committee hearing last fall i focus on the role of our embassy benefit managers, also known as pbms. after hearing from pharmacists in maine, i learned that some contracts between pbms and pharmacies actually contain so-called gag clauses that prohibit pharmacists from telling consumers if they're prescription would cost less if they paid for it out-of-pocket, rather than using their insurance. but they can only answer that question if the consumer asks. well, it's so counterintuitive to think that paying out-of-pocket is going to be cheaper than using your insurance cover using your debit card is going to save you money over using your insurance card? who's going to think to ask that? so i was outraged when i learned about this process, and i was so grateful to these pharmacists from maine for coming to me and telling me about it. i have to ask the basic question as well, and that is, how can it be that an insurance companies prescription benefit manager whose very job it is to negotiate lower prices, drug prices, could instead be leading consumers to pay more for a drug than they o

>> i actually think that the pbms have had a purpose.ve been able to bring overall drug costs down over the years. they'ved impr drug safety and you know, they've looked at ways toncase generic penetration and the use of generic drugs and lower cost alternatives and the margins that the pbms have been making is under scrutiny, as well and why do we need a middle man? ere is a nee for the scale and the consolidation of lies that these gs bring to the table. it's just that there is a perception that they're er rning and that they're the ones responsible for very high drug prices whe i think at the end of the day, everyone down the supply chain from the drug t manufacturer t distributors and to the pbms, they have to givef their own pound flesh, right? it's not just the middle man that's causing high drug prices in the country. >> meanwhile, there is another proposal that talks about allowing drugompanies and hospitals to import drugs from overseas wre they're often very much cheaper. what do you think that will do to the industry? >> you k

for example, if you're a pbm and you're controlling which drugs are listed on an insurer's formulary, the manufacturer has the perverse incentive to have a higher list price because then the pbm, who is often paid on a percentage basis, is going to get more for its work, and the manufacturer wants that drug included on the formulary. so it seems to me there is an infield conflict of interest right there, although to be fair, we're still investigating this. when we did our hearing on insulin, the american diabetes association, which had spent a great deal of time studying the cost of insulin and why it had increased, gave us a charge, and it is unbelievably complex. and when we asked them to explain it, they essentially threw up their hands despite the extraordinary research that they have done. that's how opaque the system is. health care is complex enough for consumers to navigate without the added confusion of a drug system that is so opaque. i will say that i have raised these issues at hearings and in conversations with the fda commissioner scott gottlieb, and i am very impressed

also known as pbm's. i learned that some contracts between pharmacies and pbm's contain so-called gag clauses that prohibit pharmacists from telling consumers if their prescription would cost less, if they paid for it out-of-pocket, rather than using their insurance. they can only answer the question if the consumer asks. it is so counterintuitive to think that paying out-of-pocket is going to be cheaper then using your insurance. using your debit card will save you money over using your insurance card? who will think to ask that? so, i was outraged when i learned about this process. and i was so grateful to these pharmacists from maine. for coming to me and telling me about it. a basic question is, how can it be that an insurance company is prescription to fit manager whose very job it is to negotiate lower prices could instead be leading consumers to pay more for a drug then they otherwise would have two. due to the publicity, a lot of pbm's have dropped these and the head of cmf has also sent out a let

due to the publicity, a lot of pbm's have dropped these. the head of cms has also sent out a letter saying they are no longer acceptable. we want this to be law. we have introduced two bills, one that will go to finance and apply to medicare and medicaid programs, and one to a health committee that will apply to the affordable care act programs and private healthcare programs to make sure that this practice is ended once and for all. a common thread in all of our investigations and hearings is a lack of transparency in the pharmaceutical system. what we have noticed is that price varies on a number of factors. it includes the list price set by the manufacturer, the fees charged by distributors and wholesalers and other middlemen, and a lot of times the negotiated price is not passed on to the consumer. sometimes it is used to lower premiums. that may be a good thing in some cases. but a lot of times the consumer is not seeing the result of the impact of those negotiations. we also found that these overlapping relationships have created a sy

after hearing from the pharmacists in maine, i learned that some contracts between pbm and pharmacies actually contained so-called gag clauses that prohibit the pharmacists from telling consumers if their prescription costs less if they paid for it out of pocket rather than using the insurance. they can only answer that question if the consumer asks. it is so counterintuitive to of pocket isout going to be cheaper than using your insurance, using your debit card is going to save money over using your insurance card? who's going to think to ask that? so i was outraged when i learned about this process. and i was so grateful to these pharmacists from maine are coming to me and telling me about it. i have to ask a basic question as well and that is how can it be that in insurance companies manager whose very job it is to negotiate for lower prices could instead be leaving consumers to pay more for a drug than they otherwise would have to. due to the publicity, a lot of them have dropped fees and the head of cms also is sent out a letter saying that they were no longer acceptable. but we

high list price with a rebate thickets administered after the fact, what if our contracts that the pbms have instead just say here's the price, here's what we'll pay you. you have mt market power in the pharmacy benefit manager, youav control the formulary and you will get this level of discount. here's the price and that gets administered at the point-of-sale. you take list price at of the equation, the pharmacy l benefit manager has no incentive for higher list price. it's administered right there, it's an actual discount, the money flows with it and we just take list price off the table. >> well, states continue to buy with the concept of a close formulary in medicaid with the recent examples of massachusetts and arizona, and other states with a bipartisan mix of governors considering the idea that there's growing interest in the outcomes of imposing a close formulary in medicaid through a demonstration project. how would the medicaid drug rebate program interact with such a proposal, ndu envision carvin protections for certain drugs or classes of drugs required coverage of medically

are the reason drug prices are so high and the manufacturers point their fingers at the pbms and say they're creating artificial spreads when they go ahead and sell and dispense or have their reimbursements go to the pharmacists. so there is a lot of finger pointing as to why prescription drug costs are so high and i think people need to take a look at that and at a policy level try to get to the bottom of that argument if you're going to get any traction on any solution. >> hi. kate gill lard, american physical therapy association. what do you think the impact will be in states that have expanded medicaid, maybe transition some of that population into the private market and now are rolling it back? i'm thinking arkansas and new hampshire in particular have private options for their medicaid expansion population are now kind of backtracking, if that will affect the overall risk pool for good or for bad, just what your thoughts are. thanks. >> i'm not an actuary and so take this for what it's worth, but i think there's some evidence that the population in many states between 100 and 1

i've got dan best who ran one of the biggest-- actually the biggest part d plan in the country from a pbmerspective who added tremendous insight about how plans work and i've done the same on the individual market reform, on the ipo crisis and on value-based transformation. leaders who have a history in industry in transforming complex stuff. >> on behalf of the american people, thank you so much for putting together that team and for actually doing things that work. some of the questions i have are from people in the audience, some are my own. but i have one from my friend, grace marie turner who is here. >> and my friend, also. >> absolutely. she and i have been doing health care policy in this town, i don't want to say how many years, it's been way too many. but, grace wants to know the house just vote today provide many options to people with health savings accounts. as you know something a great deal about. how do you see this helping people who have been so hurt by obamacare's high cost and rising deductibles? >> so, it's no secret we're incredibly supportive of health savings accou

raising their prices that is the reason prices are so high manufacturers point their fingers at the pbm to say they create artificial spreads when they dispense with the reimbursements go to the pharmacist. there is a lot of finger-pointing as to why prescription drug costs are so high and i think people need to take a look at that add a policy level to get to the bottom of that argument if you get traction on any solution. >> and from the american physical therapy association what is the impact on the states that have expanded medicaid may be transitioned to the private market now are rolling back like arkansas or new hampshire in particular for that population? overall risk pool? for good or for bad? >> i'm not and actuary. so take this for what it's worth but i think there is some evidence that population between 10130% of the federal poverty line where they are currently in medicaid and talking about transitioning them to the private marketplace i think dude generally a curve population could have a negative impact on the risk pool.is . . . . d i'm a consultant. a lot of the themes

you will see the pbm's point of the fingers at the manufacturers, saying they are the reason drug prices are so high, it manufactures pointed their fingers back and say they are creating artificial spreads when they go ahead and sell the in dispense or have the reimbursements go to the pharmacists. so there is a lot of finger-pointing as to why prescription drug costs are so high. and i think that people need to take a look at that and at a policy level get to the bottom of that argument, if you are going to get traction on any solution. >> ok. >> hi. american physical therapy association. my question is, what do you think the impact will be in states that have expanded medicaid, may be transitioned some of that population into the private market, and now are rolling it back? i am thinking arkansas, in particular, for their private options. that kind of backtracking, if it will affect the overall risk pool, for good or for bad, just what your thoughts are? take this for what it is worth, but i think there is evidence that the population in 8% ofstates between 130%-13 the poverty line, wh

the manufacturers point their fingers at the pbms and say they're creating artificial spreads when they go ahead and dispense or have their reimbursements go to the pharmacist. and there's a lot of finger pointing as to why prescription drug costs are so high. and i think people need to take a look at that and at a policy level try to get to the bottom of the argument if you're going to get any traction on any solution. >> kate -- physical therapy association. what do you think the impact will be in states that have expanded medicaid, maybe transitioned some of the population into the private market and now -- it back. arkansas and new hampshire, private options are -- how that will affect the overall risk pool for good or for bad? >> i'm not an actuary, and so take it for what it's worth. i think there's some evidence that the population in many states is between 100 and 138% of the federal poverty line where they are currently in medicaid and there's talk of shifting them to the private marketplace. i think there's evidence, generally a sicker population. and so it could have a negati

of this administration speaking about whether 340 b, not putting in the penny roll, going after the pbms and blaming them for price increases and not talking about the pharma companies it suggests that the overall answer from the coming out of that administration is rather positive for the drug industry. it behooves them not to play ball with the president and not to completely come out against his policies in their actions. there is probably a mistake by pfizer to raise prices on 140 drugs the same day. will the farma industry stop raising price increases, i don't expect them to. >> they just need to tweak their pr a little bit. what do you do as an investor? do you have to stay away from the group? even with the twitter attack pfizer ended that day higher even before the negotiations. >> which you own. >> we do own pfizer. i would tell you our investment thesis has not changed on pfizer or any other pharma company that we own. we are completely aware that pricing pressure from a public standpoint and public policy standpoint will be under pressure from this point going forward. so it's

of the solution the president wants to eliminate the middleman, either put strong restrictions on pbm'st managers or share rebait that is the pharmacy benefit managers are pocketing with patients, with the consumers, doing that and also looking -- i know the administration is looking at reforming medicare part d to allow more flexibility for medicare and medicaid to directly negotiate with pharmaceutical companies to get better deals and also to allow for more competition and innovation of new drugs but there are things that i always offer to my patients, you know, i always say, look, shop around, you know, the prices for medicines are different at different medicines, shop around and print coupon, you could also ask your doctor for substitution or generic medicine and even, you know, always a good idea to ask doctor if they have any samples and it's also important for patients to know and understand that there's what's called the gag rule and sometimes if you pay out of pocket it's much cheaper than using your insurance but farmists are not allowed to tell you that because of the gag r

the pbms, the middle man, are not putting anything into it. charles: great point.ongressman, appreciate it. >> thank you. charles: president trump attending the nato welcoming ceremony in the next hour. we're going to take there you and everyone is waiting to see will there be more fireworks. stick around. whoooo. when it comes to travel, i sweat the details. late checkout... ...down-alternative pillows... ...and of course, price. tripadvisor helps you book a... ...hotel without breaking a sweat. because we now instantly... ...search over 200 booking sites ...to find you the lowest price... ...on the hotel you want. don't sweat your booking. tripadvisor. the latest reviews. the lowest prices. about medicare and supplemental insurance. medicare is great, but it doesn't cover everything - only about 80% of your part b medicare costs, which means you may have to pay for the rest. that's where medicare supplement insurance comes in: to help pay for some of what medicare doesn't. learn how an aarp medicare supplement insurance plan, insured by united healthcare insuranc

that would be a complete disruption of everything everybody goes through now >> that's the pbm's are the bad guys, right? >> right that's a big change if it happens. >> it would be a big change. there are a lot of questions on the call for ian reed. he thinks that might happen. it won't be a big change for the pharmacy benefits managers that we mentioned, but also potentially drug distributors who are paid based on the list price of drugs if that dramatically changes overnight, then the prices they get paid could dramatically change as well >> the times, they are achanging. >> some people -- >> thank you >> thanks. >> see you later >> so shares of apple picking up as we head into the earnings report that will be coming out after the bell this afternoon. as always, everybody wants to know how many iphones they sold in the last three months but there's also a lot of attention on the company's service business josh lipton is live in cupertino with the very latest josh >> bill, let's dig right into what the street expects from apple after the close here earnings per share, bill, of $2.18

we don't know how much would have benefitted fieszer or pbms, this is the argument. >> ready to sell pfizer to do an inversion, then he was p precluding this. i fully understand that drugs, only one in ten make it to market, costs hundreds of millions of dollars to make the drug totally understand that. no one says that however, they get certain patent protection that no other marketplace affords any other products they get that to recoup their initial investments. they have waste of gaming that they have the legal ways of keeping generic competition out. they do extended release versions >> they get the 12 years and that's still not enough. okay. >> are you talking about viagra? >> i've for the grengot friends. at $50 a bill. >> the back story. >> bob, i wasn't going to out you on that. >> too late. >> i feel your pain, $50 is -- >> and the generics, as you pointed out are $45. >> i didn't point it out i'm pointing out what you pointed out. >> this was going to -- the july increase will be the second price increase this year making that drug -- >> that should be off patent now. >> i