The U.S. Federal Trade Commission (FTC) recently voted unanimously to turn up the heat on the middlemen of the drug supply chain. The agency is opening up an investigation into Pharmacy Benefits Managers (PBMs) for their role in “raising the price that consumers pay for medicine,” among other questionable behaviors.
For years, PBMs have used their position as gatekeepers to the consumer market to enrich themselves and insurance companies — conduct that has attracted the attention of regulators, policymakers, and the public as consumer drug costs balloon. Since the year 2000, spending in the U.S. on pharmaceuticals has nearly tripled.
How is the extra cost making its way to consumers? You see, drug makers typically provide discounts in the form of rebates alongside their products, which in a perfect world would translate to more affordable medicine. But under the current middlemen scheme, those savings never make it to the patient at the pharmacy counter. The money is instead sucked-up by PBMs.
Rather than attempting to manipulate prices via the heavy hand of government, lawmakers should look to the free market for help. Injecting price transparency, providing patients with more healthcare choices, and cutting bureaucracy from the patient-doctor relationship will lower prices while also improving the quality of care.
When it comes to healthcare reform, policies that come out of Congress are often shortsighted and ineffective at addressing the root problem. Pushing a plan to address rising medicine prices without a component to tackle PBM middlemen is the latest example. Hopefully, the FTC investigation helps some policymakers see the light.
Read the full op-ed in RealClear Policy by Tom Price, former secretary of Health and Human Services and a senior healthcare policy fellow at the Job Creators Network.