Rep. Peter Roskam thinks corporate drug pricing practices are “outrageous,” “indefensible” and “won’t stand up to scrutiny” that his Congressional sub-committee may give them.
Roskam, a Republican from the Chicago suburbs, is an authority on drug pricing, in the literal sense of the word. As the new chairman of the Health Subcommittee on the House Ways and Means Committee, Rep. Roskam has legislative authority over drug pricing in America.
In full disclosure, I was Roskam’s chief of staff between 2007 and 2013. Roskam was named chairman of the Health Subcommittee shortly after I became the Healthcare Editor at IVN – a remarkably lucky break for my new editorial aspirations.
The subject of his ire is something known as a “gag clause.” While you may assume that your pharmacist is working in your best interests, if her pharmacy’s contract with its pharmacy benefits manager (PBM) has a gag clause, she is not. A gag clause puts your pharmacist in violation of that contract if she informs you of cheaper alternatives to the high-priced prescription drugs you are purchasing.
What does this mean to you? It means that if your insurance co-pay is more expensive than the cash price for your medication, your pharmacist cannot inform you that you can save money.
What Are PBMs?
Polling by the National Community Pharmacists Association show that some 59% of pharmacies across American have contracts including gag clauses.
Contrary to conventional wisdom, it is not Big Pharma using such deceptive business practices. Just three corporate giants control 80% of retail drug pricing – CVS Caremark, OptumRx (a division of United Healthcare) and ExpressScripts.
Known as pharmacy benefit managers, or PBMs, these companies negotiate prices for buying prescription medication from manufacturers as well as retail prices for pharmacies. Additionally, they negotiate the insurance co-pay amount consumers will pay, and how much insurance companies receive from their insured purchasing prescription drugs.
So PBMs seem to be in the middle of all drug transactions.
But some of this is speculation. Roskam points out that the way PBMs do business is “fairly mysterious.” The Congressman says PBMs are begging the questions “What do they do again? How are they doing this? What is the value proposition?”
And those are the types of questions Congress should be asking. PBMs don’t take the risk of developing and manufacturing drugs. They don’t incur costs warehousing or distributing drugs. PBMs don’t risk holding inventory for the retail market.
Yet they hold enough power in the drug pricing value chain to make pharmacists agree to the gag clause, and practice which skates on the edge of violating the American Pharmacists Association code of ethics. And PBMs make huge amounts of money.
Roskam’s Bipartisan Approach
This is an issue that has fostered bipartisan cooperation and Roskam has allies with whom he works on the other side of the aisle. Roskam’s friend, colleague and occasional dinner partner, Democrat Peter Welch of Vermont, has introduced legislation to reign in PBM drug pricing practices.
Other member of Congress are speaking out about unfair business practices on the part of PBMs. The list includes Sen. Ron Wyden (D-OR), Rep. Doug Collins (R-GA) and Rep. Buddy Carter (R-GA), the only pharmacist in Congress. Look for a future in-depth piece on Carter’s views.
Roskam has long been an advocate for sensible bipartisan solutions in Congress. He is currently leading a bipartisan effort to combat opioid abuse. He was also part of a bipartisan group of members of Congress that stood up to BP when the oil company dumped toxic chemicals into the Great Lakes.
Future of the Gag Clause
Roskam sees a lot of scrutiny of PBMs in the near term. He feels like “…just looking at things, at a Congressional level, can have influence on behavior.”
As Roskam describes the gag clause in the contracts between PBMs and pharmacies, he predicts “…that won’t be happening at some point in the foreseeable future.