Middlemen organizations are making prescription drugs more expensive for patients | Opinion
Amid growing public scrutiny around rising drug costs, the Senate Finance Committee recently held a hearing on the middlemen of the drug supply chain. Thought to be a major cause of increasing medicine prices, these Pharmacy Benefit Managers (PBMs) are drawing a growing amount of bipartisan ire.
The House Oversight and Accountability Committee has also opened an investigation into the middlemen. And the Senate Committee on Commerce, Science, and Transportation held a hearing in February on the bipartisan Pharmacy Benefit Manager Transparency Act, which was reintroduced this year to address the deceptive practices used by PBMs to drive up medicine costs for patients at the pharmacy counter.
Drastic price increases on prescription drugs have taken a serious toll on American patients. For the last 13 years, on average, the cost of new drugs has risen more than 10 percent year-over-year. In fact, 44 percent of Americans say they haven’t purchased at least one needed medication due to high costs. As a result, about 125,000 people in the U.S. die per year because they don’t take their medication, making this as Sen. Maria Cantwell (D-WA) put it, a “life or death matter.”
Dr. Ryan Oftebro, a Seattle-based pharmacist, gave a direct example in congressional testimony on how PBMs have an overwhelmingly negative impact on his patients who take a common cholesterol medication. He argued that PMBs increase the price from $15 to $141 for the same 90-day supply, costing his patients an extra $500 per year.
This is why direct primary care practices are gaining traction across the country. The alternative to traditional hospital system-based care allows physicians to dispense medication at wholesale prices because the middlemen are removed from the picture.
The middlemen lobby are not taking the criticism lying down. In February, the Pharmaceutical Care Management Association, which represents PBMs, launched a digital ad campaign claiming that PBMs “work everyday to secure savings and support a more affordable future for patients.”
These claims and others like it could not be further from the truth.
The three largest PBMs manage roughly 80 percent of the prescription drug market and are owned by some of the largest insurers in the country. The entities pick and choose which drugs are covered by health insurers, which provides tremendous leverage that translates to profit. PBMs now rake in more than $200 billion a year through the scheme at the expense of patients struggling to afford care.
In their doorkeeper role, the middlemen can also compromise patient choice, harming their wellbeing and health.
A report from Xcenda found that PBMs have increasingly restricted patient access to prescription medicines. In fact, in 2022, more than 1,100 medications were excluded from at least one of the three largest PBMs’ insurance formularies (e.g., the list of covered drugs), a nearly 1,000 percent increase in the number of excluded medicines since 2014. Brand medicines accounted for nearly half of the total formulary exclusions, leaving patients with fewer treatment options.
Here’s the reality: Pharmacy Benefit Managers (PBMs) or more appropriately named “Pharmacy Benefit Middlemen” are the single greatest factor when it comes to driving up prescription drug costs in the U.S. They offer little value while profiting off the backs of patients to the tune of tens of billions of dollars a year.
That’s why addressing the profiteering practices of PBMs has become a bipartisan effort and unites policymakers on both sides of the aisle—a rarity in Washington these days. Even the Federal Trade Commission (FTC) is working to shine a spotlight on the questionable practices of drug supply chain middlemen.
Americans deserve answers—and action. I’m optimistic that oversight investigations and legislation like the Pharmacy Benefit Manager Transparency Act can gain traction and push the door open to meaningful reform that will hold PBMs accountable.