Bill Clark/CQ Roll Call via AP Images
Ranking member Sen. Roger Wicker (R-MS), left, and chair Sen. Maria Cantwell (D-WA) take their seats for a Senate Commerce Committee hearing, November 3, 2021.
The blockade of President Biden’s nominees for federal agencies that Republicans escalated last week has now had a new side effect: allowing profit-hungry middlemen to keep prescription drug prices high.
Last Thursday, the Federal Trade Commission was blocked from initiating an investigation into the ways pharmacy benefit managers (PBMs) are responsible for higher drug prices. PBMs work on behalf of health plans, ostensibly to secure discounts from drug companies and reimburse pharmacists for medications. However, their information advantage enables PBMs to skim off the top of every prescription, siphoning funds from pharmacists while ensuring that patients, private insurance, and government-run health plans pay more.
In other words, PBMs thrive specifically off of secrecy, having more knowledge about the pharmaceutical supply chain and using that asymmetry to boost their profits at the expense of patients and pharmacists. An investigation into their practices would be the first step to policy changes to prevent that.
The vote at the FTC was 2-to-2, which meant that the investigation, known as a 6(b) order after the section of the Federal Trade Commission Act that authorizes the agency to study markets under its jurisdiction, could not go forward. The two Democrats on the commission, chair Lina Khan and commissioner Rebecca Kelly Slaughter, voted for the 6(b) order; Republicans Christine Wilson and Noah Phillips voted against it. (For the duration of this article, I will refer to them as Wilson Phillips.)
The seat of the fifth commissioner, who would give the Democrats a majority on the FTC, is currently vacant, made so by Rohit Chopra’s exit to run the Consumer Financial Protection Bureau. Alvaro Bedoya, a Georgetown University law professor and privacy expert, was nominated to fill the position last September. But a combination of foot-dragging and Republican obstruction has bottled up his nomination in the Senate Commerce Committee.
In recent weeks, it’s become even more bottled up. Sen. Ben Ray Luján (D-NM) suffered a stroke in late January and has been in a treatment center in New Mexico ever since. Luján released a video last week saying that he would make a full recovery and be back in the Senate in “a few weeks.”
Until that time, however, he cannot fulfill his duties, which includes service on the Senate Commerce Committee. Because of the 50-50 Senate, there are an even number of Democrats and Republicans on all committees. Lujan’s absence gives Republicans a functioning majority on the Commerce Committee, and if they don’t want to advance Bedoya, it’s in their hands.
Republicans could boycott committee hearings, denying Democrats a quorum to move a nomination forward.
Like the FTC, the Federal Communications Commission is also deadlocked at 2-2 and unable to move forward on Democratic priorities like restoring net neutrality protections. Gigi Sohn, the public-interest advocate and Democratic nominee to fill the vacant slot, is also stuck in the Commerce Committee. Earlier this month, Republicans compelled Sohn to stand for a second confirmation hearing to address what she called “unrelenting, unfair and outright false criticism” about her views.
There was talk of also having a second hearing for Bedoya after Republicans raised concerns about his social media posts, but Commerce Committee chair Maria Cantwell (D-WA) shot that down.
But even after Luján returns, Republicans still have an option to block Bedoya and Sohn from advancing out of committee and to the Senate floor. They could boycott the committee hearing, denying Democrats a quorum to move a nomination forward. Because of the standing rules of the Senate, there must be a majority of a committee “physically present” to vote on pending nominations in order for them to get a vote on the floor. The even division of Senate committees makes that impossible without one Republican present.
Republicans on the Senate Banking Committee successfully used this maneuver last week to block five Federal Reserve Board of Governors nominees from getting a committee vote, in a bid to stop Sarah Bloom Raskin from becoming the Fed’s vice chair for financial supervision.
Sen. Roger Wicker (R-MS), the ranking member of the Commerce Committee, has downplayed the prospect that committee Republicans would boycott an FCC or FTC vote. But Wicker’s staff threatened that in advance of the initially scheduled markup for Sohn’s nomination, which led to her second confirmation hearing. “You have to have a quorum to get a vote,” Wicker told reporters last week.
At the FTC, the current blockade ends a bit of a hot streak for Lina Khan. Her first major challenge to a corporate merger, between semiconductor firms Nvidia and Arm, resulted in the companies calling off the deal. Lockheed Martin and Aerojet also terminated their merger, after the FTC filed suit to block it.
The fear of merger scrutiny from Khan and the Justice Department’s antitrust chief Jonathan Kanter is already depressing what had been a historic merger wave; the number of larger mergers actually fell in 2021 amid the boom. Khan and Kanter have also invited comment to alter the merger guidelines, which are currently rooted in ideas about consumer welfare that make it extremely difficult to get a favorable ruling against a merger in court.
Even last Thursday, amid the Wilson Phillips blockade, the FTC voted 4-0 to block a merger between the two largest hospital systems in Rhode Island, Lifespan and Care New England.
The main way for opponents—such as the U.S. Chamber of Commerce, which under the leadership of major tech firms has unleashed an all-out assault against Khan—to deter action against corporate concentration and misdeeds is to keep at least some agency actions bottled up while the 2-2 deadlock persists. That includes potential rulemaking and 6(b) orders to study markets. The PBM investigation falls along those lines, giving Wilson Phillips the opportunity to obstruct.
“By voting against investigating these prescription drug middlemen, [Wilson Phillips] are siding with Big Pharma over working families,” said Sarah Miller of Fight Corporate Monopolies, in a statement.
Wilson Phillips have also urged Congress to not increase the FTC’s funding, even though the merger wave has made it impossible for the agency to review all the deal making. Matt Stoller of the American Economic Liberties Project has called this the “defund the police” strategy, the police in this case being the cops protecting consumers and competition at the FTC.
High drug prices are a perennial complaint of the electorate. Democrats and Republicans alike constantly pay lip service to fixing the problem. In fact, in addition to the numerous pharmacists and patients who testified at the FTC before last Thursday’s vote, Republican Reps. John Rose (R-TN) and Buddy Carter (R-GA) also testified in favor of the study. Carter is himself a former pharmacist. There’s also a bipartisan bill from Cantwell and Sen. Chuck Grassley (R-IA) that would require the FTC to study PBMs.
But while a handful of Republicans support the study, it was the two Republican commissioners, Wilson Phillips, who blocked it. And it’s Republican senators who are holding Bedoya’s nomination hostage to prevent a majority that would likely favor an investigation into PBMs. Republican obstruction, in fact, could prevent any Biden nominees from taking their seats in the indefinite term, disrupting Lina Khan’s efforts to reinvigorate the FTC, along with hobbling agencies across the government.
Senate Democrats could do something about that last bit by changing the Senate rules, or enabling President Biden to recess-appoint Bedoya and others. Until or unless that happens, Republicans will likely continue down this path to grind down government and protect their favored corporations from scrutiny and the public’s need for a fairer economy.
