In the face of finger-pointing by elected officials in Washington, middlemen in our healthcare system continue to disrupt patient access. A case in point is the pharmacy benefit managers (PBMs) that manipulate health plan policies and systems meant to help patients with debilitating diseases afford their medications.
As Washington seeks solutions to curb the high costs patients face at the pharmacy, some are passing blame to pharmaceutical manufacturers while failing to acknowledge the role of these middlemen within our healthcare system. The Senate HELP Committee, Senate Finance Committee and others are looking in the right direction by investigating PBMs because, without oversight, PBMs’ use of deceptive practices will only cause patients more health and financial harm.
PBMs serve as middlemen between private insurers and pharmaceutical manufacturers. They determine which therapies health plans cover and assign restrictions and out-of-pocket costs for privately insured patients. Three PBMs, owned by for-profit insurance companies, control about 80 percent of the American prescription drug market. Despite their control and influence over how patients access their medications, PBMs have continued to escape the necessary oversight from federal policymakers and regulators.
Common PBM practices force families to stretch their wallets and negatively affect patient health outcomes and downstream costs. Research shows more than two of every three Americans abandon the prescription medicines they need when out-of-pocket costs reach $250. As patient health outcomes worsen, so does the burden on families, the broader healthcare system and the American economy.
In his State of the Union Address in February, President Biden claimed that pharmaceutical manufacturers were “unfairly” charging people for the treatments they need to stay alive. It’s just not true. In recent years, patient out-of-pocket costs for prescription drugs have increased, but rebates or discounts paid by manufacturers to PBMs have also increased. A simple equation demonstrates that while manufacturers provide discounts that should be passed along to patients to help them afford their medicines, wealthy industry middlemen are pocketing the profits instead.
While some policies in Biden’s Inflation Reduction Act of 2022 deserve recognition for how they will help patients afford and access their medications, including the cap on out-of-pocket costs to Medicare beneficiaries and the expansion of the low-income subsidy program, the legislation failed to take action against industry middlemen and payers. Moreover, the law’s drug-pricing provisions threaten to have a devastating effect on the development of cures.
Consider the effect on oncology research alone. From 2022 to 2039, drug price controls would cause a $663 billion reduction in private research and development spending in oncology, with this reduction in research and development leading to 135 fewer cancer drug approvals. A lack of competition in the prescription drug market, caused by fewer drug approvals, will only drive up patient costs.
As the effects of these policies on patient access and affordability loom, Washington must focus its attention on efforts that will drive real change for patients struggling to access the medicines they need. Last year, the Federal Trade Commission launched an investigation into the practices of PBMs and their effects on patients. Most recently, the Senate HELP Committee and Senate Finance Committee took steps to investigate PBMs. House lawmakers recently introduced a bill that would ban the use of the “quality-adjusted life year” value assessment framework, which discriminates against vulnerable patient groups, including seniors, those with disabilities and those with rare conditions.
These recent actions are critical steps in the right direction, but there remains work to be done to ensure that patients can access the treatments they need when they need them.
Placing the blame on pharmaceutical manufacturers for high patient out-of-pocket costs fails to consider the role of deceptive and opaque practices of PBMs and private insurers. Meaningful action by Congress to address PBM practices and the lack of oversight into their ability to drive up out-of-pocket costs would not only support the ability of patients to receive the treatment and care they need but also serve the administration’s goal of lowering patient costs — without threatening lifesaving innovation.
