During a Senate Judiciary Committee hearing on Tuesday, Sen. Richard Blumenthal (D-CT) questioned Juan Carlos Scott, the President & Chief Executive Officer of the Pharmaceutical Care Management Association, about rebates for employers from pharmacy benefit managers.
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00:00Thanks Mr. Chairman. Thank you all for being here and thanks for holding this
00:09hearing. I want to come back to the rebates issue. We all know that pharmacy
00:18benefit managers negotiate with drug manufacturers on rebates and
00:23theoretically they can save money for consumers if the PBMs pass along the
00:31benefit of those rebates to their clients, the employers and others, that then can
00:36use the money to reduce the plan's cost. There have been some debate, I know, and
00:42discrepancies on the issue. Last summer the three largest PBMs testified in
00:47Congress that 95 to 98 percent of the rebates they collected from drug
00:53manufacturers go back to employers. Last year the Kaiser Foundation conducted a
01:02survey, I think it's 2,142 randomly selected companies and found that only
01:07one in five of those employers actually received most of the rebates. The other
01:14four and five didn't know what percentage of the rebate they received or reported
01:18receiving. Only some or a little bit of the rebate. I know the PBMs have long
01:28argued that rebates help employers by providing flexibility in their benefit
01:35designs and in other ways, but if the employers aren't getting most of the
01:41rebates or don't even know what they're getting, tell me how there's merit to the
01:52PBMs arguments. Mr. Scott could you explain, I know there's been some
01:57discussion of it here, how you reconcile the argument that the benefits go to the
02:03employers when the employers aren't getting those benefits or don't know
02:06whether they're getting them. Thank you for the question Senator. I believe they are
02:10getting them and they have the optionality to choose to get 100% of
02:13them or to use... Well you believe they're getting them but the Kaiser
02:17Foundation found they're not. I think the discrepancy we've seen in the data is that
02:22some of it is not reflected of the trend that we have seen a lot more of that
02:26pass-through model in the last year to 18 months and that's a that's a pot that
02:31more employers are saying we want them all. We've had one of the big three PBMs say
02:35we're gonna do only a hundred percent rebate pass-through contract. You're saying the Kaiser Foundation survey
02:38is outdated? I would need to look at it to understand I'm making the supposition
02:42that that's maybe why it's why it's not lined up with the other studies from GAO,
02:48from Dennis Carlton, from others. What has changed in the last year? Employers are
02:52making a different choice. They're using their ability to design their contract to
02:56say that they want a hundred percent pass-through in more instances. And you're
03:00saying that has made a radical difference in whether they're getting the benefits
03:04of rebates? That choice has always existed. Contrast with before when they weren't
03:08getting benefits. That choice has always existed for them and so we are for
03:13transparency to make sure employers are getting all the information when they're
03:16making that decision and then letting them choose whether they want to receive
03:19the rebates. What's the latest credible study that you would urge us to? The piece
03:25completed by Dr. Carlton from the University of Chicago which was just
03:29updated in the last month shows that we're almost at a hundred percent pass
03:34through. I haven't seen that study. Has anyone else on the panel? We'd be happy to
03:37share that with you. Thank you. None of you have seen it. Let me ask all the
03:44witnesses on patent laws. You're all familiar with the drug manufacturers misuse
03:52of patent laws to in retaining in effect monopolistic control. Do all of you agree
04:05that reforms in the patent laws would enable lower costs for consumers? Yes. Yes. Yes.
04:17Hopefully we'll have unanimity because my time is about to expire. Yes. I take it
04:23that we do. Thank you Mr. Chair.