[Pages H1449-H1456]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 3, 2017, the gentleman from Georgia (Mr. Collins) is recognized 
for 60 minutes as the designee of the majority leader.
  Mr. COLLINS of Georgia. Mr. Speaker, it is good to be back. It is 
good to be back on the floor, as we have been now, for the last few 
weeks doing the people's business, and we will continue to move 
  I appreciate the last speaker discussing pharmaceutical prices. I 
think it is another issue, but we are going to go straight to really 
what I believe is the bigger cause of problems in our communities, and 
that is the pharmacy benefit managers and their monopolistic, terrorist 
kind of ways that they are dealing with our community pharmacies and 
independent pharmacies and actually causing problems in health care.

                             General Leave

  Mr. COLLINS of Georgia. Mr. Speaker, I ask unanimous consent that all 
Members have 5 legislative days to revise and extend their remarks and 
to include any extraneous material in the Record on this Special Order 
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Georgia?
  There was no objection.
  Mr. COLLINS of Georgia. Mr. Speaker, as we get started now, we have a 
lot of speakers. This is something that has been on my heart for a 
while, and I know that it is something we have been getting more and 
more comments and questions about, especially when you are dealing with 
the pharmaceutical prices and the Pharma industry.
  When they begin to look into it, they began to see that there was 
actually a bigger issue. It was not just big pharmacy and the problems 
that we do see in drug pricing. It was the end delivery that is going 
to the pharmacies and how the independent community pharmacists are 
being beaten down in a way that is really unseemly in our society. They 
are taking that healthcare line tonight.
  I have a lot of speakers, and I have a lot of stuff that I am going 
to be talking about.
  Just as an important reminder: A community pharmacist is an important 
niche in our healthcare system, serving as the primary healthcare 
provider for over 62 million people. Especially in our rural and 
suburban areas, this is a vital lifeline. Roughly 40 percent of the 
prescriptions nationwide and a higher percentage in rural Georgia--
especially in northeast Georgia--are filled by our friends in the 
independent community pharmacy system.
  Look, the problems that we have and we are going to be discussing 
even further tonight, we are going to delve into some issues that we 
want to see taken care of. We want to see this industry, especially in 
dealing with pharmacy benefit managers, put into proper perspective so 
that we can actually take care of our constituents.
  A gentleman who has been a fighter and a leader with me on this from 
day one since I have been in Congress and dealing with this issue, 
especially with transparency, is the gentleman from Iowa (Mr. 
Loebsack). This is a fight that we are going to continue to keep 
fighting. I know he is as well, and we have a lot of friends tonight to 
help us out.
  I yield to the gentleman from Iowa (Mr. Loebsack) as he continues to 

[[Page H1450]]

to tell the story that we have been trying to tell here for a long 
  Mr. LOEBSACK. Mr. Speaker, I really appreciate Representative Collins 
of Georgia's leadership on this issue. There is really no one in this 
body--maybe with the exception of Representative Carter of Georgia--who 
can tell the story of community pharmacists the way Representative Doug 
Collins does.
  I thank Representative Collins of Georgia for putting this Special 
Order hour together. He has been such a strong leader on pharmacy 
issues. He has been a great partner on the legislation that we will be 
discussing this evening.
  I am proud to say that this is a bipartisan issue, one of the few in 
this Congress at this point. It is one of the few in Washington, D.C., 
at this point. We have been able to find a consensus on this, at least 
with respect to one bill, and I think we are probably going to be able 
to do it with respect to others as well.
  We know for a fact that pharmacists across the country serve as the 
first line of healthcare services for so many patients around this 

                              {time}  1845

  People count on pharmacists' training and expertise to stay healthy 
and to stay informed and, most importantly, to stay out of urgent care 
centers and out of hospitals. That is why I am proud to stand here 
today with my colleagues to recognize the quality and the affordable 
and the personal care that pharmacists provide every day.
  Within that group of pharmacists, we have got a subset of 
pharmacists, and that is the community pharmacists and their 
pharmacies. They are also a great source not only of the expertise they 
provide, but economic growth in rural communities like those in my 
district and across the State of Iowa.
  As Mr. Collins mentioned, rural areas are very important in this as 
well. I am a member of the Small Business Caucus. I recognize how 
challenging it can be for some of these small pharmacists to compete 
with the bigger companies. I appreciate their hard work to serve our 
  Like most small-business owners, community pharmacists, they have to 
face challenges to compete and negotiate on a day-to-day basis with 
large entities as far as their business transactions are concerned. I 
frequently visit community pharmacists and I see the great job they are 
  One pressing challenge facing many of our community pharmacists in 
particular that will be discussed tonight is the ambiguity and the 
uncertainty surrounding the reimbursement of generic drugs. Generic 
prescription drugs account for the majority of drugs dispensed by 
pharmacists, making transparency in reimbursement absolutely critical 
to the financial health of these small pharmacies.
  But we know that pharmacists are reimbursed for generic drugs through 
what is called maximum allowable cost, or MAC. And this is a price list 
that outlines the upper limit or the maximum amount that an insurance 
plan will pay for a generic drug. These lists are created by pharmacy 
benefit managers, as Mr. Collins mentions, PBMs. This is the drug 
  There are lot of problems, but one of the problems is that the 
methodology used to create these lists are not disclosed. There is no 
  Further, they are not updated on a regular basis either, resulting 
often in pharmacists being reimbursed below what it costs them to 
acquire the drugs themselves. It is a major problem, because when PBMs 
aren't keeping the cost of generic drugs consistent, those price 
differentials can be a serious financial burden for local pharmacies. 
And we know when they have a financial burden, that will affect their 
business, that will affect the economy in the area, and that is going 
to affect their patients as well. And we can't have that as we are 
moving forward, especially in this country, doing what we can to reform 
health care.
  When we talk about reimbursement uncertainty for pharmacies, we are 
talking about uncertainty for those patients, as I just said.
  So, look, when we deal with this issue, I think we have to be very 
transparent about it. We are going to be introducing later this week, 
on a bipartisan basis, this Prescription Drug Price Transparency Act. 
Specifically, what this act will do, it will increase transparency of 
generic drug payments in Medicare part D, in Medicare Advantage, the 
Federal Employees Health Benefits Program, and TRICARE pharmacy 
programs, by requiring that PBMs do three things; and Mr. Collins will 
flesh this out, and I think Mr. Carter will as well.
  First, provide pricing updates at least once every 7 days. Second, 
disclose the sources used to update maximum allowable cost--or MAC--
prices. Third, notify pharmacies of any changes in individual drug 
prices before these prices can be used as a basis of reimbursement.
  This is commonsense, bipartisan legislation. We are going to hear 
more about that in just a couple of minutes, but I am very thankful to 
be here to talk about these issues.
  There is one more I want to talk about, if I might, Mr. Collins, and 
that is the importance of access to local pharmacies and Medicaid 
beneficiaries in particular. We know that Medicaid beneficiaries depend 
on their pharmacies as a provider of convenient, trusted care in their 
  In addition to dispensing vital prescription drugs, pharmacies 
provide additional services to Medicaid enrollees, including 
immunizations, medication therapy management--a really big issue--and 
point-of-care testing like flu or strep tests. These are preventive and 
maintenance care services that help to fill in the gaps where provider 
shortages exist.
  I know we are looking at reform and maybe replacing the Affordable 
Care Act, but we have to be very careful, too. We all recognize the 
importance of Medicaid, I think, going forward, and it is really 
important, certainly, for these pharmacies and these community 
pharmacists, and for their patients as well.
  I thank the gentleman from Georgia. I really appreciate him including 
me in this process. This is bipartisan. It is important to so many 
communities, so many patients around America, and I am just happy to be 
here to say a few words.
  Mr. COLLINS of Georgia. I appreciate the gentleman being here. I know 
there are others from across the aisle that are joining us in this 
fight, and we are looking forward to continuing.
  Mr. Speaker, I am just going to highlight a few things as we go 
through, and we are going to move through some of our speakers.
  Mr. Speaker, I want to highlight something that pharmacy benefit 
managers, PBMs, for those watching, may not know about, and they don't 
want you to know about it, and it is called spread pricing. Really, 
what happens there is PBMs have the maximum allowable cost, which is 
what Mr. Loebsack was just talking about, that determine the maximum 
amount a pharmacy will be reimbursed for certain generic drugs.
  However, the PBMs' reimbursement price determinations are hidden. 
There is no transparency in the process. That is the bill that we are 
going to be putting out.

  PBMs commonly manipulate the pricing by something called spread 
pricing. PBMs charge employers a higher price for drugs than necessary, 
and reimburse pharmacies at the MAC, or the maximum allowable cost, 
which is typically lower.
  Spread pricing allows PBMs to skim money from the difference between 
the high rate they charge for a prescription and the low rate they 
reimburse pharmacies. Spread pricing is artificially raising the 
acquisition cost of pharmacy drugs by overcharging at the expense of 
retail pharmacies, consumers, and health plans. And that is probably 
one of the better things they do. This gets worse. We are going to 
continue to talk about it.
  Tonight I look forward to hearing some more from my friend. I yield 
to the gentleman from Texas (Mr. Babin). Welcome to the show.
  Mr. BABIN. Mr. Speaker, I thank Congressman Doug Collins for leading 
this very Special Order on a topic that is very near and dear to my 
heart, the invaluable role of community pharmacists in our society.
  As a rural dentist who practiced for 35 years, I can relate to the 
plight of community pharmacists who must overcome all of the challenges 
involved in running a small business while serving their patients and 
serving their customers and doing their job as a medical professional.

[[Page H1451]]

  Just like my small hometown of Woodville, Texas, where I practice, 
many of the areas in which community pharmacies are located are rural 
and have underserved, low-income and elderly populations. This can 
present unique challenges and, oftentimes, results in community 
pharmacists performing a lot of services, such as face-to-face 
counseling and planning services for patients' medication regimen at no 
charge, care that is uncompensated by Medicare and not typically 
reimbursed by private insurance companies as well.
  What is even more challenging is the uphill battle that community 
pharmacists continually face in just getting adequate payment for the 
lifesaving medications that they dispense on a daily basis and still be 
able to earn a small profit.
  Community pharmacists rely on pharmacy benefit managers, or PBMs, who 
negotiate directly with payors, including private insurance companies, 
as well as Medicare part D and other government plans, for 
reimbursement levels for medications. The problem is that the payment 
levels that make it up to the community pharmacists after the PBMs have 
``skimmed off the top'' are well below the pharmacists' acquisition 
costs and fail to be delivered in a timely manner in many 
circumstances, in many instances.
  Simply put, there is a dire need for more transparency throughout 
this process and for more accountability for PBMs. I proudly 
cosponsored legislation that would do just this last year. It was 
called the MAC Transparency Act, and I now proudly support this bill 
again in this 115th Congress. Now is the time to act on this bill.
  As a dentist, it was my goal to treat each patient to the highest 
standard of care, a goal that I share with all of the community 
pharmacists that I know. Sadly, if there is no change in the conditions 
that community pharmacists are facing, many of these providers will 
have to close their doors. Many already have, and our patients suffer.
  For the sake of many rural communities that I serve, I hope to see 
the MAC Transparency Act and other similar pieces of legislation move 
forward, as well as a greater spotlight put on the actions of the PBMs 
so that community pharmacists can get the relief that they so 
desperately need to continue practicing.
  I thank Congressman Collins for his leadership on this issue.
  Mr. COLLINS of Georgia. I think the gentleman is hitting on something 
and, Mr. Speaker, I think this is really something we need to discuss. 
We are not discussing simply a business model that was designed in a 
vacuum, that was designed to help.
  Early on I stated this, and I state it every time we have this. PBMs, 
in their first iteration, as they first came about, were a good 
mechanism to provide pricing and between the pharmacies and the 
  The problem was when they became vertically integrated, when they 
started owning distribution chains, when they started owning their 
actual end-result pharmacies. When they started doing this, it became 
then that they are negotiating for themselves. And this is where the 
end-user--at the end of the day, the person who pays is the Federal 
Government, but also the customer, our constituents. This is what 
happens here, and we are losing community and independent pharmacists 
every day. This is just not right.
  When three companies control 80 percent of the market and they use 
tactics like gag orders and other things, where they don't want their 
pharmacists to talk about it, where they send out letters saying that 
the pharmacist is not on their plan anymore when clearly the pharmacist 
is, but then refuse to send a retraction letter, this is just--I have 
said this, and I have had people call me after we have talked about 
this, Mr. Speaker, where they basically said it is amazing this is 
happening. And all I say is it is true, and it has never really been 
  Mr. Speaker, I yield to the gentleman from Tennessee (Mr. Duncan) and 
welcome him here to the floor to talk more about this important issue 
for our communities.
  Mr. DUNCAN of Tennessee. Mr. Speaker, I thank the gentleman from 
Georgia for yielding, and I want to say that, in a short time in the 
Congress, he has become one of our greatest Members, and I appreciate 
him leading this effort tonight.
  It is sad, it is unfortunate that, with any big government program, a 
small number of individuals or companies find ways to manipulate the 
system and become wealthy. That is why 6 or 7 of the 10 wealthiest 
counties in the U.S. are suburban counties to Washington, D.C., and 
that is wrong.
  I have read for years about the revolving door at the Pentagon, about 
the defense contractors hiring all the retired admirals and generals. 
The same thing has happened with the Food and Drug Administration, that 
the big drug giants have hired all the former top people at the FDA, 
and we have a drug price crisis in this country today. There are many 
parts of it, but we want to talk tonight about one that most don't know 
about and you almost have to be a pharmacist to really understand what 
is going on.

  But I rise tonight, Mr. Speaker, to join my colleagues in exposing, 
as I say, an almost unknown culprit in our Nation's drug price crisis, 
pharmacy benefits managers, also known as PBMs.
  PBMs are essentially middlemen between pharmacies and drug 
manufacturers, but the legal relationships among PBMs, pharmacies, and 
drug and insurance companies have become increasingly entangled and 
  For instance, one of the largest pharmacy chains also operates its 
own PBM, and one of the largest medical insurance companies also 
operates its own PBM.
  PBMs are supposed to be helping keep down the costs of drugs by 
negotiating discounts and helping pharmacies with managing drug plans, 
as they often claim to do. Despite these PBM promises, though, I have 
heard from several pharmacy owners in my district who say that many 
PBMs are, in reality, ripping them off by drastically raising drug 
  PBMs have tricks of the trade that include retroactively charging 
pharmacies more for drugs that they have already sold and processed. I 
am also told that PBMs also take too long to update the market value of 
the drugs on their covered drug lists. But these tricks are just two. 
PBMs use many more.
  According to one expert and pharmacy owner in my district, he has 
seen three primary causes for recent increases in prescription drugs: 
one, FDA involvement, including requiring ``modern clinical trials'' of 
old drugs that have worked for decades; two, drug manufacturers 
needlessly hiking the price of generic drugs; and three, PBMs charging 
ridiculous prices for drugs and pocketing the profits.
  According to my constituents, PBMs are the main culprit of the three. 
This pharmacist recently met with me and shared an eye-opening example. 
One of his senior customers came in with a prescription for a fairly 
common drug. The prescription had a real or actual cost of $23.40, but 
the pharmacist found that the PBM was charging a copay of $250, over 10 
times the actual cost of the drug. The pharmacist chose to just absorb 
the PBM's ridiculous copay, and only charged his customer the actual 
cost of the drug.
  Another pharmacist in my district emailed me, describing how PBM 
practices are accelerating seniors into the Medicare part D coverage 
gap, or doughnut hole. He said: ``All of these PBMs have these types of 
unfair compensations . . . This is not fair, and it hurts our 
  Even more pharmacists in my district have also reached out to me, 
saying that they only get pennies on the dollar for the drugs they 
sell. PBM actions are forcing pharmacies to deny patients access to 
critical medications, or to give drugs away for free.
  The Daily Times in Blount County, in my district, recently ran a 
story on PBMs called ``Sworn to Secrecy.''

                              {time}  1900

  The article cites a pharmacist in Pennsylvania, Eric Pusey, who says 
that his patients' copays for drugs are often higher than out-of-pocket 
costs. Why? Because of PBM clawbacks. Mr. Pusey says that if he 
explains clawbacks to his customers, some get fired up and don't even 
believe what we are telling them is accurate.
  Another pharmacist in Houston says: We look at it as theft--another 
way for the PBMs to steal. Most people don't

[[Page H1452]]

understand. If their copay is high, then they care.
  Susan Hayes, a pharmacist in Illinois, says that these PBM clawbacks 
are like crack cocaine, the PBMs just can't get enough.
  Some PBMs are facing lawsuits with accusations such as defrauding 
patients, racketeering, breach of contract, and violating insurance 
laws. Since 1987, when the first of the three largest PBMs 
incorporated, drug prices have increased 1,100 percent, Mr. Speaker, 
and per capita expenditures have jumped by 756 percent.
  The three largest PBMs make up about 80 percent of the drug market, 
which includes about 180 million patients. These PBMs often conduct 
business through mail order practices. They sometimes will 
automatically fill prescriptions month after month even if the patient 
no longer needs the medication, resulting in terrible waste. Patients 
include veterans and Medicare beneficiaries--endangering them, wasting 
their benefits and taxpayer dollars, and driving up the cost of drugs.
  As we heard President Trump say in his address last night, we need to 
look into the artificially high drug prices right away. A good place to 
start is PBMs. Mr. Speaker, PBMs must be more transparent in their 
operations so that they can be held to their promises and to the law.
  I will just close by saying that PBMs must no longer be able to get 
away with conducting their business with such unethical methods that 
they are using now. In short, PBMs must be held accountable for their 
roles in the Nation's drug price crisis. I join in supporting our 
community pharmacists.
  Mr. COLLINS of Georgia. The gentleman couldn't have laid it out any 
better. That is exactly what we are talking about. If every Member of 
our body would go home and just go to their community pharmacy, they 
would hear this all over the country. This is not new.
  I have been on this floor now for almost 2\1/2\ years talking about 
this, and I have not had PBMs come to me and say: Well, no, that's not 
really true.
  Because they do it. So I thank the gentleman for being a part and 
lending your voice in your community.
  We are also very blessed in this body to have someone who doesn't 
have to come to it like I did in having to deal with it from a family 
perspective or from my community. We have someone who has actually done 
this for a living. He is my friend from southeast Georgia. He is a 
pharmacist. He has made this his life.
  I saw he was up at his alma mater the other day, and, President Cathy 
Cox, I would have to say he is a Young Harris man.
  Mr. Speaker, I yield to the gentleman from Georgia (Mr. Carter).
  Mr. CARTER of Georgia. First of all, Mr. Speaker, I want to thank 
Representative Collins for holding this tonight, for organizing this, 
also for his advocacy, and for what he has done to bring about 
attention to this very important subject. This, of course, is something 
that is very dear to my heart. As the only pharmacist currently serving 
in Congress, I take this very seriously. I take that responsibility 
very seriously.
  But it is more than that because, you see, in my professional life, 
for over 30 years, I had the honor of practicing pharmacy. I have built 
up relationships over that time, relationships with families and with 
patients. When I see what is happening in pharmacy now, it is an 
affront. It is an affront to me, and it should be an affront to all 
Americans. My heart is in this, truly in this.
  In over 30 years of practice, I have built up relationships with 
patients and with families. I have served grandparents, I have served 
parents, I have served children, and total families. You can only 
imagine the hurt that it brings whenever I see these people suffering 
because of what has been mentioned here tonight.
  Right now, in our country, prescription drug prices are something 
that is in the forefront, in the news. There is a problem, a real big 
problem, and that problem--yes, the pharmaceutical manufacturers have a 
concern here, and they have responsibility. But there is a bigger 
problem. It is what I refer to as the man behind the curtain. I wrote 
an op-ed about this and talked about the man behind the curtain. That 
is the PBMs, the pharmacy benefit managers. I am going to call them out 
  Before I do that, I want to just say something about community 
pharmacists because they play such an important and vital role in our 
communities. They directly interface and build relationships with 
neighbors and friends. I have been there, I have done that, and I 
understand how important it is. Representative Collins has spoken about 
it, and Representative Loebsack, a friend of pharmacy, has spoken so 
many times. He has spoken about it as well. Representative Babin and 
Representative Duncan understand how important the community pharmacies 
are and how important they are to the healthcare system.
  But beneficiaries are facing increased costs for prescription drugs 
without much of a basis or notification on why these costs are 
skyrocketing. So, very quickly, I want to talk about why these costs 
are skyrocketing. Yes, as I said earlier, some of the pharmaceutical 
manufacturers need to be held accountable. They do.
  I say that, but I also say that I am a big fan of the pharmaceutical 
manufacturers. You see, in my over 30 years of practicing pharmacy, I 
have seen nothing short of miracles. I can remember when I started 
practicing in 1980. I can remember that people would come in to get an 
antibiotic and that we would have to dispense 40 capsules and have them 
take four a day for 10 days. Now I can give them one capsule, and they 
can take it and be done with it. People were going into the hospital 
back then to be treated for infections. Now we can treat then. The 
advances that we have seen are phenomenal.

  We talk about the price of some of these drugs, for instance, the 
drug that is used for hepatitis C. Yes, it is too expensive, and that 
price has come down significantly. It is only as good as it is 
affordable. If it is not accessible, if it is not affordable, then it 
is no good. But stop for just one minute, and think about it. We cured 
a deadly disease through research and development. The pharmaceutical 
manufacturers put some of their profits back into research and 
development, which I applaud.
  We cured a deadly disease, hepatitis C, that was killing people. 
Again, that price needs to come down so that it is more accessible to 
people. But, again, we cured it. So I am going to cut the 
pharmaceutical manufacturers a little bit of leeway there.
  I think it is interesting that the President, in his first month in 
office, called the pharmaceutical manufacturers to the White House. He 
told them: You got to do something about these escalating drug prices.
  He also talked about those people who are on the other side of R&D, 
who are on the other side of research and development. He put a notice 
out, and he said: You better beware because we're going to be watching 
  The next day, the stocks of two of the major pharmacy benefit 
managers went down. They went down significantly, almost 2 percent, 
because they knew what was coming, and they know what is coming now.
  First of all, let's talk about the profits of the PBMs. A quick 
history, PBMs came about kind of in the mid 1960s, and all they were 
was a processor. Their goal and their charge was just to keep up and to 
process insurance claims as insurance came about and became more and 
more popular to pay for medications. That is all they did.
  But over time, they have evolved into more than that. If you look at 
what has happened over the past decade, the profits of the three major 
PBMs--and Representative Collins alluded to this earlier--you have got 
three companies who control almost 80 percent of the market. That is 
not good. That is not competition, and that is what we have to have in 
health care in order to decrease healthcare costs. It is competition. 
When you have three companies that account for almost 80 percent of the 
market, that is never good.
  But if you look at those three companies and you look at their 
profits over the last decade, you will see that they have increased 
some 600 percent--billions of dollars. Now, you can make the argument, 
well, the pharmaceutical manufacturers, their profits have increased, 
too. Yes, they have; and, yes, they should be accountable for that. 
However, at least they are bringing value to the system by investing 
into research and development.

[[Page H1453]]

  PBMs bring no value to the healthcare system at all. They put no 
money into research and development. All they do is skim it off the 
top. As medications go up in price, they make more. Representative 
Collins alluded to spread pricing. That is exactly what he is talking 
about, and that is exactly how they are making their money. The more 
expensive a drug, the more money the PBM is going to make. That's all 
there is to it.
  I served on the Oversight and Government Reform Committee for the 
past session in the 114th Congress. We had a problem with Mylan 
Pharmaceuticals and a drug that they had, EpiPen. It went up to $600. 
Unbelievable. Here was a drug that is a lifesaving drug that people 
have to have for anaphylactic shock. We in Congress actually passed 
legislation that required that drug to be on hand in gyms and in 
schools in case there was a problem. Yet, they went up to $600.
  It was really interesting because, during the time that we were 
asking questions of the CEO, she mentioned, well, when it leaves us, it 
is this price right here--I am just going to use round figures--it is 
$150. By the time it gets to the pharmacist and by the time it is 
dispensed to the patient, it is $600.
  I asked her: What is that difference there? Where is that coming 
  I don't know.
  I don't know either.
  Now, there is the beginning and the end. The beginning is the 
pharmaceutical manufacturer. She doesn't know. The end is me, the 
dispensing pharmacist, and I don't know.
  That is what I'm referring to when I talk about the man behind the 
curtain. That is where the PBMs come in.
  Now, they will tell you: Well, we are taking that money, and we are 
giving it back to the companies, to the insurance.
  Well, if they are, and they're not keeping any of it, then why are 
their profits going up so much? Why have their profits gone up over 600 
percent? It's because they're keeping it. They're keeping it, and 
they're adding no value whatsoever to the system.
  Now, they will argue the fact, they will say: Well, we are keeping 
drug prices down.
  Oh, yeah? Well, how is that working out for you? It ain't working out 
very well at all because drug prices are going up.
  I mentioned the competition, the fact that we have got three 
companies that control over 80 percent of the market. That decreases 
  We are talking about community pharmacies, and I know that is what 
Representative Collins is really wanting to focus on here tonight, and 
it is so very important because we have to have community pharmacies. 
They are vital to the healthcare system. In many areas, the most 
accessible healthcare professional is the pharmacist, particularly in 
rural areas. As they go, and as they are eliminated, we are losing a 
vital part of the healthcare system.
  But PBMs are shutting out a lot of these community pharmacies. I 
alluded earlier to the fact that I have served grandparents, parents, 
and grandchildren. I've built up those relationships. One of the 
toughest things that I have ever faced is for a family member to come 
in to me literally in tears and say: I have got to change pharmacies.

  I say: Why?
  Because my insurance company, because my PBM says that I have to get 
it from them through mail order.
  Well, why would you have to get it through them through mail order?
  Because they own the pharmacy.
  Representative Collins alluded earlier about vertical integration, 
and that is what we see. The PBM owns the pharmacy that they are 
requiring the patient to go to. Well, guess what? That means they are 
padding their pocket even more. That is the kind of thing that we 
should be protected from.
  I will give you a quick story, a true story. Back when I was still 
practicing pharmacy and owned my pharmacy, my wife had insurance 
through her employer. She had a different insurance plan than I had. 
She got her insurance, and she got a prescription filled at my 
pharmacy--at my pharmacy. Now, this is the pharmacy benefit manager who 
owns the pharmacy. That night when I got home, I got a phone call from 
the insurance company saying: Well, your wife got a prescription filled 
here at this pharmacy, but if she gets it filled at our pharmacy, we 
can give her a lower copay. We can give her a discount.
  Now, supposedly there is a firewall in between the PBM and the 
pharmacy. Well, guess what? There wasn't that firewall there that 
night, not when I got that phone call.

                              {time}  1915

  Can you imagine? What is that doing? That is taking patients away 
from the community pharmacist. That is unfair business practices. So, 
that is what we talk about. Ultimately, who suffers?
  I don't want to give the impression I am just here to try to make 
sure that community pharmacies stay profitable and make sure that they 
stay in business, although it is important. If they don't stay in 
business, who is going to suffer? It is going to be the patient. It is 
going to be the healthcare system.
  Folks, the only thing that is going to bring down costs in our 
healthcare system is more competition and free market principles. That 
is what we are trying to do now in Congress, through the repeal and the 
replacement of the Affordable Care Act.
  We understand that we have got to get free market principles back 
into the healthcare system. We have got to get competition in order to 
drive healthcare costs down. We understand that. This is a big problem, 
a big problem.
  Very quickly, I want to talk about three bills that are being 
proposed. First of all, I want to talk about Representative Collins' 
MAC Transparency bill.
  Transparency, that means give us an opportunity to see exactly what 
is going on. If you mention transparency to a PBM, they go berserk: My 
gosh, no, we can't have that. We can't have transparency.
  But Representative Collins' bill, the MAC Transparency bill, which I 
am proud to be an original cosponsor of, brings about greater 
transparency in generic pricing--drug pricing, in general, but 
particularly generic.
  Many of the recipients don't understand the cost structure. They 
don't understand how that works, where the original fees are 
originating from, which are often a direct result of the fees that are 
leveraged by the PBMs, the prescription drug plan sponsors.
  Congressman Collins' bill addresses this issue, and it addresses 
more. Under his legislation, a process would be established to help 
mediate disputes in drug pricing. It would establish new criteria for 
PBMs to adhere to when managing the costs of prescription drug 
  This MAC Transparency bill is a step forward not only for the 
industry, but for the beneficiary, and that is what is so very, very 
important. It is no surprise that costs are going up. No surprise at 
all. With the lack of transparency, that is what is going to happen.
  We have got to have greater transparency in the drug pricing system. 
And, yes, that includes pharmacy. Yes, that includes the pharmacy; yes, 
it includes the pharmaceutical manufacturer; but mostly, it has got to 
be with the PBMs.
  If we have a CEO of a medication--a pharmaceutical company like Mylan 
which we had come up and testify before us here in Congress, and I ask 
her about that gap there and where that money is going, if she doesn't 
know and I don't know, there is a problem. That means we need more 
transparency. And that is exactly what happened.
  Now I want to talk about another problem that is called DIR fees, 
direct and indirect remuneration. Let me tell you, this will be the 
death of community pharmacies.
  DIR fees are what they refer to as clawback fees. What happens is, 
when you go into a pharmacy, you get a prescription filled, the 
pharmacy's computer calls the insurance company's computer, the PBM's 
computer, and it tells us how much to charge the patient in a copay and 
tells us how much we are going to get paid. However, with these DIR 
fees, months later, after we have already been promised how much we are 
going to be paid, pharmacists are getting bills from these PBMs that 
are saying: Well, we didn't make quite as much that quarter as we 
should have, so we are going to have to claw back this much.

[[Page H1454]]

  I met with pharmacists from the New York State pharmacy association 
and they were telling me, literally, horror stories about getting bills 
for $85,000, $110,000 in clawback fees. Folks, that is not a 
sustainable business model. When you are trying to run a business, a 
community pharmacy, and you get a bill months later in the hundreds of 
thousands of dollars, that is not sustainable. You can't stay in 
business that way.
  We have got to do something about DIR fees. Thankfully, 
Representative Morgan Griffith from Virginia has a bill addressing 
this. I am supporting him on that bill.
  In fact, in a recent survey, nearly 70 percent of community 
pharmacists indicated that they don't receive any information about 
when those fees will be collected or how large they will be. Again, 
ultimately, who ends up being penalized? Who ends up being penalized is 
the patient. The patient ends up being penalized.
  Understand, this is not a partisan issue. These PBMs don't care 
whether you are Republican or Democrat. They care about one thing, and 
that is profit. That is all.
  Now, let's talk about one other. Let's talk about a bill that 
Representative Brett Guthrie from Kentucky has, H.R. 592, Pharmacies 
and Medically Underserved Areas Enhancement Act. Under this bill, many 
of the individuals who seek consultation, especially seniors, can 
continue to receive that quality input and expertise.
  This bill is known as the pharmacy provider status. Simply, what this 
will do is make sure that the pharmacists who give consultations are 
being reimbursed for that. That is vitally important.
  Pharmacies are the front line in health care. There are so many 
diseases. The pharmacists who are graduating today are so clinically 
superior to when I graduated. Their expertise is beyond anything that I 
ever imagined it would be. We need to make sure that we are utilizing 
that. That is going to be a key in helping us control healthcare costs: 
utilizing all these allied health fields and making sure we are using 
them to their fullest potential. This bill will help us do that.
  So there are just three bills that are being introduced right now 
with community pharmacists that impact pharmacy but, more importantly, 
that impact health care and that are going to help us have a great 
healthcare system and to continue to have a great healthcare system.

  There are a couple other things that I wanted to mention. I am going 
to hold off on those because, again, I want to make sure that everybody 
understands the point that I am trying to make, and that is just how 
important, how vital the community pharmacies are and just how bad the 
PBMs are and how they are ripping off the public. They are ripping off 
the public. Look at their balance sheets. Look at the profits. Again, 
they want to argue, and they want to say: We are holding down drug 
  Again, how is that working for you? It is not working. It is not 
working because they are pocketing the profits. If they were truly 
doing what they said they set out to do, we wouldn't see escalating 
drug prices like we are seeing.
  Yes, there are some bad actors out there, as there are in every 
profession. Yes, we had Turing Pharmaceuticals and Martin Shkreli, the 
``pharma bro.'' This guy was a crook, no question about it. We had 
Valeant Pharmaceuticals and what they did with Isuprel and Nitropress.
  Just recently, Marathon Pharmaceuticals bought a drug that was 
available over in Europe. They brought it over here and got it approved 
in America. It is a very important drug for muscular dystrophy. Now 
they want to increase the price to an enormous amount that won't be 
affordable for patients.
  Those are bad actors. As my daddy used to say, you are going to have 
that, and we understand that. We have Valeant and Turing and Marathon. 
We are calling them out, too. They need to be called out.
  But we also need to focus on what one of the biggest problems is in 
escalating prescription drug prices, and that is the PBMs. They bring 
no value whatsoever to the system. They put no profit back into 
research and development.
  Communities' pharmacists play an important role in our healthcare 
system. I am proud to support our community pharmacists. I am proud to 
have been able to practice in a profession for over 30 years that I 
know brings a great deal of value to patients and to their families.
  Again, I want to thank Representative Collins, and I want to commend 
him for his hard work.
  Representative Austin Scott is here, also. He has been a champion of 
this as well. They understand. They get it. I appreciate their efforts 
on that, and I appreciate everyone who has been here tonight. I thank 
Representative Collins for hosting us here tonight. I appreciate his 
  Mr. COLLINS of Georgia. Before the gentleman goes, you told the story 
about getting a call from your own pharmacist. You and I were here 
together, I think, sometime 6 months ago. We were doing this and 
talking about this issue of mail order. We were talking about this.
  I had a Member who was watching us on the floor talk about the 
pharmacy and the PBM problem and got a call from the PBM because they 
had gotten a prescription for their child. Yes, the day before they are 
getting a call in their office from the PBM saying: If you just switch 
from your local pharmacist, we will do it better. That is why we are 
sitting here.
  An interesting thing you brought up on DIR fees. What we have right 
here sort of describes what you were talking about. I am putting it 
here so people can see it.
  There is an interesting part of this DIR fee issue. It forces 
Medicare part D beneficiaries to pay inflated prices at the point of 
sale that are higher in actual cost than the drugs. The cost of the 
drug will be recouped in DIR fees, which is retroactively assessed 
  Many beneficiaries are moving past their part D benefit faster and 
hitting the doughnut hole sooner, forcing them to pay out-of-pocket 
costs. This is particularly true with lifesaving or specialty drugs. 
These are things that we are seeing.
  Patients forced to pay out of pocket might be forced to cut back or 
abandon treatment. According to the Community Oncology Alliance, 
pharmacists lose $58,000 per practice, on average, to DIR fees each 
year. This makes it difficult for independent community pharmacists to 
keep up.
  When patients pass through the doughnut hole into catastrophic 
coverage, guess who picks it up? CMS takes on the cost-sharing burden. 
This is why this matter is in Congress. These costs have increased from 
$10 billion in 2010 to $33 billion in 2015. This is just dealing with 
this issue.
  We have got to have greater transparency on this. This is why Morgan 
Griffith's bill is good and we are going to continue to fight about 
  Again, I have yet to have a PBM tell me I am wrong here. I know from 
your experience you are seeing it as well.
  I yield to the gentleman from Georgia (Mr. Austin Scott), our other 
friend from south Georgia who has been outspoken on this. He comes to 
the floor to talk about his experiences with this as well.
  Mr. AUSTIN SCOTT of Georgia. Mr. Collins, I had several parents in my 
office today. I thought I would talk about a couple of the meetings 
that I had.
  I had a father there talking about his son Gabe. He had a T-shirt on 
with ``H4G,'' which stands for ``Hope for Gabe.'' I listened to him 
talk about his son and the life-threatening disease that his son has 
and the threat that his son is under because of a U.S. pharmaceutical 
manufacturer named Marathon. I would like to read part of an email that 
I have from him:

       Hope you are well. I just wanted to let you know that my 
     son Gabe takes a drug called Deflazacort. He has since he was 
     5 years old. He is now 11. We currently pay $116 for a 3-
     month supply of 15-milligram dose for Deflazacort. We were 
     getting this drug from Europe, as it was not available here 
     in the United States, and have had no problem with access to 

  Now, many of you heard about this story. The FDA approved the same 
drug for sale in the United States. What did the drug manufacturer do 
with the price of it? Well, Marathon took the price from $116 a quarter 
to approximately $87,000 a year.
  Now, this is what is happening. For drugs that are available 

[[Page H1455]]

else in the world, it is not that they are being developed with 
extensive research and expensive research in our country. People are 
simply buying the right to sell the drug in the United States. As soon 
as approved and available in the U.S. marketplace, it is no longer 
legal for people to import that drug from Europe. Marathon priced the 
drug at $89,000 per year.
  Reading again from his email, in bold letters:

       It is the same drug we are getting today from Europe for 
     $450 per year, the exact same drug. We need your help here. 
     The Duchenne community needs your help, and specifically Gabe 
     needs your help.

                              {time}  1930

  As I sit here and look at the American flag, you know, there is no 
other country in the world that allows their citizens to be treated 
like this. None. I am embarrassed that this Congress hasn't done 
anything about this abuse to the American citizens from the 
pharmaceutical and the PBM industry.
  I know our President, and I am glad that we have a President with the 
courage and the boldness that our President has, had the executives to 
the White House. I would suggest that a good meeting also would be to 
have the parents--have the father of Gabe, have the mother of Gabe come 
to the White House. Sit down in the same room with the TVs on with the 
executives from those companies that are cheating these people. Let's 
let the executives explain on TV in front of the parents, in front of 
the child who needs that lifesaving drug why it costs $450 in another 
country but should cost $87,000 in America.
  Another group of parents that was in my office today was there 
representing juvenile diabetes. I had a heart-wrenching discussion with 
a mother in my office in Warner Robins about her daughter, insulin-
dependent. She has got to have it or she dies. This mother had a job, 
actually, in another country and talked about what she paid in another 
country to receive that same drug, insulin, for her child. It cost a 
fraction of what it cost in America.
  I think it would be great for our President to have that mother and 
that daughter or the mother who was in my office today talking about 
her daughter come and sit down at the White House, and maybe the 
president of Eli Lilly could come and sit down. Maybe we could put the 
TV on, the cameras on so everybody in America could see the CEO explain 
why insulin, which has been around for decades, costs as much in this 
country as it does when it doesn't cost anywhere near that in any other 
  Something has got to give. Something has got to give. The American 
families have given enough. I am hopeful that we will move sooner 
rather than later. American families can't take it anymore. A drug that 
costs $450, that can be imported from Europe, shouldn't cost $87,000 in 
  On top of the issues with what is happening with the manufacturers, 
we have got the issue with the PBMs.
  Why shouldn't you know what the PBMs are getting in a kickback?
  Everywhere else you go, you get a price sticker. You know what the 
rebates are when you go to your local car dealer. They are readily 
  Why shouldn't you know as the American citizen?
  My friend Mr. Collins and I have been working on it for years. We 
worked on it back in the State legislature. In fact, we passed a bill 
back in, I think, 1987, the first transparency act that we passed in 
the State legislature in Georgia. I hope that governors and members of 
the State legislatures will go back and address this issue as well. The 
transparency issues can be done at the State level. That bill came to 
the Georgia House floor, and it passed 150-0. Not a single Democrat, 
not a single Republican voted against that bill. Every single member 
who was there that day voted for the bill.
  Mr. Speaker, we know something has got to be done. I just hope that 
we take action sooner rather than later.
  I would just like to make one last request. Mr. President, I hope you 
will invite these parents and their children to the White House. I hope 
you will invite the CEOs of these companies to come and sit down at the 
same table, and I hope you will even invite the press to come and 
publicize the meeting.
  I thank Mr. Collins so much for standing up for the American 
citizens. I am honored to be a friend of his, and I thank him for 
allowing me to be in the fight.
  Mr. COLLINS of Georgia. Representative Scott brings out this issue 
with passion. That is exactly what we need as we go forward in this 
  This is exactly what the PBMs don't want to have. They don't want to 
have transparency. They don't want to talk about it. We have been 
talking about it now for years on this floor. It just continues to get 
  In fact, the Prescription Drug Price Transparency Act that we are 
getting ready to introduce--and Mr. Scott and others are part of it--
just the other day they were trying to undercut this bill.
  I recently saw an interview with Mark Merritt. He is the CEO of PCMA, 
the trade group for PBMs. The article misrepresented PBMs' role in the 
marketplace. Now, that is a shocker, really. Distorting the facts to 
protect PBMs' ability to continue profiting at the expense of 
beneficiaries and taxpayers.
  So tonight let's have a little fact check. Let's look at the claims 
by Mr. Merritt versus the truth.
  First, Mr. Merritt claimed that PBMs play an important role in 
negotiating price discounts in order to pass those savings along to 
customers. In fact, what he said was:

       We have an interest in lower price or bigger discounts . . 
     . and we're going to negotiate the most aggressive discounts 
     we can.

  Well, it is true that PBMs do effectively negotiate huge discounts. 
However, the patients never see this discount or rebates reflected in 
their prices or out-of-pocket costs. These rebates and discounts merely 
pad PBMs' profit margins. They do not increase patients' well-being. 
This lack of transparency allows PBMs to receive massive rebates and 
refuse to pass those savings along to consumers or customers.
  In fact, what is interesting, there is proof that transparency in MAC 
pricing saves more money than the PBMs are willing to admit.
  You want an example?
  Let's look to Texas. Texas has one of the oldest MAC-style laws. 
Texas passed MAC transparency legislation similar to the Prescription 
Drug Price Transparency Act in June of 2013.
  Now, here we go, Mark, explain this one.
  Since Texas passed their law, their Medicaid fee-for-service 
prescription drug expenditures for the top 100 drugs fell from $219.54 
per prescription to $91.32. Yep, you are doing a good job negotiating 
for your bottom line.

  What else does he say?
  Number two, Merritt tries to distort the purposes of the Prescription 
Drug Transparency Act by drawing concern to transparency in the drug 
marketplace. Let's see what he says. He says:

       The kind of transparency to be concerned about is where 
     competing drug companies and competing drugstores can see the 
     detailed arrangements that we have with all of their 

  Well, seeing as how they own part of the competitors, not really a 
lot of things going on there.
  Our legislation simply would not allow competing drug companies to 
see detailed arrangements that PBMs have with competitors.
  Mark, quit lying.
  This statement is a misrepresentation of what the Prescription Drug 
Transparency Act does. Competing pharmacies would not be able to see 
the arrangements their opponents have with PBMs because they would not 
be publicly disclosed. Transparency measures and contractual agreements 
include confidentiality clauses preventing public disclosure.
  May I remind Mark that he has gag orders in some States where the 
pharmacists can't even talk about these issues.
  By the way, they send letters to pharmacists saying: Oh, don't go 
talk to your elected officials, because if you do, we will cut your 
contract off.
  Wow, that is concern, Mark.
  Furthermore, the disclosure of sources of drug pricing determinations 
remains confidential and is only disclosed to pharmacies and their 
contracting entities. PBMs distort transparency to mean only public 
transparency in an attempt to protect the profitability that comes with 
keeping their corrupt business practices in the dark. I wish he would 
have stopped there. He didn't.

[[Page H1456]]

  Let's go on to the third. Mark Merritt says:

       We want to make sure that wholesalers who sell to the 
     drugstore aren't trying to sell the most expensive thing and 
     pass the cost onto consumers.

  All right. Here we go again. This is getting familiar. It has little 
to do with wholesalers. PBMs design the formularies--yes, we understand 
this, Mark--that dictate what drugs are covered by insurers. Because 
there is no transparency, PBMs are able to receive drugs at discounted 
prices but refuse to tell employers. PBMs are then able to still charge 
employers the full amount for the drug, even though they are receiving 
it cheaper. PBMs often receive large rebates to incentivize them to 
include expensive brand name drugs in their formularies, even though 
cheaper generics are available.
  Mr. Speaker, listen. They receive large rebates to incentivize them 
to include the expensive brand name drugs on their formularies. I had 
an issue just like that with my own mother just recently. She needed 
medication. She had been on it for 8 months. They had to reauthorize it 
after the first of the year.
  I asked: Well, is there another issue she could have?
  They said: Well, this is the only one on the formulary.
  PBMs don't control pricing; PBMs don't control what drugs come to 
market. Another falsehood. PBMs substitute expensive drugs and 
overcharge Medicare part D, TRICARE, and FEHB programs. This means they 
are lining their pockets with money from the taxpayers.
  Fourth thing:

       If drugstores like those terms, they can sign a contract; 
     and if they don't, they can join with some other plan or PBM.

  Oh, I love this. This is classic, Mr. Speaker. PBMs hold a 
disproportionate share of the marketplace. We have already talked about 
three of the largest PBMs own 80 percent of the market--80 percent. 
Because PBMs have a stranglehold on the market, community pharmacists 
cannot stay in business without being forced to contract with them. It 
forces community pharmacists to sign take-it-or-leave-it contracts with 
anticompetitive and unfair provisions, and from transmitting it without 
written consent. These are just crazy.
  I had--one of my pharmacists who was on their plan actually had a 
letter sent to their customers who said: You are no longer on the plan.
  He called the PBM. The PBM said: No, you are still on the plan.
  He said: Then why did you send a letter out?
  PBM said: Oops, must have been a mistake.
  He said: Well, why don't you send a letter out telling them that they 
are wrong?
  PBM said: Oh, we don't do that. That is on you.
  Yeah, because all you want to do is keep the money, follow the money. 
Mark, it is easy. I understand running a trade association is tough, 
but at least be honest about it.
  The last thing. Community pharmacists typically get paid more by 
plans because there is not as much competition. Well, five for five. 
Community pharmacists in northeast Georgia and across the United States 
are under constant threat of going out of business because of PBMs. 
PBMs exploit the market, prey upon community pharmacists, using spread 
pricing and retroactive DIR fees. PBMs also use a disproportionate 
share of the market to steer patients to pharmacies they own 
  The Prescription Drug Price Transparency Act is vitally important to 
improving fairness and transparency in the healthcare system. Community 
pharmacists must be kept in business and patients should have the 
choice to receive care from their local pharmacists. Community 
pharmacists might be afraid to stand up to PBMs. Community pharmacists 
many times are basically scared into submission.
  I have stood on the floor of this House many times. My pharmacists 
can't speak, but I can, and I will remind the PBMs one more time: You 
can't audit me. You can go audit for profit, which you do every day. 
You can go hit them, but you can't hit me.

  I will continue to be a voice for community pharmacists. These 
Members are being a voice for community pharmacists. Our numbers are 
rising every day. The President himself has actually begun to look at 
those middlemen and those pricing.
  Tonight ends another night of telling the truth when the truth needs 
to be told. Mr. Speaker, we end another time of standing up for the 
American people and the community pharmacists.
  I yield back the balance of my time.