As the U.S. Senate returns from recess, one elephant in the room is a proposal that proponents claim will lower prescription drug costs. Following the failure of President Biden’s signature Build Back Better package, the drug pricing provision is among those that have been singled out for more targeted legislation. The policy, which has gained serious momentum among congressional Democrats, relies on anti-free market price controls applied by the government to artificially lower the cost of some medicine.
The idea is attractive considering U.S. spending on pharmaceuticals has nearly tripled since 2000. But knee-jerk price mandates will have major unintended consequences that outweigh potential benefits. Sen. Manchin should reconsider his support of the idea and pivot to an alternative strategy that doesn’t come with as much baggage.
Instead of slowing the healthcare innovation pipeline, Sen. Manchin and other lawmakers should alternatively address the middlemen of the drug supply chain that are largely responsible for ballooning price tags. Called Pharmacy Benefit Managers (PBMs), these entities act as the gatekeepers between pharmaceutical companies and the consumer market. PBMs use this considerable leverage to pocket financial discounts already provided by drug manufacturers that are intended for patients.
The result is artificially high drug costs. Federal lawmakers should compel these middlemen—who comparatively offer little effective market function for the money they collect—to pass down at least some of the discounts to patients at the pharmacy counter as financial savings. The Trump administration attempted to implement this strategy for Medicare Part D via executive action. But the order has sadly been slow-walked and delayed every step of the way by the very same people who claim they are working to lower the price of medicine.
High inflation is hitting Americans on a wide array of goods—ranging from ground beef to used cars. The solution to broad, economy-wide inflation may be complicated, but the fix for medicine is not. Reining in middlemen and injecting transparency into the drug supply chain is a clear-cut strategy that will help control costs at the pharmacy counter without compromising innovation.
Read the full op-ed in the Charleston Gazette-Mail by Dr. Chris Stansbury, a partner at West Virginia Eye Consultants and a member of the Job Creators Network.