On Tuesday, the Committee on Oversight and Accountability held a hearing into the Pharmacy Benefit Manager (PBM) industry, which the Federal Trade Commission described in a recent investigation as “prescription drug middlemen.” During my question line, I spoke with our expert witnesses on the ways in which the business model of most PBMs actually focuses on running up the costs of medications for consumers and driving independent pharmacies out of business through exorbitant fees that reduce competition for pharmacies affiliated with the PBMs.

When they emerged in the 1960s, PBMs worked on behalf of their clients, such as insurance companies and consumers, to help negotiate the lowest prices possible for prescription drugs. However, over time this business model shifted as PBMs created groupings of medications called drug “formularies,” which listed the drugs and the manufacturers that made the best deals with the PBMs on behalf of their clients. PBMs started extracting “rebates” or “discount” payments from drug makers to be listed on the formularies, even though PBMs did not fully pass along these savings to insurance companies or consumers. These savings never make it to consumers, but the high list prices still come at the expense of consumers with high copays or without insurance coverage who are forced to pay the higher prices out of pocket.

In this way, PBMs created a system in which they use their leverage as middlemen to extract what are essentially kickbacks from drugmakers, thus fattening PBM’s profits, often at the expense of consumers.

Since 2010, more than 1 in 7, or 15% of independent pharmacies have disappeared and one major factor in the closing of more than 3,500 of these community pharmacies has been the direct and indirect renumeration (DIR) fees which PBMs charge pharmacies. PBMs charge pharmacies DIR fees sometimes months after pharmacies sell a customer a prescription for which PBMs reimburse the pharmacy. According to official government records, DIR fees increased by 107,400 percent from 2010 to 2020 – meaning a fee that was $1 in 2010 would have climbed to $1,074 by the end of the decade. Thankfully, under a rule issued by the Biden Administration, PBMs will no longer be able to assess these DIR fees retroactively as of January 1st, 2024. While ending retroactive DIR fees is progress, we still need to end all DIR fees once and for all, and I’m committed to working with members of both parties to get it done.

This week, as bipartisan negotiations to avoid the United States defaulting on our national debt continued on Capitol Hill, I joined Andrea Mitchell on MSNBC to discuss the implications of the U.S. failing to meet our responsibilities to pay our bills and how doing so would benefit the Chinese Communist Party (CCP). As Ranking Member of the Select Committee on the Strategic Competition Between the U.S. and the CCP, I know that Chairman Xi is watching our every move. The U.S. defaulting on our debt would not only cause an economic and political disaster in our country, it would also weaken the U.S. dollar, undermine our standing without allies, and provide the CCP with the best propaganda that it could possibly ask for to show that democracy does not work. I am committed to ensuring the U.S. does not default on our national debt and hope that these bipartisan talks will soon produce a sensible deal that prevents such a disaster without harming essential programs such as Medicare and Social Security.

If you are unable to make it to our district office in Schaumburg, my staff is available at mobile office hours throughout the district. Share your questions, concerns, and get help navigating federal agencies at convenient locations across the district.

Our Next Pingree Grove Office Hours: Tuesday, June 6: 12:00pm – 4:00pm at the Pingree Grove Municipal Center at 555 Reinking Rd, Pingree Grove, IL RSVP HERE

We will continue to hold additional office hours in Pingree Grove on the first Tuesday of each month: July 11^th (postponed from July 4^th), August 1st, September 5th, October 3rd, November 7th, and December 5th

Our Next Des Plaines Office Hours: Tuesday, June 13: 9:30am – 11:30am in the Des Plaines Public Library at 1501 Ellinwood St, Des Plaines, IL RSVP HERE

We will continue to hold additional office hours in Des Plaines on the second Tuesday of every other month: August 15th, October 10th, and December 12th.

Our Next Wood Dale Office Hours: Tuesday, June 20th: 10:00am - 1:00pm in the Wood Dale Public Library at 520 N Wood Dale Rd, Wood Dale, IL - RSVP HERE

We will continue to hold additional office hours in Wood Dale on the third Tuesday of each month: July 18th, August 15th, September 19th, October 13th, November 21st, and December 19th.

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