PBM Accountability Project Statement on Energy and Commerce Subcommittee on Oversight Hearing on Medicare and Medicaid Fraud

This week, the House Committee on Energy and Commerce Subcommittee on Oversight and Investigations will hold a hearing titled, “Protecting Patients and Safeguarding Taxpayer Dollars: The Role of CMS in Combatting Medicare and Medicaid Fraud.” Mark Blum, managing director of the PBM Accountability Project, issued the following statement: 

“The PBM Accountability Project welcomes the Committee’s focus on rooting out waste, fraud and abuse in Medicare and Medicaid and urges lawmakers to recognize how abusive health insurance PBM practices drain these vital programs. This hearing comes on the heels of Congress’ recent passage of important PBM reforms that are a critical first step in addressing an unnecessarily opaque and complex system, including the growing vertical integration across the healthcare industry where the nation’s largest health insurers, PBMs, GPOs and pharmacy chains are increasingly merging into consolidated behemoths that dominate the marketplace. 

 “As the Committee examines vulnerabilities in federal health programs, it is critical to include the role of PBM middlemen in diverting prescription drug dollars away public programs and patients and into their own outsized margins of profit.

“A growing number of state attorneys general have brought enforcement actions against PBMs for deceptive and unfair practices and secured large settlements against them in Medicaid and other public programs, underscoring that overbilling and other deceptive practices are not isolated incidents, but rather systemic components of a PBM business model that siphons money away from taxpayer-funded government insurance programs PBMs purport to serve. Federal actions like the 2024 audit by the Inspector General of the U.S. Office of Personnel Management found that ESI, one of the PBM Big 3, had pilfered $44.9 million in overcharges from the American Postal Workers Union. The audit revealed how predatory PBM practices have defrauded federal health insurance programs like the Federal Employees Health Benefits Program (FEHBP). 

“Together, the abundance of state and federal cases shows that, when the vertically integrated insurers and their PBMs operate in the shadows, without appropriate regulation and oversight, programs like Medicare, Medicaid and SCHIP all pay far more for prescription medicines than they should. We urge Congress and regulators to use this investigation to bring real transparency to predatory PBM practices. The truth revealed by vigorous fact finding of the Committee on Oversight will establish the imperative for Congress to eliminate PBM fraud, waste and abuse, and enact reforms needed to ensure prescription drug savings flow back to retired seniors, disabled and underserved Americans, and taxpayers – not to PBM middlemen.”