As the landscape around reproductive rights in the United States is shifting, the middlemen of the drug supply chain, Pharmacy Benefit Managers, are once again proving they require additional government guardrails. A new report from the House Oversight Committee finds that health insurers and PBMs are limiting access to no-cost, birth-control options, contrary to the intentions laid out in the Affordable Care Act.
Specifically, committee staff found that “health plans and PBMs have coverage exclusions or cost-sharing requirements for at least 34 different contraceptive products.” And 12 of those birth-control options have no equivalent product available on the market. Translation: PBM middlemen are acting like bouncers for the hottest club in town that some Americans aren’t hip enough to get into.
The news is concerning but isn’t surprising. Regardless of your thoughts about the Affordable Care Act, it’s evident the status quo around PBMs isn’t working.
Earlier this year, the Federal Trade Commission launched an investigation into PBM practices. As part of the investigation’s announcement, the agency noted PBMs “have enormous influence on which drugs are prescribed to patients, which pharmacies patients can use, and how much patients ultimately pay at the pharmacy counter.” The PBM scheme is also catching the eye of state regulators looking to protect residents from PBM antics.
How exactly are PBMs gaming the system?
PBMs control what medicine is covered by health insurance plans — a list known as a formulary. Not only does the formulary give PBMs the power to restrict certain products from getting to the consumer market and incentivize the inclusion of more expensive medicine as opposed to generics but it also creates a system in which prices balloon across the board.
As a condition for market access, PBMs charge big bucks because … well, they can. Using the leverage they have as intermediaries, PBMs pressure drugmakers into offering rebates alongside their products. In a perfect world, those discounts would be passed down to patients at the pharmacy counter as savings. But in reality, PBMs pocket the money.
As a result, PBMs are driving up the cost of medicine for patients. Take the past four years, for example. What if I told you that after stripping out middleman funny business, the net cost of brand-name medicine has declined yearly since 2018? Well, it’s true. But when you add PBMs into the mix, Americans’ costs at the pharmacy counter continue to go up.
In 2020, PBMs collected a jaw-dropping $200 billion from the drug supply chain— a scheme that is growing. The amount of money scooped up by middlemen has ballooned by 80 percent since 2014.
When passing the Inflation Reduction Act earlier this year, the Biden administration and a majority of lawmakers in Congress chose to ignore the role PBMs play in jacking up medicine costs. It is hoped the latest discovery around middlemen limiting access to contraception will force Washington to rethink its priorities.
