4 things to watch as drug executives head to Capitol Hill on Tuesday

In what promises to be a closely watched hearing on Capitol Hill on Tuesday, CEO's from some of the top pharmaceutical companies will give their take to lawmakers the rising price of drugs.

The expected scapegoat? Insurers and, more specifically, pharmacy benefit managers (PBMs), which have been widely maligned by the pharmaceutical industry and Trump administration as a reason for higher prices. 

So payers went on offense on Monday, delivering a preemptive rebuttal to the anticipated claims that PBMs—who will not be represented on the hearing panel—are likely to be a key focus of drugmaker criticism. In all, executives for seven major drug companies—AbbVie, AstraZeneca, Bristol-Myers Squibb, Johnson & Johnson, Merck, Pfizer and Sanofi—will speak before the Senate Finance Committee.

“We expect we’ll see pharma companies deflect attention,” said Matt Eyes, president of America’s Health Insurance Plans, on a call with reporters Monday afternoon. “In fact, you’ll probably hear them go after one of the few tools that exists,” to mitigate rising drug costs. 

RELATED: PBMs launch counterattack following Trump administration’s plan to end drug rebates 

It's just one example of cross-industry finger pointing that is heating up this week in the lead up to the hearing. Here are a few themes to watch for, including talk of “backdoor” deals negotiated by PBMs. 

1. Deny, deny, deny—and blame insurers, PBMs 

PBMs have taken a beating during the ongoing debate over drug prices and that is likely to continue in the hearing on Tuesday.

The opaque role that PBMs play in the pharmaceutical supply chain has been under significant scrutiny as policymakers both in Congress and in the Trump administration look to address drug costs. The Department of Health and Human Services took a major step to kneecap PBMs recently in proposing a rule that would eliminate antikickback safe harbors and instead offer those legal protections to pass-through discounts.

Drug companies have worked hard to put PBMs center stage in the debate, too—taking the attention off themselves. 

RELATED: Through spat with PBMs and insurers, pharma deflects drug-price scrutiny 

“The drugmakers have a long tradition of finger-pointing,” Erik Rasmussen, vice president of advocacy and public policy at the American Hospital Association, told reporters. “They’ll say it’s everyone’s fault but mine.” 

Others argue, though, that the criticism of PBMs is warranted. Several states have criticized the practice of spread pricing, particularly in Medicaid, where PBMs charge an insurer a higher price than was paid at the pharmacy for a drug. 

David Balto, a District of Columbia-based antitrust attorney, said on a different call with reporters that the way PBMs currently negotiate discounts is the “opposite” of how they were intended to function. 

“PBMs have been forcing rebates to increase, which increases the cost to consumers in increasing list prices,” Balto said. 

2. Rebate rule, other Trump administration actions take center stage 

Drug prices have been a key focus for President Donald Trump and HHS Secretary Alex Azar so actions taken by the administration are likely to be on the docket. Expect drug companies to laud the agency’s plan to ax drug rebates.

A new campaign from the Pharmaceutical Care Management Association, the PBM trade group, claims that the rebate rule, should it be finalized, will amount to a $40 million windfall for drug companies. Dea Belazi, CEO of PBM AscellaHealth, told FierceHealthcare that eliminating rebate negotiations is “extremely one-sided.” 

"It's almost stacking the deck to support pharma, and support their financial model,” Belazi said. “I don’t know how you do this. I don’t know how an employer stomachs this.” 

RELATED: The ‘vendors’ in HHS’ new drug pricing plan sound an awful lot like PBMs, experts say 

However, though the rebate rule may come with some perks, other White House proposals are far more likely to draw ire from pharma companies. HHS issued a rule that would mandate drug companies to include list prices in direct-to-consumer ads and has also proposed a payment model that would peg Medicare Part B drug prices to those charged overseas. 

Azar, himself a veteran of the pharma industry, has warned that drug companies would not escape the administration’s war on drug prices unscathed. The White House laid out a laundry list of policies aimed at drug prices in its blueprint last May.

“We will not wait for an industry with so many conflicting and perverse incentives to fix itself,” Azar said in an October speech. 

3. Drug executives are on their own

A potential boon to the pharma companies at the hearing is that they’re the only ones speaking—so any assertions about PBMs, insurers, providers or other markets in healthcare will go unchallenged by representatives in the industry. 

It should come as no surprise, then, that payers and providers took time Monday to air out their grievances ahead of the hearing. 

RELATED: Price hearing cheat sheet—CEOs prep for grilling, history repeats itself and more 

Eyles, Rasmussen and R. Shawn Martin, senior vice president for advocacy, practice advancement and policy at the American Academy of Family Physicians, all said their organizations welcome their chance to counter drug companies in Congress. 

On the call, Martin challenged drugmakers’ assertions that high prices are crucial to cover the cost of research and development. Eyles said industry groups expect to hear plenty of talk about the high cost of R&D and the expense of bringing a new drug to market. 

“It’s not always a justifiable price for the purposes of what they’re asserting,” Martin said. 

4. Democrats, Republicans alike to ask tough questions 

Bringing down drug prices is one of the few issues that has bipartisan support, so expect hard questions from both Democrats and Republicans on the Finance Committee. 

The hearing is the second in a series on the issue and legislators have said they don’t intend to take their foot off the gas.

Industry analysts flagged drug prices as a healthcare issue that could see movement even with a split Congress, especially with Sen. Chuck Grassley, R-Iowa, at the reins of the Finance Committee. 

RELATED: Survey—Healthcare executives spotlight the sweeping policy changes they see coming for the industry 

Eyles said that, if nothing else, holding these hearings is kick-starting a much-needed conversation about drug costs. The complexity of the drug supply chain, he said, isn’t easily boiled down to soundbites. 

“I think this is the start of the process, not the finish," Eyles said.