During a House Energy and Commerce Committee hearing, Rep. Debbie Dingell (D-MI) questioned FTC Chair and the FTC Commissioners about the agencies rulemaking process and the impacts of the Supreme Court's overturning of the Chevron deference.
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NewsTranscript
00:00I want to thank Chair Bilirakis for calling today's hearing and to all the FTC Commissioners
00:08for being here today.
00:09Oversight is a critical part of this committee's job, especially over parts of the government
00:13that impact the lives of every American and nearly every industry.
00:17With Chevron, Congress needs to aggressively reclaim our authority and stop allowing federal
00:24agencies to create laws where they do not exist and force them to follow congressional
00:30intent when they do.
00:32It's really important.
00:33Frankly, honestly, from my perspective, agencies have, and I'm speaking of all agencies, I'm
00:40not singling out the FTC, have had minimal accountability to the American people.
00:48With Chevron, I think we add some accountability, even though it is in the courts.
00:56Since June of 2022, the FTC has been studying the contracting practices of pharmacy benefit
01:01managers, PBMs, and their impacts on patients getting access to life-saving drugs they need.
01:08I'm in full support of injecting transparency into their operations.
01:13In fact, I believe their compensation needs to be decoupled from drug list prices.
01:19They do add value, but we need to tighten up the ship.
01:24I'm concerned about the market impacts of both consolidation and vertical integration
01:28in the PBM market and find it puzzling that even with all the power PBMs have amassed
01:33over the years, they felt the need to create whole new entities called GPOs or group purchasing
01:39organizations.
01:41As I'm sure you're aware, the Ohio Attorney General recently filed a lawsuit against one
01:45of these GPOs and several PBMs, alleging that these entities were engaged in anti-competitive
01:50behavior.
01:51Very little is known about these GPOs except that they've created new revenue streams for
01:56PBMs and insurers that own them.
01:59I know that two have been set up offshore in Ireland and Switzerland, and there are
02:03indications they did that to take advantage of lower foreign corporate tax rates and privacy
02:08laws.
02:09Chair Kahn, is this something the FTC is examining?
02:18Thanks for the question, Congressman.
02:20On both fronts, yes.
02:21As you noted, the FTC has been scrutinizing the pharmacy benefit managers for a couple
02:26of years now.
02:27We just released an interim report with some of our staff's initial findings laying out,
02:32as you just noted, the significant vertical and horizontal consolidation, as well as the
02:39concerns we've heard from independent pharmacies, for example, as well as the risk of potentially
02:45inflated prices.
02:46We do two case studies in the report, specifically on cancer drugs, showing some potentially
02:52troubling outcomes there.
02:54On GPOs specifically, we've heard concern from doctors in particular that shortages
03:01in areas like antibiotics and chemotherapy may be driven in part by the practices of
03:07these GPOs.
03:09And so a few months ago, in partnership with the FDA, we launched an RFI to collect comments
03:16from the public on these GPOs, and we're continuing to review those comments.
03:20Commissioner Holyoak, do you want to comment on that?
03:22Do you have any comment, or anybody else have a comment on that subject?
03:26On that subject, certainly.
03:28As you may know, I dissented from this morning from approving this report.
03:34I don't believe the report is sufficient.
03:37I think it lacks economic and empirical evidence.
03:40I think it doesn't look at all of the players in the pharmaceutical field.
03:44I think it doesn't look at all at consumer prices and how consumers are impacted.
03:50I'm also concerned that there was a very thorough report from 2005.
03:55It doesn't attempt to look at that report and describe the changes from the market conditions
03:59from that report.
04:00It doesn't explain why those changes exist.
04:04I think the two case studies are not—we don't know if they're representative of the
04:09field.
04:10It's too early to know.
04:13It's not sufficient.
04:14It doesn't provide enough evidence to understand what that actually means.
04:18Those two case studies also talk about reimbursement rates to the PBM-affiliated pharmacies, but
04:24don't tie that to actual consumer harm and what's happening with prices.
04:29I think there's a lot of work that needs to be done still on that.
04:34I hope that the commission can commit to doing that work and providing a fulsome report.
04:41Thank you for that.
04:42I have a few seconds.
04:44Chair Kahn, how did we lose the UnitedHealth Group Change Healthcare case?
04:50The government.
04:51It may not have been just exclusively you.
04:53Because you see what happened, right?
04:55Exclusively, Change Healthcare was hacked because their security wasn't properly evaluated
05:01in this process.
05:02So, how did we lose?
05:04This was a Justice Department effort to block that merger.
05:07Unfortunately, as you noted, they lost in the D.C. District Court.
05:12That was a vertical merger.
05:14The judge ultimately ruled that he didn't think the risks of anti-competitive effects
05:18would be resulting, and he thought that some safeguards that the companies had promised
05:23they would put in place would be adequate.
05:26I do want to just step back and note a broader trend here where we see time and time again,
05:31as companies become more dominant, we are seeing how a single data breach or a single
05:37hack can have cascading consequences, be it in healthcare, be it for auto dealers.
05:43There was just a big hack that rendered auto dealers kind of captive to a single company.
05:48So this is a broader trend, especially for the FTC that oversees both competition and
05:54data security.
05:56Being able to connect the dots here is going to be critical.
05:59Fair enough.
06:00I think in the PBM space and in this type of situation that Congress, in light of Chevron,
06:06needs to put some laws in place, potentially, or at least debate them, to help us and help
06:11you.
06:12I now yield back.