If Americans want to pay less for prescription drugs, there is no way to do it without reforming the Pharmacy Benefit Manager industry. Congress should do so by the end of this year.
The PBMs, once known for reducing drug costs, no longer exist. Literally, they are no longer independent companies. They sit inside the insurance giants that own them. Cash machines to help health conglomerates hit quarterly numbers.
For 15 years, I led the trade association representing PBMs when they were independent firms competing to lower costs. PBMs helped build Medicare Part D— one of the most successful and popular public-private partnerships in modern health policy.
Back then, the model reduced patients’ drug costs. Today, out-of-pocket drug costs are rising seven times faster than the underlying cost of the drugs. Brand-name drug prices rose only 2 percent to 5 percent over the past year. Yet, out-of-pocket spending climbed faster — about 35 percent faster than the net price of the drugs.
That gap is no accident. It reflects how PBMs and their affiliates decide which drugs patients can access, how cost-sharing is designed, and how much of a manufacturer’s discount actually reaches the consumer. Spoiler: Very little does.
The modern PBM bears little resemblance to the cost-lowering intermediaries of the past. Today, a single insurer-owned PBM can act as wholesaler, mail-order pharmacy, specialty pharmacy, benefit designer and even a drug manufacturer.
Vertical integration has given insurers end-to-end control — and end-to-end profit — over the pharmaceutical supply chain long before a medication ever reaches a patient.
This is why the legislative proposals matter so much. The PBM Reform Act would ban spread pricing, end retroactive pharmacy clawbacks, and require PBMs to pass negotiated rebates directly to patients or health plans.
The No UPCODE Act targets upcoding schemes in Medicare Advantage that inflate taxpayer spending. And the House-passed Lower Costs, More Transparency Act would finally require PBMs — and their affiliates — to disclose the rebates, fees, and spreads they bury out of sight.
None of these reforms is theoretical. They would lower what Americans pay immediately, before deductibles, coinsurance, and the pharmacy checkout.
Consumers feel the pain of rising costs. Premiums rise. Benefits shrink. Formularies narrow. The inflation families face at the pharmacy counter does not come from drugmakers. It comes from the multilayered system between manufacturers and patients, a system built by and for the middlemen.
Congress has debated PBM reform for years. The time for academic discussion is over. If lawmakers want to help consumers, they should include PBM reform in the year-end health funding package. Lower drug costs would be the best Christmas present Washington could give the American people.
Mark Merritt is a health policy consultant and has served as a senior executive for several major industry associations.
Reprinted with Permission from DC Journal – By Mark Merritt
The opinions expressed by columnists are their own and do not necessarily represent the views of AMAC or AMAC Action.
Politicians have done so much damage to our nation over the decades, and one man, DJT is doing his best to repair all the damage. Just add this to his long list of things to fix, if anyone can do it it’s him. Thank God for placing DJT in the White House. I wish others would have his passion for doing what’s right for our nation. He only has 4 years, God help us.
The drug companies will not cure any ailments, if they did they would go bankrupt. I have went off most prescribed meds. I have an old Indian friend who can tell me what plant/herb heals what sickness. If nature don’t make it don’t take it. Yes there is a cure for cancer, but no one will say because cancer is a $billion$ dollar industry. The banker wants you indebt, The mechanic wants your car to break, the doctor wants you sick. The only person that wants you to prosper is the thief.
Our health care systems are nothing but a huge scheme to get as much money as they can from the citizens who rely on them. Our Medicare premiums increasing in January and some of the deductibles and co-pays are going up as well. The paltry raise we are getting will be wiped away by the healthcare increases. So much for COLA “raises”!!
No more debates or discussions about this —Congress needs to fix this problem ASAP
It’s impossible to lower Healthcare and drug prices as long as the octopus’ in congress have their tentacles in any aspect of Health.
BO care needs to be scraped and Heath Insurance given back to the private enterprise.
Get the tentacles out of the Dr office and burn the red tape. Let Doctors be Doctors not Data Entry Specialists.
Boycott the medical industry. The only way to invoke change is to hit them where it hurts: their wallets. Stop paying for insurance. Stop buying and using their drugs. Stop seeing doctors.
Let nature take it’s course. The way God intended.
Scrap PBMs
automate PBM role
Outsource PBMs
plan D hum!
so we’re forced to pay for an RX plan Or be penalized with SSFew & then pay the deductibles for meds
Not sure this is helping us seniors either
How about we just remove PBM’s all together?
Has anyone written article on how much MALPRACTICE INSURANCE adds to the cost of healthcare and health insurance?
we need tort reform to limit the lawsuits .
We use ScriptSaver Plus, which we get through AMAC, for 80% of our meds and it saves us a bundle. My wife’s provider uses a PBM (Express Scripts) and they are terrible with prices, timely refills, communication, and customer service. I’m lucky I dont have to be on Medicare yet and I feel for those who are, let’s reform NOW.
Does this “reform” mean anything other than price controls?
Insurance seems to be a huge part of the problem. It seems crazy that each insurer negotiates medical prices with providers as it results in pricing chaos which creates more costs.
It makes little sense to me that an uninsured person has to pay the highest medical prices. This person should pay the least as he or she has no administrative staff, layers of bureaucracy, etc.