CVS CEO defends PBMs, accuses drugmakers of ‘monopolistic’ practices

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CVS CEO defends PBMs, accuses drugmakers of ‘monopolistic’ practices

David Joyner, a longtime CVS executive, speaks during a Senate Health, Education, Labor and Pensions Committee hearing in Washington, D.C., on May 10, 2023.

Al Drago | Bloomberg | Getty Images

CVS Health CEO David Joyner on Wednesday defended controversial pharmacy middlemen like his company’s Caremark unit, which are widely accused of inflating prescription medication prices, and instead accused manufacturers of “monopolistic tendencies” that keep drug costs high in the U.S. 

Joyner, who stepped into the role in October, spent much of his opening remarks on the company’s fourth-quarter earnings call discussing so-called pharmacy benefit managers, or PBMs. It was atypical for CVS’ quarterly call to begin that way, but comes at a time when lawmakers on both sides of the aisle and President Donald Trump have signaled interest in cracking down on PBMs. 

CVS owns Caremark, one of the nation’s three largest PBMs that collectively administer roughly 80% of prescriptions in the U.S.

Those middlemen negotiate rebates with drug manufacturers on behalf of insurers, create lists of medications known as formularies that are covered by insurance and reimburse pharmacies for prescriptions. But lawmakers and drugmakers alike argue that PBMs overcharge the plans they negotiate rebates for, underpay pharmacies and fail to pass on savings from those discounts to patients.

Joyner acknowledged that rising health-care costs in the U.S. are pressuring patients, employers and the federal government. He blamed factors such as increased patient utilization of services, rising health-care provider costs, labor shortages and “dramatic price hikes” for branded drugs. 

But he said PBMs like Caremark are “one of the most powerful forces helping to offset rising health care costs,” claiming that they are the only part of the drug supply chain solely focused on lowering costs. 

“Our work is a critical counterbalance to the monopolistic tendencies of drug manufacturers,” Joyner said. “This is why PBMs are needed and why manufacturers fight so hard to limit our capabilities.” 

He alleged that branded manufacturers added $21 billion in annual gross drug spending in the first three weeks of January through their price hikes, but did not cite where the figure is from. 

Joyner added that multiple economists have estimated that PBMs generate net value for the U.S. health-care system, more than $100 billion a year.

“No one has demonstrated more success than the PBMs of driving down drug prices,” he said.

However, the pharmaceutical industry and lawmakers argue that PBMs and insurers pocket those savings from negotiated rebates and discounts rather than passing them to patients.

In a statement on Wednesday, PhRMA, the nation’s largest lobbying group for the pharmaceutical industry said PBMs are “under intense, well-deserved scrutiny.” 

“Bipartisan state attorneys general, policymakers in both Congress and state legislatures and the FTC are all investigating these health care conglomerates,” a PhRMA spokesperson said. “They’ve all come to the same conclusion: PBMs are driving up costs and reducing access at the expense of patients, employers, and our health care system.”

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