Sens. Warren, Hawley introduce bill to tackle vertical integration in health care

WASHINGTON – Sens. Elizabeth Warren, D-Mass., and Josh Hawley, R-Mo., on Feb. 11 introduced the “Break Up Big Medicine Act” to address consolidation in the health care industry that they say drives up prices, squashes competition and fuels corporate greed. 

“There’s no question that massive health care companies have created layers of complexity to jack up the price of everything from prescription drugs to a visit to the doctor,” said Warren. “The only way to make health care more affordable is to break up these health care conglomerates. Our bill would be a monumental step towards ending the stranglehold that corporate giants have on our broken health care system.” 

Warren and Hawley say giant health care conglomerates dominate the American health care system. The three largest pharmacy benefit managers (PBMs) manage 80% of prescription drug claims, while just three prescription drug wholesalers control 98% of U.S. drug distribution. These corporate entities are vertically integrated, meaning one company can own or control every part of the health care supply chain—from health insurance companies and PBMs to pharmacists and physicians. 

The Break Up Big Medicine Act addresses these structural conflicts of interest by: 

• Prohibiting a parent company from owning a medical provider or management services organization and a PBM or an insurer; 

• Prohibiting a parent company of a prescription drug or medical device wholesaler from owning a medical provider or management services organization; 

• Requiring that a company violating these conflicts of interest come into compliance within one year of the bill’s enactment; 

• Creating automatic penalties if a company fails to comply in a timely manner, including disgorgement of profits and forced sales of assets; 

• Enabling the Federal Trade Commission (FTC), Department of Health and Human Services, Department of Justice (DOJ), state attorneys general, and private parties to bring lawsuits against violators; and 

• Allowing the FTC and DOJ to review and block future actions that would recreate the conflicts of interest prevented by the bill. 

“Americans are paying more and more for health care while the quality of care gets worse and worse,” Hawley said. “In their quest to put profits over people, Big Pharma and the insurance companies continue to gobble up every independent healthcare provider and pharmacy they can find.Working Americans deserve better. This bipartisan legislation is a massive step towards making healthcare affordable for every American.” 

Read about other recent actions by lawmakers aimed at reining in PBMs: FTC scrutinizes PBM markups & NCPA welcomes passage of PBM reforms