Energy and Commerce hearing spotlights pharmacy benefit managers' role in high drug costs and local pharmacy closures

Chairman Carter convened a House Energy and Commerce subcommittee hearing on pharmacy benefit managers (PBMs), where lawmakers and expert witnesses described PBM market concentration and opaque business practices as contributors to rising prescription costs and shrinking access to local pharmacies.

The hearing brought patient stories, state audit findings and federal reports into the record and featured testimony from independent pharmacists, employer-purchaser representatives, consumer advocates and health economists.

Why it matters: Witnesses and members said PBM practices—rebate-driven formularies, spread pricing, and vertical integration—can increase list prices, raise patient out-of-pocket costs, and steer business to PBM-affiliated pharmacies, which they said harms independent pharmacies and can reduce access to care, particularly in rural or underserved areas.

Hugh Chancey, a pharmacist and co-owner of Chancey Drugs, told the subcommittee that PBM practices have jeopardized his pharmacy’s ability to serve people in South Georgia. Chancey testified that “the top 3 PBMs control over 80% of the market,” and described instances in which PBMs steered patients away from community pharmacies and required mail-order fills that led to late or missed medications.

Sean Grimminger, president and CEO of the National Alliance of Healthcare Purchaser Coalitions, urged stronger transparency and called for plan-level disclosure so employers can assess what they actually pay for each drug. “Most self funded employers to this day do not know how much money they are spending on any specific drug,” Grimminger said.

Anthony Wright, executive director of Families USA, said PBM opacity contributes to higher premiums and cost-sharing, and urged Congress to require that savings and discounts be passed through to payers and consumers.

Brookings economist Matthew Fiedler cautioned that transparency is likely to produce modest savings on its own but said it could improve competition and enforce existing contract terms. “Greater transparency would likely reduce the price of PBM services by making it easier for payers to comparison shop, enforce existing contracts, or press their PBMs for better terms,” Fiedler testified.

Members and witnesses cited federal and state findings. The subcommittee referenced a Federal Trade Commission interim report and state audits that found large differentials in reimbursement between PBM-affiliated pharmacies and independent pharmacies, and an inspector general audit that found Express Scripts overcharged the United States Postal Service health plan by about $45,000,000.

Several members emphasized specific reforms that were included in a bipartisan end-of-year package that did not become law: banning spread pricing in Medicaid, enforcing reasonable contract terms between PBMs and pharmacies in Medicare Part D, and adding disclosure requirements for PBM activities in the commercial market. Witnesses said those provisions would increase transparency, reduce opportunities for perverse incentives, and protect community pharmacies.

No bill votes were recorded at the hearing. The subcommittee did record procedural unanimous-consent entries into the record: Representative Carter asked unanimous consent to submit letters supporting PBM reform from patient, provider, pharmacist, small business and advocacy organizations; the chair said, “No objection.” Representative Diana DeGette also asked unanimous consent to place a 17‑page list of negotiated provisions from last year’s bipartisan package into the record; the chair responded, “Without objection.”

Members pressed witnesses on tradeoffs. Fiedler said changes to PBM compensation structures (for example, banning rebates) could create trade-offs that might alter PBM negotiating incentives and that the effects would depend on how payers adjust. Other witnesses argued the current rebate-driven system inflates list prices and misaligns incentives.

Independent pharmacy data and state experience drew prominent attention. Witnesses and members cited more than 300 independent pharmacy net closures in 2023 and large state audit findings of spread-pricing revenue in Medicaid managed care (Kentucky, Ohio, West Virginia, North Dakota were named by witnesses). Chancey said his company alone employs over 100 people and that community pharmacies serve as local health-care hubs during disasters.

Lawmakers from both parties expressed support for reform. Ranking Member Diana DeGette (D-Colo.) and several Republican members urged moving the bipartisan package to the floor; others urged alternative routes such as a suspension vote. Several members also tied PBM reform to broader affordability steps, but cautioned that PBM changes are not a substitute for addressing other cost drivers such as drug manufacturer prices.

The hearing closed after member questioning; members were given 10 business days to submit additional written questions for the record.

Ending: Witnesses and committee leaders repeatedly framed PBM reform as bipartisan and urgent—but no new legislation was passed during the hearing. Lawmakers and witnesses asked the committee to pursue the transparency, contract and payment reforms discussed so that employers, patients and pharmacies can better see where money flows in the drug supply chain and where savings might be realized.