Drug Industry Middlemen To Be Questioned By Senate Committee

Consumers, lawmakers and industry players all seem to agree that prescription drugs prices are too high. What they can't always agree on is whom to blame.

On Tuesday, though, fingers are expected to point toward pharmacy benefit managers, the industry's mysterious middlemen.

The Senate Finance Committee will hear from executives from the biggest pharmacy benefit managers, led by CVS Caremark and Cigna's Express Scripts.

"They're kind of a secret organization," says Sen. Chuck Grassley, R-Iowa, of the pharmacy benefit managers. "I ask people to explain what they're doing and nobody seems to give you the same answer twice." Grassley is chairman of the Finance Committee and Tuesday's hearing is its third on drug prices this year.

Pharmacy benefit managers, or PBMs, manage prescription drug benefits for insurance companies and employers. And because they control the medication purchases of millions of patients, they are tremendously powerful.

"They exist only because pharmaceutical prices got so high and they were a way to get some market power in there that was on the consumer side," says Len Nichols, a health economist at George Mason University. "Now they've become so big and dominant that they are hurting pharma."