Executives at two Minnesota-based pharmaceutical benefit managers (PBMs) are being called to Congress as part of the U.S. Senate Finance Committee's ongoing probe of high drug prices.
John Prince, the chief executive at UnitedHealth Group's OptumRx division, and Mike Kolar of Eagan-based Prime Therapeutics are two of five PBM executives that were invited to the April 3 hearing.
Last month, the committee heard testimony from some of the nation's largest drug manufacturers as the pharmaceutical and health insurance industries spar over who's more to blame for rising drug costs. This week, Minnetonka-based UnitedHealth Group said it would expand a program to pass directly to patients the value of drug manufacturer rebates, which the Trump administration has highlighted as a key driver of drug costs.
"Middlemen in the health care industry owe patients and taxpayers an explanation of their role," said U.S. Sen. Chuck Grassley, R-Iowa, and U.S. Sen. Ron Wyden, D-Ore., in a statement. "There's far too much bureaucracy and too little transparency getting in the way of affordable, quality health care."
Health insurers hire PBMs to manage the drug coverage portion of health plan benefits. OptumRx is the PBM for UnitedHealthcare, which is the nation's largest health insurer, as well as other health plans. Prime Therapeutics is the PBM for Eagan-based Blue Cross and Blue Shield of Minnesota, as well as other health insurers that use the Blue brand.
PBMs negotiate prices with manufacturers that can be discounted by way of a complex system of rebates that's not fully transparent to consumers. PBMs create formularies that specify how much coverage patients receive for a given medicine and steer subscribers to a network of pharmacies.
In January, the Trump administration proposed eliminating legal protections for rebates between drug companies and PBMs, saying manufacturers blame rising drug prices on the growing demand for rebates from PBMs. Whereas drug companies say too much of the rebate money doesn't make its way to patients, health insurers and PBMs insist they pass along the savings to consumers.
The rebate structure is one of several sources of inefficiency in the supply chain for pharmaceuticals that was highlighted by a group of Minnesota employers in a report last month. Like the report from the Minnesota Health Action Group, Grassley and Wyden also noted the problem with drug costs involves many parties.
"We've heard from pharmaceutical companies and it's only fair that the committee has the opportunity to ask questions of other players in the health care supply chain," the senators said in their statement announcing the April hearing. "Every part of the industry has a role to play in lowering prescription drug prices."
Executives from the Cigna and Humana health insurance companies also have been asked to testify along with an executive from CVS Health, the large drugstore operator that also runs a PBM and the health insurer Aetna.
Those invited to testify will have five minutes to speak and can submit written testimony, leaving time during the hearing for questions.
A spokesperson for Prime Therapeutics said Kolar plans to attend; OptumRx didn't immediately say whether its CEO would be there.