Last month, the U.S. House Judiciary Committee released an interim staff report examining CVS Health’s relationships with digital pharmacy services. Led by Chairman Jim Jordan (R-Ohio), the report takes aim at a core policy concern: rising health-care costs. It frames competition and innovation as central tools for addressing those costs, a welcome emphasis in a debate often dominated by structural suspicion rather than market effects.
At the same time, the report leaves key questions unresolved. It gestures toward the responsibility of health-care firms to combat fraud and signals ambivalence about the role and value of pharmacy benefit managers (PBMs) in the marketplace, without fully engaging the tradeoffs those intermediaries present.
The timing is notable. Scrutiny of PBMs is intensifying, and the Federal Trade Commission (FTC) just announced a significant settlement with Express Scripts Inc. over insulin pricing, underscoring the broader regulatory pressure shaping the report’s backdrop.
The Duty to Combat Fraud, Waste, and Abuse
Like all health-care companies, CVS has a duty to investigate potential fraud, waste, and abuse. Fraud can include prescriptions written and dispensed without a patient’s knowledge. Abuse can involve authorized products—ranging from eye drops to foot baths—billed at exorbitant prices, a practice commonly described as hyper-inflated billing. Left unchecked, these practices raise costs for patients and taxpayers alike.
Private insurers, the U.S. Department of Health and Human Services’ (HHS) Centers for Medicare and Medicaid Services (CMS), and the Federal Employees Health Benefits Program (FEHB) all work with PBMs, including CVS Caremark, to identify suspicious activity. That coordination reflects the scale of the problem. Indeed, the White House recently created a National Fraud Enforcement Division to police fraud across sectors, including health care.
Oversight obligations extend to pharmacy networks themselves. The Office of Personnel Management (OPM) requires CVS and other PBMs to continuously evaluate pharmacy networks for cost effectiveness. Prosecutors have uncovered numerous fraud schemes involving pharmaceutical hubs, including telemedicine pharmacy schemes, kickback cabals, and fraudulent billing practices. In response, PBMs have traditionally acted both when they possess direct evidence of fraud and when they receive information creating an unacceptable risk—such as a client alert about hyper-inflated billing.
The interim report questions that approach. It criticizes CVS for monitoring, auditing, and sending cease-and-desist letters to independent pharmacies working with digital hubs before obtaining definitive proof of fraud, which the report suggests amounted to CVS acting to suppress competition. The record points in a different direction. CVS appears to have acted when it received credible information indicating unacceptable risk, even in the absence of definitive proof, in part because federal authorities have long flagged similar concerns. HHS’ Office of Inspector General has found that independent pharmacies were eight times more likely than chains to engage in questionable billing.
Waste imposes comparable costs. CMS estimates that waste accounts for “up to 25% of health care spending in the United States.” In 2022 alone, Medicare spent as much as $5.8 billion on services deemed to provide “minimal benefit.”
Recent examples illustrate the practical difficulty of policing fraud and waste without definitive proof. In November 2024, CMS reiterated prior guidance that “[q]uestionable billing spikes and potential invoice shortages” involving certain topical medications warrant monitoring by plan sponsors. In another case, a client reported a pharmacy with an “unusual dispensing pattern,” noting that its billing rose sharply, even as the number of claims remained constant. Elsewhere, a client questioned a compounding pharmacy operating in Washington and Iowa that dispensed drugs to a patient in California. HHS and CMS have repeatedly warned that “inter-pharmacy transactions” can facilitate “abnormal return volumes.”
Against that backdrop, CVS and other PBMs have historically acted on credible information suggesting fraud, waste, or abuse. Congress may reasonably revisit that standard in light of the interim report. If lawmakers prefer PBMs to wait for definitive proof before acting, Congress can articulate that requirement through legislation, after weighing the risks of delayed intervention.
The interim report also blurs the line between anti-fraud enforcement and antitrust concerns. It suggests that CVS used fraud controls to reduce competition from hub pharmacies, pointing in part to internal discussions in the late 2010s about creating a CVS-affiliated hub. That inference appears premature. Substantial evidence indicates that CVS acted in response to credible risk indicators or at the request of clients. By 2026, CVS had taken no concrete steps toward launching its own hub.
The report further acknowledges that CVS has since refined its guidelines for pharmacies partnering with hubs, loosening restrictions while continuing to address fraud risks. Given that CVS never meaningfully pursued a proprietary hub and now treats hub-affiliated pharmacies on the same terms as others, the suggestion of anticompetitive intent rests on thin ground.
Assessing the Value of Pharmacy Benefit Managers
Even so, the interim report usefully frames the debate. As it notes, many studies find that PBMs “reduce drug spending to some degree,” while also acknowledging persistent criticism that PBMs do not pass through enough of those savings to consumers.
That debate now shifts to the FTC. The policy community awaits the agency’s forthcoming report on PBMs, which follows years of politicization under the prior regime. That period included a study design widely criticized as biased and culminated in the resignation of the FTC’s chief economist. Against that backdrop, then-Commissioner (now-Chairman) Andrew Ferguson pledged in 2025 to deliver “comprehensive, fact-based, and data-driven final reports.”
The House’s interim report provides a useful starting point for that effort. The FTC’s final report should evaluate PBMs on objective, empirical grounds, rather than ideological priors. Congress, consumers, PBMs, and other market participants share an interest in a health-care system that rewards innovation, delivers high-quality care at affordable prices, and minimizes fraud, waste, and abuse for all Americans.
