how many pbms do we have? >> there are 66 full service pbms in the u.s. and more organization that is provide pbm services. >> does that seem like a monopoly in pbms. >> three pbms control nearly all of the population. >> you have an association to represent. the point is, when we hear testimony that the pbms are asking our drug manufacturers to raise the list price and then they -- many of them get a percentage of the cost of the drug for handling it, it looks like to me we got the foxes in the hen house and we have to take action. i yield back, madam chair. >> thank the gentleman and he yields back. and now i'd like to recognize the gentleman from oregon, mr. schrader for five minutes of questioning. >> thank you, madam chairman. appreciate it very much. >> i would associate myself with the last two members that talked. because industry is unfortunately, the situation where a lot of changes,s pricing structure is opaque and complex. i don't blame anyone in any of the industry sectors for that. just grown up that way. as a result, it calls for, unfortuna

would eliminating the pbms help? >> i think the pbms play a role in administering service that if they don't exist, someone will have to replicate. they do a lot more than negotiate a rebate. and if the pbms are eliminated, the plans and the sponsors would have to replicate those services. >> my time is up. madame chair, thank you. >> i just want to comment that i love the questions of members from both sides to just peel layer by layer the onion skin back on this. it's so important for us to do it. it really is the essence of having a hearing. i now would like to recognize the gentleman from vermont, mr. welch, who if there is anyone who has done a deep dive on pricing, it is he, recognized for five minutes of questioning. fasten your seat belts, witnesses. >> thank you. not really. look, the bottom line here is that the pharmaceutical industry creates life saving and extending drugs and pain relieving drugs. you are killing us with the price. that's on both sides. we are trying to get to the bottom of this. there i

agreements between pbm's and insurers. today we are considering seven partisan bills that essentially unmasks the secrets of the secret process and ensures low income seniors can afford their medications and build on the drug pricing package passed by the house last week. the first and very important bill ensures the seniors can afford their drugs. representative cunningham introduced the creating lower-cost alternatives for your prescript and drugs act, the bill eliminates cautionary for generic drugs for low income medicare enrollees in caps their out-of-pocket cost for the drugs. nearly 25% of seniors who take drugs report is difficult for them to afford the medication. this bill will not only save seniors money, but will also help save the life in many instances. the second group of bills exposed how drug prices are set. the spike act proposed by reed in the prodrug pricing act proposed by representative shows koski and princess rudy required drug manufacturers to justify large spikes and drug prices. reporting accurat

the pbms themselves? >> there are recent mergers between pbms and health plans that may allow for more of the point of sale rebate dollars going back to the members and better integration of data for risk scoring. another is this institution called icer which is a watchdog drug pricing industry group. it is the instituted for clinical and economic research. looking at in determining the true value of the drugs are and asserting what the price should be. this is done in europe and rent three introduced by the pbms here as well. in addition to looking at the published literature about the effect of the drug. this also looking at the quality and cost. and that is there whether it should be covered and what the appropriate price is. >> this has been in place for quite awhile. it is o often involved in europe and canada by the licensing agencies to help decide on the value of introducing the new drug based on dollars per patient year of life or quality of life or whatever parameter. i didn't know how much this

different pbms can negotiate different prices. one drug for high cholesterol may get an 80% discount while a similar drug only gets a 20% discount or why the same drug at one pharmacy chain costs twice as much at another. it all depends on the deal made between the insurance agency and the manufacturing company by the pharmacy benefit manager. the insurance company agrees to pay part of the negotiated price. first the price is set then the insurance company determines what percentage of that it pays. that amount varies from insurer to insurer. they use the deals to determine where the place a given drug on their list of medicines covered by a given plan. the list is divided into several tiers. if you're covered, you'll know this. there are preferred brands, non-preferred brands, et cetera. the amount you pay, which is your co-pay is based on what tier the drug lands in the lower the tier, the less you pay. the higher the tier, the more you pay. the three main manufacturers all point finger at each other for high prices. drug compa

these programs for manufacturers and pbm's are important and useful in the short-term they are only a band-aid. we have to work on the long-term income has a solution. many of the concerns we heard last year hearing on insulin are similar to the issues that we are just in our hearing looking at the drug supply chain a year ago but i appreciate hearing directly from the manufacturers and the pbm today about your perspectives on why insulin cost are rising. it is like we heard a hearing on drug pricing in 2017 fully understand why the cost of we need to hear if the distributors or viruses at the end -- >> we leave us now to take it back to life to the international center a discussion about modernizing the armed forces underway. >> i did have a chance to see our soldiers and had a chance and it spot on in terms of what were doing but i also attended a joint training that of in romania and poland when you look at where our nato partners are in our nato partners were doing work out there to build interoperability and build mutual training and partnerships to make the alliance so strong. >

we need more transparency around pbm's. his companies cut deals to determine how much patience pay but it is all secret. competition, free markets cannot work without transparency. now, there is a fundamental question that drug companies want us to ask about .rug prices what are we willing to pay to save a life? when it is your child costs , the answer is anything. we will mortgage our homes and empty our bank accounts. that is the wrong question. the question is what is the right amount of money drug companies should make on these drugs with hundreds of medical trials underway for new gene therapies currently priced at half $1 million or more, we the drugy any price companies demand. neither american families nor our health-care system can afford that. i feel grateful to be here today representing patients from across the country. i believe a moment is at hand to address this problem. with bipartisan support, we can and will. thank you for having me. sen. graham: thank you mr. mitchell. >> good morning members of the commi

there's $166 billion a year in rebates that -- >> so it's the fault of the pbms? >> what we're talking about is a patient affordability issue. so getting those dollars down to -- >> mr. stansel, let me stop you because i can tell you can talk the ears off a jackrabbit. you're very good at what you do, and i'm really not trying to be rude. i think what your clients do is extraordinary. i mean you come out with new drugs every year. you extend our lives. you improve the quality of our lives. you save money. certainly a lot cheaper to take a pill -- not all pills, but most pills than spend a week in the hospital. i just think it's -- your research and development, it's just breathtaking, and i want to thank you for that. you've improved the quality of life for people throughout the world. but we've got a problem here, and the problem is that the people of the united states of america are paying way more than anybody else. and i've been here 2 1/2 years, and all we've done about this is talk. if i've learned anything in 2 1/2 years, it's that doing nothing is hard bec

full disclosure, we own a pbm which has a different model than the bigger ones. about 2% of the total picture. we were on the hill in the hearings recently, and our model is transparent. that is the issue of not being able to understand who is getting a cut, who is taking profitability out and benefiting. it is bigger than that, though. that is just one facet. has been a lot of consolidation, continues in health care industry. is that making things better or worse? >> i don't think scale is the answer alone but there is ability to have economies of scale around revenue cycle, for example, or buying supplies. it makes sense to have scale, but scale alone is not enough. there has to be attention paid to being relevant. consolidation generally is a more,hing, but there is so it is hard to say in a sound bite. david: if you got a call from washington and they said you can do one thing, anything t you want to do to improve health care across the country, what would you do? sochange the payment system, there is more payment for primary care, end-of-life care, palliativ

the formularies that we have now are not done on behalf of the public but for the benefit of the pbm. doctor miller. give me the steps in order to heal these outrageous drug prices. >> as medicare part d adopted the changes recommended to bring more pressure on the pbm to change the structure there is a whole set of anti- competitive behaviors and legislation. >> you need to move on and move further last is this is where we disagree on the drugs were there is not competition , that is where we recommend you think of negotiation or reference pricing and we think it can be done without the formulary exclusion my will talk to you and your staff about that. >> i yield back thank you to the witnesses. >> the gentleman yields back. i now recognize the gentle man from oklahoma for five minutes. >> thank you madam chair into the witnesses. i will focus it on the fair act there is a little bit of a difference of approach. we both agree that drug prices are too high. 100 percent agree. we do agree there has to be something done. but the approach is what is different i believe in private industr

secret decisions how drugs are pricedmp and the pbms and secret >>rmacy befit ge epof e anpay to pharmacies for drugs. while the bills have bipartisan support, republicans say they want to protect innovation and research. let's see how wall street is doing with about 45 minutes to go before the closing bell. dough up about 180 points. >>> sharks fans are hoping their team stays in the game. one fan in particular really wants them to win. check out this room. helen garcia has sharks memorabilia decked out wall to wall. everything from pucks to posters cover her entire bedroom. that is a true fan. some of her other keepsakes have a lot more meaning. she started what is called the teal wings project in honor of her friend and fellow paaw wing fan who has died. >>> let's get a check at our cat mary is nge next at's right. our wet weather continues. tracking scattered showers for us and the bay area. in the sierra, talking about the snow. check out the snowy drive up i- 80 with all of that snow. hazardous driving conditions. a winter weather advisory in the west slopes of the sierra until 8:00 p

lumping that together and negotiating as a pbm. you can decide the rationality of that on your own but, could i just say that, without taking a position on the issue, this business of having the government negotiate drugs it's not a two-sided argument. the only way you can use government to drugs, if you don't drive your price down your drug is off the formulary, at that point in time you now have government deciding what a patient can get and not get so it becomes a question of using the government to choose instead of people choosing and again you can decide . >> i take your point on that but on the one hand you're taking the veterans administration, will let them do it but not medicare . >> that's because veterans is a system that basically assumes they are at risk. i'm not here to defend that, i'm just saying that's how it happens, there's a difference between a healthcare system and them mean mean a corpus assuming risk in the broader economy. i think those are two different and i think they're different . >> that's what we ne

it connects the pbms to the doctors and the doctors to the pharmacies. >> okay. >> let me shift gears to credit rating agencies, okay? our rating agencies form a very useful function. they gather information about each of us. can we agree, though, that when the rating agencies have information that's inaccurate, they could do a better job of making it easier for a consumer to change that information, could they not? >> well, certainly it's very important that the information they have be accurate, and -- >> but have you ever had a situation where it wasn't accurate and -- >> yes. oh, yeah. in fact, we brought a case against a company called real page, i think, which is a background screening company, and they were using an algorithm to match up data to people's criminal records. >> mm-hmm. >> and they were not doing a very good job of it. and so we brought a case and got them to change their algorithm and also to pay monetary relief of $3 million. >> but what i'm talking about is a situation where the rating agencies have information on you, for example, and they just got it wrong. >>

turns out what we call coupons are really relationships between insurance companies, we call them pbmsallows a consumer who doesn't have insurance and get a good price good rx brought all of them together and put them altogether and said what's the best option? it might be your insurance, it might not. >> why will cvs or walgreens not bother we're not the least bit interested >> we have a great relationship with cvs and walgreens they want consumers to pay an affordable price when you walk into ccs, they don't want to say $2,000 because of the complicated nature of the system they can't discount it on their own they need to work with insurance and work with people like us to come up with a price so that they can provide an affordable price to the consumer. >> you're not robin hood how do you make money? >> we work with all of the major pharmacies we make money a few different ways we have a subscription product called good rx gold. we make some referral fees and have advertising on the site we start from the premise of whatever is best for the consumer is what we're going to show them

regulation et cetera, there are also just some built-in incentives, financial incentives for insurers and pbms to prefer high cost high rebate drugs. and this is conversation you're hearing play out in all the drug pricing hearings, et cetera. but the economic incentives whether they're taking -- certainly are aligned because beneficiaries pay coinsurance based on list price, the higher the price the more coinsurance dollars and again reaching catastrophic coverage very quickly. so all of those factors are impacting this. the medicare payment advisory commission seeing this trend back in 2016 noted the need for reform. so they put forward a three pronged approach to reform the program, which had lots of support and so one that would impose an out-of-pocket cap. beneficiaries don't really have true out-of-pocket protection. so that would provide them that. currently beneficiaries pay 5% in catastrophic coverage. so 5% once they get their of every dollar spent until they start over the next year and go back through the benefit phase. they also restructured the shurnts piece so that currently the

pharmacy revenues, the pbm's, what percentage of that $2000 would be paid to them? >> this is actually quite small. the cost-effectiveness of this -- cine when you look in the public sector, we have very deep discounts. 70 or 80% discounts. >> the billion dollars of investment that you noted earlier, is that an ordinary or a capital expense on your income statement? >> that is or never. capital could be components to that. peoplenvested into r&d, and costs. >> thank you, mr. chairman. gomer,re we go to mr. you said something about .7, can you say that again? i think i misheard you. >> you probably did not. for every infectious disease slot we have, we have .7 applicants. there has been a new york times editorial in the last month by matt mccarthy that demonstrates we will have a shortage of infectious disease. anticipating infectious disease doctors. there have been no infectious disease doctors in them. i think we have a public health problem. heart of that is related to funding. we are what we call a cerebral field. we rely on these dollars to recruit applicants i