Insights

On February 11, 2026, the House Energy and Commerce Health Subcommittee held a hearing to consider how to reduce health care costs by examining the prescription drug supply chain. This hearing was the Subcommittee’s second on health care affordability, and reports indicate there will be additional hearings focusing on other parts of the health care sector. Overall, Republicans and Democrats both agreed that prescription drug costs are too high and that there is too much consolidation in the prescription drug industry, especially among pharmacy benefit managers (PBMs). However, Republicans and Democrats on the Committee also focused on familiar partisan arguments regarding the impact of the Inflation Reduction Act and recent actions by the Trump administration, including TrumpRx, on prescription drug costs. Unsurprisingly, witnesses from different parts of the pharmaceutical industry sought to highlight actions they have taken to reduce costs and to place blame on other stakeholders, including hospitals and insurance companies, as well as on programs such as the 340B program.

OPENING STATEMENTS

• Health Subcommittee Chair Morgan Griffith (R-VA-9)

• Full Committee Ranking Member Frank Pallone (D-NJ-6)

WITNESS TESTIMONY

• Lori M. Reilly, Esq., Chief Operating Officer, PhRMA – Testimony

• John F. Crowley, President and CEO, Biotechnology Innovation Organization – Testimony

• John Murphy, President and CEO, Association for Accessible Medicines – Testimony

• David Marin, President and CEO, Pharmaceutical Care Management Association – Testimony

• Angie Boliver, President and CEO, Healthcare Supply Chain Association – Testimony

• Chester “Chip” Davis, Jr., President and CEO, Healthcare Distribution Alliance – Testimony

• James Gelfand, President and CEO, The ERISA Industry Committee – Testimony

• Douglas Hoey, CEO, National Community Pharmacists Association – Testimony

• Rachel E. Sachs, Professor of Law, Washington University in St. Louis – Testimony

MEMBER DISCUSSION

PBM Consolidation and Vertical Integration

Multiple Health Subcommittee members on both sides of the aisle expressed concerns about reports that the 3 largest PBMs control 80% of the market and about PBMs’ frequent vertical integration. Members expressed skepticism about Mr. David Marin’s arguments that there is competition within the industry and that this competition leads to lower prices for patients. Other witnesses who did not represent PBMs were also highly critical of certain PBM practices. A number of Subcommittee members praised the inclusion of PBM reforms in the recently passed appropriations legislation, but others said more needed to be done.

Medicare Negotiation Vs. Most-Favored Nation Deals and TrumpRx

The biggest partisan divide centered on whether Medicare negotiation, as passed under the Inflation Reduction Act, or the most-favored-nation deals negotiated by the Trump administration and presented on TrumpRx, represented the better way to address concerns about drug costs. Republicans, including Health Subcommittee Chair Morgan Griffith (R-VA-9) and Rep. Michael Rulli (R-OH-6), praised the Trump administration for its efforts to secure lower drug prices for the American people through TrumpRx. Republicans, including full Committee Chair Brett Guthrie (R-KY-2), criticized the Inflation Reduction Act for disrupting the Medicare Part D marketplace.

On the other hand, Democratic members, including full Committee Ranking Member Frank Pallone (D-NJ-6) and Health Subcommittee Ranking Member Diana DeGette (D-CO-1), argued that the deals from the Trump administration lacked transparency. As a result, they argued, there is no way to verify how effective they are at lowering drug costs. These members asked Subcommittee Chair Guthrie if he would be willing to work with them to determine the details of these deals. He said he would as long as that didn’t blow up the deals in question. Democrats such as Rep. Marc Veasey (D-TX-33) criticized TrumpRx for listing drugs that could actually be found for cheaper using manufacturer or other coupons. Democratic members such as Reps. Pallone and Jennifer McClellan (D-VA-4) criticized Republicans for including carve-outs for orphan drugs from the Medicare negotiation program in the reconciliation bill and called for expanding Medicare price negotiation to the commercial market.

Federal Government’s Role in Drug Development and Approval

Members on both sides of the aisle expressed interest in the federal government’s role in drug development and approval. Rep. Dan Crenshaw (R-TX-2) asked Ms. Reilly about efforts to modernize the regulatory framework when it comes to the approval of new therapies. She responded that a transparent regulatory environment and strong IP protections are necessary to support the development of innovative therapies, including gene and cell therapies. On the other side of the aisle, Democratic members questioned witnesses about the impact of reductions in force (RIFs) at the Food and Drug Administration (FDA) and concerns about reports of politicalization within the agency. All of the witnesses who were asked about the impact of RIFs and politicization expressed concerns about the negative impact on drug development and approval. Democratic members such as Reps. Pallone and Kim Schrier (D-WA-8) expressed specific concerns about the FDA not reviewing Moderna’s flu vaccine due to vaccine skepticism. Other Democratic members criticized Republicans for not speaking out about cuts to basic research at agencies such as the National Institutes of Health (NIH). Rep. Guthrie countered that the NIH received a half-billion-dollar increase in the appropriations legislation.

Other Topics

• Rep. Griffith asked Mr. Crowley if they should start looking at insurance companies as fiduciaries and hold them liable for harm they cause to patients. Mr. Crowley agreed that this is a good idea to provide more protection for patients.

• Reps. Gus Bilirakis (R-FL-9) and Kevin Mullin (D-CA-15) asked Mr. Crowley about rare disease drug development. In response to a question from Rep. Bilirakis on how we can continue to encourage investment in finding cures for rare diseases without burdening patients, Mr. Crowley said we need to reduce the complexity of the clinical trial system, modernize the FDA, and ensure medications are affordable and accessible.

• Rep. Troy Balderson (R-OH-12) asked Mr. Hoey to elaborate on specific challenges rural pharmacies face when negotiating with PBMs, specifically with take-it-or-leave-it contracts for reimbursements. Mr. Hoey explained that PBMs hold all the leverage, forcing pharmacies to accept contracts that pay them less than it costs to acquire the drug; as a result, 5,000 pharmacies have closed in the last 4 years.

• Rep. Cliff Bentz (R-OR-2) asked Ms. Sachs how AI might help analyze the pharmaceutical space. She noted the FDA’s approval of AI-enabled medical devices and the use of AI to streamline clinical trial enrollment. She also suggested using AI to help the subcommittee look through and summarize the vast amounts of information in the pharmaceutical space. She also warned of an AI arms race between providers and insurers that could deny care through prior authorization.

• Rep. Rick Allen (R-GA-12) asked Mr. Gelfand if his proposed bill, H.R.5509, the Safe Step Act, would help hold insurers accountable for increasing the use of step therapy, leading to nonadherence and access issues. Mr. Gelfand explained that reforming step therapy makes sense and that it should be electronic, timely, and aligned with medical management.

On February 3, 2026, the House Energy and Commerce Oversight Subcommittee held a hearing to examine fraud in the Medicare and Medicaid systems. There was strong bipartisan agreement that fraudulent actions need to be addressed, however, Republicans and Democrats shared different views on best practices for preventing and investigating potentially fraudulent activity.

OPENING STATEMENTS

• Subcommittee Chairman John Joyce (R-PA-13)

• Subcommittee Ranking Member Yvette Clarke (D-NY-9)

• Full Committee Chairman Brett Guthrie (R-KY-2)

• Full Committee Ranking Member Frank Pallone (D-NJ-6)

WITNESS TESTIMONY

• Jessica Gay, CPC, AHFI, CFE, Vice President and Co-Founder, Integrity Advantage – Testimony

• Kaye Lynn Wootton, JD, President, National Association of State Medicaid Fraud Control Units – Testimony

• Stephan W. Nuckolls, Chief Executive Officer, Coastal Carolina Health Care, PA and Treasurer and former Board Chair, National Association of Accountable Care Organizations (NAACOs) – Testimony

• Jessica Tillipman, JD, Government Contracts Advisory Council Distinguished Professorial Lecturer in Government Contracts Law, Practice and Policy, George Washington University Law School – Testimony

MEMBER DISCUSSION

How Fraud Occurs

Rep. Russ Fulcher (R-ID-1) questioned if some states are targeted due to lower barriers of entry for fraudulent programs. Ms. Gay shared that in her experience, there are common states where fraud begins but will often spread to other states. Ms. Wootton shared that fraud schemes are evolving by crossing state lines, which used to be more uncommon, and the increased use of electronic health records make it easier to forge documentation.

Rep. Dianna DeGette (D-CO-1) asked for clarity on whether fraud is more commonly carried out by providers or beneficiaries. Ms. Wootton responded that far more providers commit fraud.

Rep. Paul Tonko (D-NY-20) asked if there is a difference between improper payments and fraud. Ms. Tillipman shared that often, improper payments are not fraud and that 77% are administrative errors. Rep. Tonko questioned if there were harms in labeling all improper payments as fraud to which Ms. Tillipman responded that it can make fraud investigations more difficult as well as diminish taxpayer faith in government.

Rep. Dan Crenshaw (R-TX-12) was curious if there were specific reasons why Medicare and Medicaid programs seem to be much more vulnerable to fraud than private programs. Ms. Gay shared that the national scope of Medicare and Medicaid make it much more appealing to target and the lack of an Explanation of Benefits provided to beneficiaries makes it easier to create fraudulent bills.

Rep. Diana Harshbarger (R-TN-1) questioned if expanded telehealth services could aid in fraud. Ms. Gay responded that reduced barriers to care and the ability for providers to cross state lines make it easier for fraudulent activity.

Fraud Investigations

Rep. Fulcher asked Ms. Wootton if fraud investigations were different for foreign actors than citizens, which Ms. Wootton denied.

Rep. Gary Palmer (R-AL-6) questioned if state auditors should have greater access to data to best investigate fraud allegations. Ms. Wootton shared that investigators need to see as much data as possible to produce a complete investigation, however, she is often limited to Medicare and Medicaid data and would like to find a way to also be able to access 3rd party and private payer data.

Rep. Troy Balderson (R-OH-12) wondered how long the average investigation lasts, which Ms. Gay shared was about a year, due to needing time to collect data to build the case as well as give an appeal time frame. The investigation is then shared with law enforcement. Rep. Balderson asked Ms. Wootton if investigators can recover fraudulent payments. Ms. Wootton responded that the payments are often either already spent or hard to track, which makes them difficult to recover. Rep. Balderson was interested in the impact of AI on fraud schemes and investigations, so Ms. Wootton shared that fraud control units are receiving training on how to identify AI modified data.

Rep. Kevin Mullin (D-CA-15) shared concerns about collaborating across government sectors and asked if investigations had better outcomes when local, state, and federal agencies were all involved. Ms. Wootton shared that, in her experience, states do not have the ability to cross borders which makes federal collaboration vital. Rep. Mullin asked if completely freezing government funding to suspected fraudulent programs is helpful to the investigation. Ms. Tellipman answered that blanket freezing does not improve the investigation and will harm individuals receiving proper services.

Impact of Fraud

Rep. Rick Allen (R-GA-12) requested that Mr. Nuckoll expand on the impact of fraud on the ability for Accountable Care Organizations (ACOs) to provide care to seniors. Mr. Nuckolls explained that ACOs share costs with the federal government and when spending for the plan is greater than the budget, the ACO must repay Medicare the difference. With increased fraud claims, ACOs often need to repay Medicare more which will force ACOs to leave the care space if they cannot afford the increased costs. Rep. Allen followed up by asking what the impact will be for beneficiaries, which Ms. Wootton responded that many will not be able to receive services without jumping through hoops.

Rep. Crenshaw asked Ms. Gay to elaborate on the impact to beneficiaries when fraud is not controlled. Ms. Gay shared that in her experience, it increases the chance that beneficiaries do not receive the care that they need, either through complete denial or subpar treatment. Another experience that Ms. Gay has seen is documentation of conditions in a beneficiaries’ chart without a proper diagnosis, which can impact access to care further down the road.

Ranking Member Pallone questioned if there was risk to programs and program participants when fraud is overstated or action taken preemptively. Ms. Tillipman explained that if fraud is overstated, it can make it more difficult to direct limited resources to the proper investigations which can make it more difficult to address true fraudulent activity.

Rep. Buddy Carter (R-GA-1) asked if artificially reducing payment rates for common fraudulent services, such as skin substitutes, would impact access to care for patients. Mr. Nuckolls responded that yes, patients will not receive skin substitutes as providers will not be able to afford the cost without proper reimbursement.

Preventing Fraud

Rep. Kim Schrier (D-WA-8) asked if proper enforcement is a strong deterrent for potential fraud schemes, with which Ms. Tillipman agreed.

Reps. Schrier and Lizzie Fletcher (D-TX-7) wanted recommendations for fraud prevention. Ms. Tillipman suggested the Committee look to the currently unimplemented recommendations from the Government Accountability Office and the Inspector General.

Rep. DeGette shared her concerns that the Department of Health and Human Services (HHS) has reduced their number of Inspector Generals by 18, or 10%. Rep. DeGette asked Ms. Wootton if this would have an impact on fraud prevention and investigation. Ms. Wootton responded that HHS is most effective when completely staffed.