Key Takeaways
- •Congress recently passed and the President signed into law the most comprehensive PBM reform legislation in history, aiming to increase transparency and lower drug costs.
- •John Hoey (NCPA) testified that vertically integrated PBMs are "systematically eradicating community pharmacies" and controlling patient choices, leading to pharmacy deserts.
- •Rep. Griffith (R) pressed David Marin (PCMA) on whether the FTC should break up the three largest PBMs, to which Marin responded, "No," despite market concentration.
- •Democrats criticized the Trump administration's "secret deals" with drug companies for lack of transparency, while Republicans highlighted the new Trump Rx platform.
- •Members from both parties agreed that more work is needed on drug affordability, with calls for further PBM reforms, increased competition, and stable research funding.
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Hearing Analysis
Overview
On February 11, 2026, the House Energy and Commerce Subcommittee on Health held a hearing titled "Lowering Health Care Costs for All Americans: An Examination of the Prescription Drug Supply Chain." Chaired by Rep. H. Griffith (R-VA-9), the hearing sought to investigate the "black box" of pharmaceutical pricing and distribution. This session followed the recent passage of a major Pharmacy Benefit Manager (PBM) reform package and aimed to identify further legislative opportunities to reduce out-of-pocket costs for patients while maintaining American leadership in medical innovation.
Key Testimony
The hearing featured a broad panel of nine witnesses representing every major link in the supply chain. Lori Reilly, Chief Operating Officer of PhRMA, and John Crowley, President and CEO of the Biotechnology Innovation Organization (BIO), emphasized the importance of the U.S. innovation ecosystem. Reilly testified that while the U.S. leads in medical discovery, the supply chain has become "convoluted," noting that 50 cents of every dollar spent on brand medicines now goes to entities other than the manufacturer. Crowley shared a personal narrative regarding his children’s struggle with Pompe disease to illustrate the life-saving potential of biotech, but he criticized the "delay and deny" tactics of insurers and PBMs that prevent patients from accessing new treatments.
Overview
Representing the generic and biosimilar sectors, John Murphy, President and CEO of the Association for Accessible Medicines (AAM), warned that the generic market is facing a sustainability crisis. He noted that while generics make up 90% of prescriptions, they account for only 12% of total drug spending, and relentless price compression is leading to drug shortages. On the other side of the ledger, David Marin, the new President and CEO of the Pharmaceutical Care Management Association (PCMA), defended PBMs as the only entities focused on lowering costs. In his first congressional appearance, Marin admitted the PBM industry had failed to effectively communicate its value but argued that PBMs saved the healthcare system $300 billion last year.
The role of wholesalers and Group Purchasing Organizations (GPOs) was also scrutinized. Chester “Chip” Davis, Jr., President and CEO of the Healthcare Distribution Alliance (HDA), described wholesalers as the "backbone" of the system, handling 96% of medicines with very thin profit margins. Angie Boliver, President and CEO of the Healthcare Supply Chain Association (HSCA), worked to distinguish "traditional" GPOs, which serve hospitals and providers, from PBM-owned "rebate GPOs" that operate offshore and have drawn criticism for a lack of transparency.
Key Testimony
James Gelfand, President and CEO of The ERISA Industry Committee (ERIC), provided the perspective of large employers who fund health plans. He testified that even the largest U.S. companies are often denied access to their own claims data by PBMs. B. Douglas Hoey, CEO of the National Community Pharmacists Association (NCPA), offered a scathing critique of vertical integration, arguing that the "Big Three" PBMs—owned by CVS Health, Cigna, and UnitedHealth Group—are systematically "eradicating" independent pharmacies through steering and opaque pricing. Finally, Professor Rachel E. Sachs of Washington University in St. Louis provided an academic overview, warning that political interference and a "brain drain" at the FDA and NIH are threatening the future of American biomedical research.
Overview
Policy discussions centered on several key areas. Members discussed the "Trump Rx" platform, a new administration initiative designed to help patients find low cash prices for drugs outside of insurance. Republicans, including Full Committee Chair Brett Guthrie (R-KY-2), praised the initiative and the recent PBM reforms, while Democrats, led by Ranking Member Diana DeGette (D-CO-1) and Full Committee Ranking Member Frank Pallone (D-NJ-6), criticized the "secret deals" the administration has allegedly made with drug manufacturers. Democrats expressed concern that these agreements lack transparency and could undermine the drug price negotiation provisions of the Inflation Reduction Act (IRA).
Key Testimony
A notable exchange occurred when Chairman Griffith pressed PCMA’s David Marin on whether the Federal Trade Commission should break up the largest PBMs, given that three companies control 80% of the market. Marin disagreed, characterizing the market as "highly competitive." Another significant moment involved Rep. Pallone’s questioning of Lori Reilly regarding "most favored nation" agreements. Reilly stated that as a trade association, PhRMA does not have access to the private agreements between individual companies and the White House, leading Pallone to argue that the public is being asked to "take their word" for the benefits of these deals without any oversight.
Overview
Partisan dynamics were evident throughout the hearing. Republicans focused on the "perverse incentives" created by PBMs and the potential of market-based solutions like Trump Rx. They also criticized the IRA for "destabilizing" the Medicare Part D market. Democrats countered by defending the IRA’s success in lowering costs for seniors and raised alarms about the impact of Robert F. Kennedy Jr.’s leadership on public trust in vaccines and the stability of the FDA. Rep. Nanette Barragán (D-CA-44) used a visual chart to illustrate the "horizontal and vertical consolidation" of the industry, arguing that when one company owns the insurer, the PBM, and the pharmacy, the patient loses all choice.
The hearing concluded with a consensus that transparency remains the primary hurdle to reform. Chairman Griffith indicated that the subcommittee would continue its "affordability series" and would likely seek more information regarding the specific terms of the administration’s deals with manufacturers. Witnesses were asked to provide further data on "specialty drug" definitions and the impact of offshore GPOs on employer costs. No specific deadlines for new legislation were set, but the committee signaled that further oversight of the 340B program and the implementation of recent PBM reforms would be forthcoming.
Transcript
[Gavel sounds.] Subcommittee will come to order. The chair recognizes himself for five-minute opening statement. First, I want to recognize the bipartisan bill that we were able to pass last week that included many important healthcare provisions and lowered healthcare costs for all Americans. Today, we will discuss healthcare costs and patient access challenges by examining affordability across the entire pharmaceutical supply chain. I am proud of this subcommittee's work, but there is still more to be done, which is why I'm eager to continue building on our affordability series with today's hearing that comes after we heard from insurance executives last month. We now will hear from stakeholders who are a part of the complex pharmaceutical drug supply chain. To regular people, this system may seem simple. A disease is researched and a treatment is developed. Then that treatment is manufactured and distributed to a hospital, pharmacy, or other healthcare entity before it is dispensed to the patient. However, there are many more layers that are involved in this process that affect how a drug gets to a patient and how the drug is priced. One of the most frustrating aspects of the supply chain is that it operates as if in a black box. Luckily, we have witnesses here to provide their perspectives and shine a light on the process. Do each of these entities in front of us today play a role in getting the drug to a patient? Yes. Are there too many cooks in the kitchen at times? Probably so. Today is a great opportunity for Congress to get a glimpse and see what is happening and look for ways to help make prescription drugs more affordable. In 2017, the same subcommittee held a similar hearing to the one we're doing today, but a lot has changed since then. I'm glad we are reexamining what we learned from that hearing to continue working towards what we all want: lowering costs for patients while ensuring that America remains a leader in pharmaceutical innovation. We have PhRMA and BIO in front of us who can speak to the intricacies that go into researching, developing, and pricing a drug on the market. We will also get the perspective of generic drugs from the Association for Accessible Medicines, who can speak on the issues in that arena. We also have the Pharmaceutical Care Management Association here as the trade association that represents pharmaceutical benefit managers, commonly known as the PBMs. What we heard in our hearing last month is that insurance companies own many of these PBMs. In fact, the largest three PBMs are owned by insurance companies and they control over 80 percent of the market. How they manage these benefits is a mystery at times and can lead, in some cases, to higher prices. However, just last week, led by Representative Buddy Carter from Georgia, Congress passed and the President signed into law the biggest PBM reform package in history. These bills will bring more transparency into this system, lower costs, and allow for more access to medicines. The Healthcare Supply Chain Association is here on behalf of group purchasing organizations, or GPOs, which act as intermediaries between manufacturers and providers. In front of us is also the Healthcare Distribution Alliance, who is involved in the distribution of prescription drugs along the supply chain. I am looking forward to hearing from the National Community Pharmacists Association, who are also with us today, since they represent the community pharmacists that so many of us use. These community pharmacies serve a critical role in bringing care to patients, especially in rural areas, yet many have had to sadly close their doors in recent years due to some of the factors that we will discuss today. The ERISA Industry Committee is also here to discuss their point of view for employers when it comes to high costs as well as decisions they make based on those costs. Each of these different entities play a unique role in how a drug finally gets to a patient. In this meeting, we will hear from these witnesses on how to navigate this complex web on behalf of the American people. I look forward to the discussion. And with that, as I said, I look forward to it. I yield back and now recognize the ranking member of the subcommittee, Ms. DeGette, for her five-minute opening statement.
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