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Committee presses PBM witnesses on vertical integration and concentration in drug distribution
Summary
Committee members questioned PCMA witnesses about PBM market concentration, vertical integration and conflicts of interest; witnesses said claims that three PBMs process 80% of claims reflect claims-processing concentration, and noted Tennessee has enacted PBM reforms in 2021 and 2023.
During extended questioning following the PCMA briefing, several committee members pressed witnesses on market structure and vertical integration in the prescription drug supply chain and whether PBMs favor pharmacies they own.
Jim Sparks and others raised concerns about independent pharmacy closures and asked whether PBMs constitute an oligopoly. PCMA witness Johnny Garcia and Michael Power said that while a large share of claims-processing is concentrated ("80% of claims are processed by 3 PBMs," Garcia said), the market structure is layered and includes wholesalers, PSAOs and contracting relationships; Power pointed to prior merger reviews and recent state PBM reforms and federal actions increasing transparency and rebate pass-through.
Members encouraged continued oversight and further questions, and the committee concluded the briefing after a round of exchanges about vertical integration, disruption from new market entrants and potential policy responses.
