Senator Collins Questions Health Care Leaders on Reducing Costs and Improving Quality

Senator Collins Questions Health Care Leaders on Reducing Costs and Improving Quality

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Washington, D.C. – Today, the Senate Health Committee held its second in a series of hearings on ways to reduce health care costs.  U.S. Senator Susan Collins, a member of the Committee, questioned health care leaders on ways to reduce excess and unnecessary health care spending while improving quality and value for patients.

There is widespread agreement that there is a significant amount of wasted spending in our nation’s health care system.  This waste contributes to rising health care costs and makes it more difficult for families, taxpayers, and employers to afford health care.  Health care “waste” is a broad term and can take many forms, such as the delivery of unnecessary services, excessive administrative costs, fraud, and other areas of care delivery that do not ultimately benefit patients.

At the hearing, Senator Collins questioned David Lansky, Ph.D., President and Chief Executive Officer of Pacific Business Group on Health (PBGH), on strategies to prevent pharmacy benefit managers (PBM) from raising the cost of prescription drugs.

“I’ve done a lot on this issue in the Aging Committee.  You mentioned that you found example after example where the PBM turned the formulary to its advantage and not to the customers’ advantage,” said Senator Collins.  “It seems to me there are perverse conflicts of interest in the way this whole system works in addition to a lack of transparency.  One is that a PBM may be paid a percentage of the cost of the drug, so that’s an incentive for the manufacturer to have a high list price and the manufacturer wants to please the pharmacy benefit manager in order to have its drug included on the formulary.  Do you have any comments on that?”

“I agree with those points, absolutely.  We’ve been working to identify what we call a waste-free formulary, where the conflicting incentives that are now operating in the system would be removed and you would have transparency of the cost for the patient who ultimately is paying for all of this and the beneficiary of it,” said Dr. Lansky.  “We’ve identified a number of areas where that could be improved, the challenge now is to rebuild the intermediary layer of payment of financing so that kind of an evidence-based formulary can be applied.”

Senator Collins has championed bipartisan efforts in Congress to increase the affordability and accessibility of prescription drugs.  Last month, the Senate Judiciary Committee passed legislation, cosponsored by Senator Collins, to address the rising cost of prescription drugs.  The Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act would deter pharmaceutical companies from blocking lower-cost generic alternatives from entering the marketplace. 

Additionally, Senator Collins introduced two bills to remove barriers that prevent patients from paying the lowest possible price for prescription drugs.  The Patient Right to Know Drug Prices Act and the Know the Lowest Price Act would prohibit health insurers and pharmacy benefit managers from using “pharmacy gag clauses” – an egregious practice that some companies use to hide the lowest prescription drug prices from patients at the pharmacy. This causes many consumers to needlessly overpay for their prescription.

In 2015, Senators Collins and Claire McCaskill (D-MO) launched the Senate’s only bipartisan investigation into the causes, impacts, and potential solutions to egregious price spikes for certain generic, off-patent drugs.  They released a report on their investigation in 2016.  Following their investigation, Senators Collins and McCaskill authored a bill to improve generic competition and lower the cost of prescription drugs that was signed into law as part of the FDA Reauthorization Act.

Witnesses for the Senate Health hearing included:

• Jeff Balser, M.D., Ph.D., President and Chief Executive Officer, Vanderbilt University Medical Center, Dean, Vanderbilt University School of Medicine, Nashville, TN
• Steven M. Safyer, M.D., President and Chief Executive Officer, Montefiore Health System, Bronx, NY
• David Lansky, Ph.D., President and Chief Executive Officer, Pacific Business Group on Health (PBGH), San Francisco, CA
• Brent James, M.D., M.Stat., Clinical Professor, Department of Medicine, Stanford University School of Medicine, Member, National Academy of Medicine, Stanford, CA