
    Ms. Sachdev. Thank you so much. Yes, we passed a PBM 
legislation is in SEA 8, so that is where that particular 
language comes from. We need to codify the Transparency in 
Coverage Act and include the pharmacy information in that. 
Prohibiting gag clauses with all parties, including insurers, 
but now that they have merged it has to be all parties, 
including those group purchasing organizations, those GPOs that 
they contract with.
    A lot of the legislation around the country at the State 
level is focused on PBMs and the rebates that they have 
negotiated with the drug manufacturers. Now there is this other 
entity over here called the GPO and they are negotiating. If 
you are just targeting the PBM you miss the GPO, so that is an 
opportunity.
    Spread pricing is a huge problem. We have heard about 
pharmacies, independent pharmacies getting paid less. There are 
issues you can pay a pharmacy a certain amount, but then the 
PBM can claw it back, which is like I paid you 100 bucks, but 
now you have got to pay me 50 back. We need some insight into 
claw backs.
    This is a particularly shady process, where they will pay 
the pharmacy a price for a certain drug claim, but they will 
charge the employer much more for it. That is why we need total 
transparency through the whole supply chain, so the employer 
can do that audit all the way through.
    Merger and acquisition oversight, and because we have seen 
all of this vertical integration, we really need to think about 
how to prohibit self-dealing. You know, I am the insurance 
company, I am the PBM, I am the pharmacy, but the employer and 
the patient pays for everything, so I am just taking money out 
of one pocket, and putting it in the other.
    They really should not be allowed to self-deal.
    Ms. Houchin. Thank you. Like you, I continue to be 
frustrated. I hear from constituents a lot on concerns about 
the practices of pharmacy benefit managers, how consolidation 
of PBMs has taken away options for plan sponsors and patients. 
Do employers have flexibility when designing their prescription 
drug benefit programs?
    Ms. Sachdev. They have limited flexibility. Sometimes the 
PBMs will say if you--here is your drug formulary. If you want 
to make any changes to it, you can, but we are going to charge 
you a huge fee to make any changes. When they do the math, they 
are like gosh, I just wanted to take a few drugs off, or get 
biosimilars on because there are no biosimilars on the 
formulary.
    Now you are going to charge me a million dollars to do 
that. That is ridiculous. They should not be able to charge 
fees because you are really handcuffing employers by doing that 
if you are not going to say hey, you can do this, but then 
these fees, and they have so many fees really for doing 
anything.
    Ms. Houchin. Thank you. I think that is why this 
transparency piece is so important.
    Ms. Sachdev. Yes.
    Ms. Houchin. I have heard from constituents that they can 
no longer get long-term supplies. They can only get a month's 
supply of their prescription drugs, and then the cost is three 
times higher than if they had a 3-month supply. We are 
currently investigating if it is a PBM issue, or another issue 
that is causing their prescription prices to go up.
    When we have increased costs of healthcare like going to a 
different facility, you know, buying a facility, going across 
the street, and then it costs more, consumers know that there 
is something not right about that. That it is incumbent upon us 
to try to contain these costs when possible. Nearly every 
healthcare related constituent meeting someone brings up PBMs, 
so I look forward to this Committee considering serious 
legislation addressing PBMs, and their role as the middleman. 
Thank you for being here today, I yield back.
    Chairman Good. Thank you, Ms. Houchin. Now we will 
recognize Mr. Scott from the great State of Virginia.
    Mr. Bobby Scott. Thank you, thank you, Mr. Chairman. Ms. 
Tripoli, you responded to a previous question by saying that 
the costs did not go down when there are mergers. By costs, do 
you mean charges, or costs of providing services?
    Ms. Tripoli. I mean the underlying price of healthcare. 
After there is a merger and acquisition, particularly in the 
hospital setting, we see prices go up.
    Mr. Bobby Scott. You are talking about the charges, not the 
costs of providing the services.
    Ms. Tripoli. The charges, of course, the charges to the 
patient, the out-of-pocket costs of course depend on whether 
they are insured, what type of insurance.
    Mr. Bobby Scott. Yes, but I mean the costs of the hospital 
providing the services could go down, but the charges could go 
up?
    Ms. Tripoli. The price of medical services after markets 
consolidate, after two hospitals merge together, goes up.
    Mr. Bobby Scott. The price?
    Ms. Tripoli. The price does.
    Mr.  Bobby Scott. The charges. Okay. We are dealing with 
costs of services, we are dealing with surprise billing, and it 
seems that when you land in an emergency room, providers could 
charge whatever they want. We heard one service was $1,000.00, 
or $2,500.00 in the same hospital, or $8,000.00 down the 
street. There used to be a term called UCR, usual, customary, 
and reasonable. Is that still a limitation on what you can 
charge? Anybody want to answer that?
    No? Can you still just make up whatever you want unrelated 
to anything?
    Ms. Tripoli. Just to make sure I understand the question. 
Is the question about the charge master price where hospitals 
are essentially setting, pretty much a price, they are building 
to price, and then is that what you are asking?
    Mr. Bobby Scott. Yes. I mean, if I take my car to a 
mechanic and say change the oil, he cannot come back and say 
well I will charge you $750.00, and I am going to keep your car 
until you pay. It has got to be a reasonable price.
    Ms. Tripoli. It should be a reasonable price. I think what 
we are seeing as a result of heavily consolidated markets is 
that the underlying price is not reasonable. It is not only 
high, and increasing, but there is incredible variation across 
the market. In one hospital system you can, depending on your 
plan, on your health insurance plan, the MRI can be $1,000.00, 
or it can be $3,500.00.
    That MRI should be one price because it is an MRI. It is 
the same service. It is the same across the whole country.
    Mr. Bobby Scott. That is not the case right now.
    Ms. Tripoli. Exactly.
    Mr. Bobby Scott. One of the--we have had a lot of 
complaints of PBMs and TPAs, how much of this could be solved 
if they were considered fiduciaries?
    Mr. Baker. Thank you for the question. I think it would 
have frankly limited value for the reasons that Dr. Sachdev 
brought about earlier, because of self-dealing. You could say 
PBM you have to be the fiduciary, but within the corporate 
umbrella of that PBM, they also own their mail pharmacy, their 
specialty pharmacy, the GPO, there is all of these other 
corporate entities that they could still bury these profits in.
    I think it is important to really look at the global 
entity, and make sure that you are putting regulation in place 
that makes sure that all of the entity needs to be driving the 
best interest of its clients.
    Mr. Bobby Scott. Do you want to answer that?
    Ms. Monahan. On the fiduciary question. I think there is 
potential for value in having PBMs or TPAs be fiduciaries, but 
we want to just think about it from kind of the functional 
sense of kind of, what service is being provided here, what 
activity are they performing. Then with respect to that 
activity, is there something that we think is really very 
important that they be acting in the best interest of the plan 
members.
    I totally recognize these are really complex companies and 
structures, and so I do not--I think the idea here is that we 
want them to be working and to contain costs, and not just be 
acting in their own self-interest. I do not think it is 
necessarily like clean, put the label on. Done. Thinking 
through, like yes, there might be some value in thinking of 
them as fiduciaries as well.
    Mr. JC Scott. I would just add the fiduciary label in law 
implies that there is decisionmaking authority, and ability to 
control the other entities' decision and financing. A great 
example, the PBM does not hold that decisionmaking authority on 
behalf of the employer, and a great example is the conversation 
we just had about rebates where the employer is making the 
choice whether that goes to the point of sale at the pharmacy 
counter, to defray premium, to make the benefit more robust, or 
to apply it elsewhere in the employer's finances.
    The PBM does not control that decision. As you look at that 
fiduciary label, that decisionmaking authority does not exist.
    Mr. Bobby Scott. Let me try to get in one other question. 
What is the rationale for facility fee to determine whether the 
procedure is performed in a hospital or a physician's office, 
particularly when they are charging these facility fees in a 
corporate owned physician's office?
    Ms. Tripoli. I think there is very little rationale for 
facility fees for a certain group of services. Ultimately what 
is happening is you're seeing large healthcare corporations 
buying up physician practices, rebranding so that they can get 
a higher reimbursement. How that plays out in the commercial 
market is that consumers are experiencing a facility fee.
    In the story of the woman I told, Ms. Tesso and her son, 
they did a 1-hour videoconference, and they got a $1,000.00 
bill facility fee, but they never stepped foot in the hospital-
based setting.
    Mr. Bobby Scott. Thank you, Mr. Chairman.
    Chairman Good. Thank you, Mr. Scott. Now we will go to 
Chairman Foxx from North Carolina.
    Mrs. Foxx. Thank you, Mr. Chairman, and thanks to our 
witnesses for being here today. Dr. Sachdev, the Employers 
Forum of Indiana has continued to push for change in Indiana, 
which has among the most hospital consolidations in the 
country. Kaiser Family Foundation has discussed challenges with 
hospital price transparency data.
    How has your organization surmounted these challenges?
    Ms. Sachdev. Thank you for the question. I am not sure that 
we have fully surmounted those challenges, but we are doing our 
very best. It is beginning with transparency. We are requiring 
financial transparency of all the hospitals in the State, they 
have to submit all of their finances. We have hospitals that 
have between 2 billion and 7 billion dollars in cash and 
reserves, and so when they come to legislators claiming 
poverty, they have the data, and we were able to supply that.
    It needs to be more readily available to them.
    Mrs. Foxx. How has the recently passed legislation 
prohibiting hospital off-campus facilities fees been 
implemented?
    Ms. Sachdev. We looked. We did not want a blunt instrument 
across all of the hospitals. We want to make sure all of our 
rural hospitals are successful. It did not apply to all 
hospitals. It applied to certain hospitals, and those were our 
largest hospital systems, and they simply do not fill out a 
hospital facility fee form, they just fill out an independent 
form.
    Mrs. Foxx. Thank you. Ms. Monahan, the No Surprises Act 
prohibited gag clauses in contracts between health plans and 
third-party administrators to ensure that plan sponsors can 
access cost and quality data. Despite this, plan sponsors still 
struggle to access needed information. What can be done to 
allow plans to access cost and quality data.
    Ms. Monahan. I think we need to revisit the gag clause 
prohibition and think about kind of where the burden falls. 
Right now, the TPAs are kind of looking at this and responding 
saying it is on the employer to kind of negotiate a contract 
where they get rid of the gag clauses.
    There is no kind of real hook on the TPAs themselves to be 
eliminating these.
    Mrs. Foxx. Thank you. Mr. Baker, I would like to pose the 
same question to you. What can be done to improve plan sponsors 
access to their own cost and quality data?
    Mr. Baker. I think the Consolidated Appropriations Act has 
been a very good start. It is really trying to put more data 
out there, but that law really says the data needs to go to the 
Federal Government, and it can be done in an aggregate fashion. 
Where these employers see exactly their data, know exactly 
their costs, and where their money is going would be incredibly 
helpful.
    Mrs. Foxx. Thank you very much. Mr. Scott, many in Congress 
believe that large pharmacy benefit managers are not 
transparent and are driving higher drug prices through the use 
of rebates and spread pricing. Do you agree that plan sponsors 
should be able to audit their plan data without interference, 
and should they be made aware of any indirect compensation the 
PBM receives for its contracted services?
    Mr. JC Scott. Yes. I would agree. We need our clients and 
employers to have all the information they need to make 
informed decisions.
    Mrs. Foxx. Thank you very much. Mr. Chairman, I yield back.
    Chairman Good. Thank you, Dr. Foxx. We will now recognize 
Ms. Hayes from Connecticut for 5 minutes.
    Mrs. Hayes. Millions of Americans across the country are 
hit with unexpectedly high medical bills because of increased 
hospital consolidation. Studies show that consolidation has 
consistently produced higher prices for care. According to the 
American Hospital Association, between 1998 and the end of 
2021, there were 1,887 hospital mergers, reducing the number of 
hospitals from 8,000 to just over 6,000.
    This consolidation includes hospitals acquiring independent 
physicians' offices and converting them to hospital outpatient 
departments. Under the current system, these departments can 
fully charge facility fees, and receive higher reimbursements 
than freestanding physicians' offices than other lower cost 
settings.
    There is little evidence that the quality of care is 
higher, and that in many cases physicians' practices were 
brought by hospitals, and designated part of the outpatient 
department, just to take advantage of this rule. Ms. Monahan, 
you discussed hospital billing practices that make it difficult 
to determine which setting is providing the service.
    This includes when a service is provided in what is 
effectively a doctor's office but is billed at the hospital 
rate. While the plan has no way of distinguishing the setting 
in which the care took place, can you tell us a little bit 
about if you do not know the location of where care is 
provided, how is a plan supposed to determine the rate of 
payment?
    Would providing accurate information on the site of service 
improve transparency?
    Ms. Monahan. Absolutely providing this would improve 
transparency, and the payers as well as State officials, State 
regulators, Federal regulators, looking at this really just 
cannot see the actual location where care took place, and they 
cannot make their decisions to say this is an off campus, a 
physician's office that is miles off campus. It looks like a 
hospital to us, and figuring out what to pay then becomes much 
more difficult.
    If you want to adjust, this is a lower quality practice 
that a hospital now has acquired and maybe we do not want to 
contract them, or we do not want to pay them as much if we 
cannot see that that is where the care is being provided, 
rather than it all just looks like it is on a main hospital 
campus. It makes it a huge challenge to implement reforms.
    Mrs. Hayes. Can you just help us understand a little why it 
would make a difference, I think to Mr. Scott's question, if a 
service is being provided. Does the setting, should the setting 
determine the rate of reimbursement for that service, whether 
it be an MRI, an ultrasound, or whatever.
    Ms. Monahan. Ideally, no. I think that is a system we want 
to move to where for care that can be safely and effectively 
provided in a physician office, we should not be paying more 
when it is being provided in a hospital owned setting. Right 
now, what you see is states trying to do, like Indiana, to say 
at least off campus physician, or a physician's offices. Let us 
not pay more, let us not pay facility fees there.
    Payers may have difficulty implementing that if they cannot 
see where the care was provided.
    Mrs. Hayes. Thank you. Ms. Tripoli, in your testimony you 
discussed the lack of transparency concerning the business 
practices of PBMs, or pharmacy benefit managers. As you know, 
in 2022, 80 percent of all equivalent prescription claims were 
processed by three companies. CVS Health, Express Scripts 
through Cigna, and Optum RX through United Healthcare Group.
    What are some of the problems that may arise because of how 
PBMs are currently compensated, and how would transparency help 
in these issues?
    Ms. Tripoli. Thank you very much for the question. I think 
the first thing to say is the reason we have a drug 
affordability crisis is because of price gouging from drug 
companies. It is also important to note that PBMs, of course, 
have a role to play. There is just an incredible amount of 
opaqueness around the PBM business practices and contracting 
practices.
    They are, to your point, three major PBMs owning 80 percent 
of the market. Giving them this market power gives them 
increased negotiating leverage with the drug companies, to get 
price concessions. The result of pricing structures that are 
not always in the interests, in the financial interests and 
health interests of the American people.
    Increased transparency, pulling back the curtain, 
understanding what is happening around the rebates, the actual 
negotiated rates is going to empower employers to actually be 
able to negotiate to get a better deal for the employees.
    Mrs. Hayes. Thank you. That was one of the things that 
Democrats tried to do was Medicare negotiating the price of 
prescription drugs, increasing competition in many of these 
workplaces. How does the lack of competition impact an ability 
to better deal with PBMs in 15 seconds?
    Ms. Tripoli. The main thing that I have not said is that 
PBMs can actually steer patients to their own pharmacies, 
taking away choice from consumers, which is hugely problematic 
for their access to pharmaceuticals.
    Mrs. Hayes. Pretty basic. Thank you. That is all I have. I 
yield back.
    Chairman Good. Thank you, Mrs. Hayes. Now we will go to 
Representative Chavez-DeRemer from Oregon.
    Mrs. Chavez-DeRemer. Thank you, Mr. Chairman, and thank you 
for the witnesses for being here today. We have heard a lot 
about pharmacy benefit managers, PBMs, and so just for a quick 
refresher, while we asked several questions over and over 
again. I think it is fair to the American people to hear it 
over and over again what your answers are.
    PBMs decide which medications are covered by health 
insurance plans, which pharmacies patients can use, and all are 
owned by insurance companies who in turn also own the 
pharmacies. The discounts acquired by PBMs notice rebates are 
often not passed down to the patients.
    In other words, a PBM could get $100.00 rebate from a 
pharmaceutical company, pass along the $15.00 to a patient, and 
pocket the remaining $85.00. Meaning the insurance company is 
forcing a larger copay on a patient, so they can pay themselves 
more than if there was no rebate at all.
    It is really a system beating down on the patients, and 
that is who we hear from. Mr. Baker, how could we require PBMs 
to pass through the discounts from rebates onto the patients, 
and avoid insurance companies jacking up the premiums because 
they are losing profits from these rebates?
    Mr. Baker. That is a great question. I think it goes back 
to the theme of the conversation here today, transparency and 
data--to make sure that at that claim level the ultimate plan 
sponsor can see exactly what is being charged, what they are 
getting back in rebate dollars from the pharmaceutical 
manufacturers in aggregate.
    I think you also bring up another very important point 
about the PBMs owning their own pharmacies and having that 
control. Just for perspective, a drug cost is not a drug cost, 
and this is where we have got to look at that major corporate 
umbrella that these PBMs are part of.
    For example, Mark Cuban's cost plus drug company, there is 
a drug called Imatinib. You can buy it from him for a year's 
supply for $866.00. There's one PBM that works with four large 
State health plans. If you are part of the State health plan of 
Kentucky, that drug is going to cost you $26,000.00. If you are 
part of Louisiana's health plan, it is $57,000.00.
    If you are part of Georgia's health plan it's $170,000.00, 
and if you are unfortunate enough to be a taxpayer in 
Tennessee, you are paying $212,000.00. Exact same drug, exact 
same PBM, the price changes depending on how they want to do 
that and the arbitrage that is in the middle, how they want to 
move that money around.
    Mrs. Chavez-DeRemer. I appreciate the answer, especially 
being here today given that you are a competing industry 
dominated by the monopoly. How can Congress disrupt this 
vertical integration in the industry so that insurance 
companies cannot distort our healthcare system and force 
devastating costs on what I would call vulnerable Oregonians?
    Mr. Baker. I think the vertical consolidation has been 5 
years on and is very obviously not helping. Costs continue to 
go up, and quality continues to go down. You know, I think 
really delinking how PBMs make their profit from a percentage 
of acquisition costs and sales costs because then if I am a PBM 
and I make 7 percent, do I want to make 7 percent off of 
$5,000.00 drug or off of a $50.00 drug?
    Again, these are large corporations who are driven to 
profit. I think it starts with creating the right incentives, 
getting the right data out there, and then making sure that all 
of that is completely visible.
    Mrs. Chavez-DeRemer. Thank you, Mr. Baker. Let us move now 
to the relationship between PBMs and employers. A whole lot of 
employers have said they are not able to get accurate costs and 
pricing information as was stated earlier, from PBMs, despite 
laws which mandate the sharing of this information. PBMs deny 
this claim and say that employers can receive cost and quality 
information at any time through the audit.
    It seems almost coy, really, for certain PBMs to say if you 
want to know whether we are following the law, audit us. 
Knowing small businesses do not have that kind of time, let 
alone really the resources to do so. With that disconnect, Mr. 
Baker, answer me this. How can we bridge this issue so that 
there is seamless transparency between the PBMs and the 
employers?
    Then to followup to that, Ms. Monahan, what can Congress do 
to make sure that PBMs comply with the law, and meet their 
reporting requirements, insuring the disclosure of direct and 
indirect compensation for their services? I will wait for 
those, because I will be running out of time, so make it quick.
    Mr. Baker. I will go very quickly. I think it goes to the 
status quo. Basically, PBMs say you cannot audit, but then they 
say only certain auditors can come in, and only certain data is 
available. The term audit is very loose, and it is not as 
comprehensive as it needs to be, and it should be able to be 
done by anybody that the employer chooses.
    Mrs. Chaves-DeRemer. Thank you, Mr. Baker, Ms. Monahan?
    Ms. Monahan. This Committee sent a letter last December 
encouraging DOL to issue guidance clarifying that the service 
provider compensation disclosures applied to PBMs and TPAs. At 
this point that guidance has not happened, but so further 
action may be warranted to make sure that is clear.
    Mrs. Chaves-DeRemer. Great. That was quick. Thank you. Dr. 
And Ms. Tripoli, but I do not think we are going to have time. 
If PBMs disappear tomorrow, how do you believe employer health 
plans would be able to negotiate those drug prices with 
pharmaceutical companies? I know the answer will be long, so I 
will go ahead and ask this question to the Chair, submit it, 
and I appreciate I just wanted to get that for the record, and 
with that I yield back my time.
    Chairman Good. Thank you. We will now go the Ranking 
Member, Mr. DeSaulnier, for his questions.
    Mr. DeSaulnier. Thank you, Mr. Chairman. I want to followup 
on the Chairman's, Chairman Foxx's questions about the 
prohibition on gag rules. Starting with Ms. Monahan, and then 
Dr. Sachdev. If we required a plan's data to be treated as a 
plan asset under ERISA, how might that help with getting the 
information that Dr. Foxx was talking about?
    Ms. Monahan. That would effectively kind of flip the 
framework we currently have on its head, so rather than the 
PBMs and TPAs kind of owning the data and setting the terms by 
which an employer can access it. It would say this is the 
employer's data, and the employer can then set terms, or 
Congress could set terms under which, you know, the TPAs, or 
PBMs could be using that. There are certain important functions 
that they would perform, so we would want to make sure that 
would still happen in some sense.
    The employer, that would be their data, and they could have 
access to it. The one thing I would want to make sure is that 
there are the appropriate privacy protections to protect the 
plan members whose health information would be accessible.
    Mr. DeSaulnier. Doctor, any comments?
    Ms. Sachdev. Yes. In addition to the gag clause where you 
say we are going to remove this, there is--it is one thing to 
say the gag clauses are gone. It is another thing, there is a 
lot of stalling that happens and getting the data to the 
employer.
    It can take, you can make the request that they might give 
you the wrong data, it may take 18 months to get the data. I 
would really encourage you to think about a timeframe by which 
they have to give the data back. In Indiana, we put 15 business 
days in statute.
    Again with the audits, we have a law now that says 85 to 
100 percent of rebates have to go to patients or employers. How 
do we know that 100 percent or 85 percent, or any percent is 
actually getting? We have to have those audits at the drug 
level, not in aggregate.
    I think what would be perhaps most transformational is with 
the Transparency in Coverage Act, all the insurance 
information, all the PBM direct pricing information, as these 
insurance companies have to put those prices on their machine-
readable files on their own websites, the hospitals have to put 
it on their own websites.
    They should all send a copy to you. You could put it in a 
master data base. You would be able to see how prices compare 
when policies change, monitor it, look for compliance. Also 
give the public access, and researcher's access. That way we 
would all be making evidence-based decisions in a policy 
manner, in a purchasing manner.
    As mentioned, as you mentioned, employers do not have a lot 
of resources to do all this deep dive data analysis, so the 
Federal Government just getting a copy of these machine-
readable files could really go a long way to help them.
    Mr. DeSaulnier. Thank you. Ms. Tripoli, would you talk a 
little bit more about hospital facility fees and the cost to 
hospitals? It is interesting listening to this happening many 
years ago, 20 plus years ago, being on the governing body of a 
public hospital clinic in an area in the San Francisco Bay 
area, the east bay where Kaiser is very, a closed system, is 
dominant.
    We were trying to move the high cost of what we called the 
aircraft carrier of the hospital, and so it was Kaiser, and so 
was Sutter, and so was Anthem is affiliated, into primary care, 
and into community-based clinics.
    Now I am listening to this testimony, I am reading, and the 
hospitals seemed to have changed that model to sort of capture 
even lower cost at a higher cost reimbursement. Is that 
accurate?
    Ms. Tripoli. That is. That is accurate. I completely agree. 
I think we want to make sure, as was mentioned earlier, that 
services are provided in the most safe and effective location 
possible, but what we are seeing is a complete shift to 
outpatient care where it is higher priced, higher cost 
services, to take advantage of a higher reimbursement.
    Mr. DeSaulnier. Ms. Monahan, as a consumer, as personally 
as a consumer, as a survivor of cancer, and non-curable cancer, 
trying to navigate this is basically just giving up to a 
certain degree, and trusting your primary care doctor. 
Fortunately, I have a really good one. He has to advocate and 
figure out where are we sending you.
    To get started on the pharmaceutical industry and going to 
Walgreens as opposed to a personal local pharmacy is just a 
hugely different world. Sticking to the just--the access to the 
facility. What does this mean for the consumer? I know my 
perspective; you just really count on your primary care 
physician.
    Ms. Monahan. Very much so, and I think it really means that 
consumers are going to be paying a lot more because so many 
physician practices are now being purchased by hospitals and 
large health systems, and it is not really necessarily up to 
the physician, you know, but when they go and they see you out 
at this location that is owned by the health system, the health 
system is going to tack on a bill.
    That bill, how it is being processed under your insurance 
will often mean you are paying a lot more when you would go to 
see your physician. You might just have a copay, but now you 
have an additional hospital bill, and that might be a 
coinsurance charge, or you are paying for all of it under your 
deductible, so it is a lot more money just to go to your 
doctor.
    Mr. DeSaulnier. Yes, it is awful for the consumer. Thank 
you, Mr. Chairman. I just want to mention my oncologist, in 
case he was listening, I rely on him too. I yield back.
    Chairman Good. Thank you, Mr. DeSaulnier. Now we will go to 
Representative Comer from Kentucky.
    Mr. Comer. Thank you, Mr. Chairman. Mr. Scott, it is good 
to see you. Following PCMA's statement regarding our recent 
oversight hearing on this topic, which criticized having a new 
entry to the market, Mr. Baker testified about the challenges 
he has faced. I wanted to give you a chance to answer a few of 
the same questions that were discussed during that meeting, 
during that hearing.
    However, I first want to acknowledge that the Chief 
Financial Officer of CVS Caremark Aetna was quoted on May 31st 
at an industry conference when asked about potential reforms 
proposed in Congress as saying, ``There's other ways in the 
economic model that we could adjust if one of those things 
changes.'' Advised his peers to ``not worry about Congress.''
    Now your presence before us today and insistence on being 
the only voice testifying to Congress on potential reforms, 
leads me to believe you might have a different opinion of the 
importance of Congress. Mr. Scott, this poster shows Imatinib, 
a generic chemotherapy drug used to treat Leukemia.
    Can cost the patient at CVS more than $17,000.00 for a 30 
day supply. An identical prescription, a 30 day supply of 
Imatinib would only cost $72.00 at Cost Plus Drugs. Obviously, 
Imatinib does not cost $17,000.00 if Cost Plus Drugs can sell 
it for $72.00.
    How would you explain to any patient or payer such as the 
Federal Government the benefit in CVS charging $17,000.00 for a 
drug that can be sold for only $72.00?
    Mr. JC Scott. It is good to see you Chairman Comer, and I 
appreciate the opportunity to visit with you again. We have 
spent time together before, and I am glad that Mr. Baker is 
here, and has been able to testify in other forums, because I 
do believe to your point it is important we hear from a variety 
of voices.
    PCMA certainly celebrates every new entrant into the market 
because we want a very competitive marketplace with a lot of 
choices. We have heard a lot today about frustration from 
employers that they cannot get the information they need from 
their current PBM. That is great. I can assume that they can 
flock to different business models as those develop in the 
marketplace.
    I believe Congress has an incredibly important role to 
play, which is why I am here, and why we want to engage, 
because we all need to be working together toward trying to 
bring down the cost of prescription drugs. I cannot speak as to 
what the CVS representative was saying to his shareholder 
audience, other than to say I recognize that as policy change 
occurs, the importance of having a pharmacy benefit company in 
existence to help employers and other plan sponsors manage 
their prescription drug cost, that value proposition is going 
to continue to be present.
    That work needs to be done because if you disaggregate 
that, you lose that value of scale and being able to negotiate 
and harnessing group purchasing power. It is only going to 
increase costs if every employer and every plan sponsor has to 
do that on their own.
    For your example on the chart, I cannot speak to the 
specific example with not having more knowledge of the 
patient's health plan, the cost sharing, the benefit design.
    Mr. Comer. It is the same example I used in the oversight 
hearing on the PBM. Let me ask another question because my time 
is running short. Mr. Scott, CVS Caremark underwent a system 
enhancement last week, which removed the plan cost column, 
including for our example here, Imatinib.
    Plan sponsors were previously able to see the total cost of 
the medication, and the total cost to their plan. 
Unfortunately, as PBMs professed to want transparency, and have 
a focus on providing plan sponsors with information, they are 
actively suppressing information available to plan sponsors.
    Thankfully, this information magically became available 
again last night right before this hearing. Mr. Scott, I am 
having trouble reconciling these two things. We continually 
hear about how PBMs would like to provide transparency, but 
then see intermittent or incomplete information provided to 
plan sponsors.
    Can you provide some insight into voluntary actions PBMs 
could take right now to provide this data to PBM clients?
    Mr. JC Scott. Yes, sir. If a pharmacy benefit company is 
not providing the information that a client is requesting when 
they're drawing up their RFP, when they are designing their 
contract, then that client is going to move to another PMB. It 
is in the interest of the PBM to make sure they are providing 
the data.
    Mr. Comer. Well, why have they not taken those actions? 
They talk about transparency, and that is what we have got 
other committees looking into this. We are going to have 
legislation to be more transparent. The Secretary testified in 
a committee hearing; transparency is the answer. Well, why will 
not the industry just be transparent?
    Mr. JC Scott. I believe the industry is transparent.
    Mr. Comer. I disagree. Respectfully.
    Mr. JC Scott. I understand that. If the companies are not 
providing what the client is asking for, the client is going to 
move elsewhere. That is why we see new business models able to 
enter into the marketplace and differentiate in the kinds of 
contracts they're willing to offer.
    Mr. Comer. The problem with the client is the industry is 
exhibiting vertical and horizontal manipulation of the 
pharmaceutical market. That is the problem, and that is what 
Congress is going to have to do, Mr. Chairman, to fix the 
problem. Transparency is a great political talking point, but 
Congress has been talking about that for years, and nothing is 
happening. I appreciate this Committee hearing. I look forward 
to working in a bipartisan way to try to get resolution to this 
problem. With that, Mr. Chairman, I yield back.
    Chairman Good. Thank you, Mr. Comer, and again thanks for 
all of our witnesses here today. I represent a predominantly 
rural district, and I regularly hear, as I am sure many of my 
colleagues do about the importance of local, independent 
pharmacies, and how they're under attack from big pharma, and 
dying out, or struggling to survive.
    Mr. Scott, your testimony cites data that would seem to 
disagree with what I am hearing from my constituents, and why 
do you think that is, or how would you counter that argument 
about the impact on local pharmacies?
    Mr. JC Scott. Yes, sir. It is not our data, or not our data 
alone, this comes from the NCPA, the community pharmacy lobby. 
That is documented that we continue to see a stable marketplace 
when it comes to independent pharmacies across the country. 
What we've talked about a little bit here before during the 
course of the hearing is isolating those rural pharmacies, 
right?
    Not the independents, the 83 percent independents, who are 
serviced by wholesalers through their pharmacy services and 
administrative organizations, or PSAOs that do a lot of 
negotiating work on their behalf. You have got these stand-
alone rural pharmacies, often the only point of care where we 
really have to focus on making sure that they are able to have 
a sustainable business model, so that they can be there to 
serve patients.
    That gets to the conversation we were having earlier about 
making sure there is a lot of different ways they can provide 
value to patients.
    Chairman Good. One of the things that a lot of people in my 
district talk about is how Express Scripts, in particular, is 
offering a reimbursement rate that's so low that it is 
unaffordable for these small pharmacies to fulfill Tri-Care 
prescriptions. What would your response be to that?
    Mr. JC Scott. A lot of this gets to the setting of pharmacy 
networks, so just like you said, a provider network on the 
hospital side. We work with our clients--our companies work 
with our clients to develop networks of pharmacies. Always with 
the goal of making sure that there is an access point nearby 
the patient's home where they can get access to their 
medications at a retail pharmacy.
    In the Tri-Care system, the Department of Defense is 
involved in helping to set very specific network adequacy 
requirements that dictate like how far they have to be, as it 
is in the Medicare program, and in the commercial marketplace. 
That's the objective of the plan sponsor, is to develop a 
robust network to serve the patients that they represent.
    Chairman Good. I switched gears in the interest of time to 
Mr. Baker here. Mr. Baker, some have claimed that increased 
transparency, which we talked a lot about today, actually 
causes prices to increase, and can result in collusion because 
it inhibits a payer's ability to privately negotiate discounts. 
What's your opinion on this?
    Mr. Baker. I think that transparency would do nothing but 
drive down costs. I think it is a fear tactic. I find it very 
interesting that we want to continue to point to the system as 
working, but again, costs have gone up every year. Quality is 
going down every year. What we have been trying, and how we 
have allowed the gate keepers to run is not working.
    This lack of transparency is driving a lot of those poor 
outcomes. I think people being able to really see like the poor 
State of Tennessee. I am paying $212,000.00 for this drug that 
your neighbor to the north, Kentucky, only gets $26,000.00. If 
that information is out there, and people then can say I do not 
want to pay $400.00 for a gallon of milk at, you know, my 
grocery store.
    I am going to go over here because I know what a gallon of 
milk should cost, we are going to see a significant drop in 
pricing.
    Chairman Good. There is no question. Your company's 
business model is to provide a transparent, cost-effective PBM 
option for employers. You have talked about how yours is 
different. What benefits have you seen to the industry and 
consumers from what your PBMs offer?
    Mr. Baker. I would say three things. One, we have seen 
decreasing costs for all of the clients that we work with, so 
because we are transparent, and we sit down and have deep 
conversations with them about the decisions they should make in 
the best interest of their plan, their costs go down.
    Two, technology matters. We talk a lot about healthcare, 
and the poor technology in healthcare, and that is the same 
thing in the PBM industry. Most PBMs are still dealing in 35-
year-old DOS based technology which makes reporting very 
limiting, makes the ability to customize very hard.
    Technology then gives employers much more flexibility, and 
then finally, we inject a lot of pharmacy technicians and 
pharmacists that we hired from community pharmacy back into the 
system. PBMs have created a tremendous amount of exclusionary 
formularies and utilization management criteria.
    Basically, what those words mean is they do not let the 
doctor write for the drugs that the doctor wants. They say no, 
doc, you cannot write for that drug. We, PBM, will not cover 
it. That puts a significant administrative burden on physician 
practices to try to figure out oh, Express Scripts has this 
drug. CVS has this drug.
    We want to make sure that we help those physician offices 
out by saying here are the right drugs, and then work with the 
member to stay on that drug through the course of their 
therapy.
    Chairman Good. Well again, I want to thank all of our 
witnesses today, and for your investment of time to be with us 
today, and I would like, without objection, there being no 
further business, the Committee stands adjourned. Thank you.

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    [Whereupon at 12:08 p.m., the Subcommittee was adjourned.]

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