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The chairman of the influential House Oversight and Accountability Committee is threatening executives of the nation’s three largest pharmacy benefit managers with hefty fines or prison time for allegedly lying at a recent congressional hearing.
Chairman James Comer (R-Ky.) sent letters on Wednesday to Patrick Conway, CEO of Optum Rx (UnitedHealth), Adam Kautzner, president of Express Scripts (Cigna), and David Joyner, president of Caremark (CVS), arguing that their testimony at a July hearing contradicted the committee’s findings and the Federal Trade Commission’s investigations.
During the hearing, Conway, Kautzner and Joyner testified that their PBMs treat affiliated and nonaffiliated pharmacies equally when setting rates, negotiating contracts and directing patients where to dispense their medications.
Those statements were lies, say Comer’s letters, in which he cites evidence from committees and the FTC to argue that PBMs increase their own pharmacy revenue at the expense of other companies.
Comer urged executives to correct their statements by Sept. 11 or face possible legal action, including up to five years in prison and fines that could reach hundreds of thousands of dollars.
Express Scripts denied Comer’s allegations, while CVS said it was reviewing the letter. UnitedHealth did not respond to a request for comment.
“We fully support Dr. Kautzner’s “I reject the testimony and strongly disagree with the allegations in this letter,” an Express Scripts spokesman said in a statement.
Comer’s allegations
PBMs – influential middlemen in the pharmaceutical supply chain – are facing intense public anger over business practices that critics say contribute to high drug prices in the United States.
The House Oversight Committee held a hearing this summer where lawmakers had a rare opportunity to directly question executives of PBMs about the business practices of their companies, which negotiate discounts on drugs with pharmaceutical companies in exchange for inclusion on health insurance drug lists. PBMs also contract with pharmacies to dispense drugs.
During the hearing, lawmakers from both parties put Conway, Kautzner and Joyner on the defensive, saying PBMs contributed to rising costs and limited patient access to medications.
Members of Congress and the Federal Trade Commission (FTC) have expressed particular concern about the significant market power of Caremark, Express Scripts and Optum Rx, which together fill nearly 80 percent of all U.S. prescriptions.
Their parent companies CVS, Cigna and UnitedHealth all have large PBM, health insurance and pharmacy networks. This vertical integration incentivizes the conglomerates and allows them to give preferential treatment to their pharmacies, including sending patients to those locations and paying higher rates, according to a July FTC report.
The FTC concluded that Optum Rx, Caremark and Express Scripts had enough influence to force non-affiliated pharmacies into unfavorable contracts.
But Conway, Kautzner and Joyner testified during the July hearing that PBMs do not refer patients to affiliated pharmacies for medications or pay affiliated pharmacies more than other pharmacies in their networks.
Conway also testified that Optum Rx does not enter into opt-out contracts, where pharmacies can unknowingly change the terms of their contract. Express Scripts’ Kautzner said the PBM allows independent pharmacies to negotiate their contracts, including reviewing and proposing changes to a draft.
On Wednesday, Comer said each of these claims was nonsense.
The statement that pharmacy reimbursement is appropriate “contradicts the findings of the Committee and the Federal Trade Commission (FTC) that CVS Caremark, Express Scripts and Optum Rx all reimburse PBM-owned pharmacies at a higher rate than non-affiliated pharmacies,” the chairman wrote in his letter to CVS’s Joyner.
Comer cited a whistleblower email shared with the committee and the FTC staff report, which found that PBM reimbursement for their own pharmacies is significantly higher than for non-affiliated pharmacies.
The committee also has evidence that Caremark, Express Scripts and Optum Rx steer patients to their own pharmacies, Comer said. Express Scripts, for example, uses data it receives from competing pharmacies to encourage patients to shift their prescriptions to its own mail-order pharmacy, Comer wrote in his letter to Kautzner.
Meanwhile, the committee and the FTC have reviewed evidence showing that independent pharmacies have no bargaining power when joining PBMs’ pharmacy networks and that PBMs can make changes without pharmacists knowing about them, the Kentucky congressman said.
Comer cited a case in which an independent pharmacy unknowingly accepted a change in its payment agreement with Optum Rx simply by submitting a claim.
PBMs claim they save employers and health plans money while making it easier for consumers to access expensive drugs. Instead, the companies argue that the drug companies that set the list price of drugs are responsible for the high cost of many drugs.
“We are proud of the work our physicians and teams do every day to improve the health of the millions of Americans we serve and lower drug costs,” the Express Scripts spokesperson said.
Pressure is growing on the federal government to take action to curb high drug prices at a time when about a third of Americans say they don’t take medications they need because of the cost. The Inflation Reduction Act passed in 2022 gave Medicare the ability to negotiate the price of certain drugs, which is expected to reduce spending at the expense of drug companies’ revenues.
Given continued congressional scrutiny in the form of hearings and proposed legislation to clean up the pharmacy supply chain, PBMs aren’t likely to shy away from reforms either. Most of the bills revolve around making PBMs’ business practices more transparent, and industry leaders say they’re open to it.
“Transparency activity is increasing and we strongly support transparency as long as it is targeted and constructive,” Cigna CEO David Cordani said on a conference call with investors last fall.
But Cordani recently promised to defend Express Scripts more vigorously against critics in Washington, a sentiment echoed by CVS CEO Karen Lynch in second-quarter earnings calls.
By strengthening defenses around PBMs, executives are trying to protect companies from change that are key drivers of revenue and profits. Express Scripts, for example, posted second-quarter revenue of $26.6 billion—44% of Cigna’s total revenue.
