Congress can lower drug prices with new laws to reform Pharmacy Benefit Managers

• Patsy Writesman is a nationally recognized health care speaker, consultant and owner of ManageHealthCareCosts.com.

Few patients have even heard of Pharmacy Benefit Managers (PBMs). That’s because PBMs like to stay out of sight. But you need to know about PBMs because they are powerful go-betweens in the prescription drug delivery system and what they do impacts every patient. They tell your doctor what drugs will be available in your Medicare or private insurance plan – often restricting your access to cheaper, but equally effective generic medicine.

However, ironically, PBMs also use their power to keep drug prices high. Why? Because they get paid a percentage of that high list price. The higher the drug price, the higher their profit. The problem for patients is that the “co-pay” you must come up with out-of-pocket at the pharmacy window is also based on that high list price.

Delinking what PBMs get paid, both in Medicare Part D which serves seniors, and in the commercial health insurance plans that younger workers receive from their employers, is a matter of fairness and common sense.

Fortunately, our representatives in Washington are determined to stop the abuses seniors and younger workers face at the hands of Pharmacy Benefit Managers. One piece of PBM reform legislation is H.R. 6283 and its senate counterpart S. 1542, The Drug Act, co-sponsored by Tennessee Congresswoman Diana Harshbarger, R-District 1 (northeast part of the state). Tennessee U.S. Sen. Marsha Blackburn also continues to be a champion for PBM reform and is pushing for swift action to address PBM abuses.

Another view:Congress should not undermine pharmacy benefit companies to appease Big Pharma

Why price controls for medication do not work

PBM reform is not new to our state. Two years ago Tennessee passed our own PBM reforms that among other things protected Tennessean’s right to buy their prescription drugs at a pharmacy of their choice, often at trusted local pharmacies with a long tradition of faithful service to our communities.

However, there is only so far state legislation can go to protect Tennesseans. Congressional action is also needed to stop PBM abuse and lower drug prices.

Government price controls on drugs never work. They lead to shortages and rationing which hurts patients. They also discourage investment and innovation that will lead to the next generation of life saving drugs.

The real answer to addressing drug prices is a vigorous free market in prescription drugs where manufacturers compete to make them better and cheaper. But the monopolistic anti-competitive practices of the PBMs prevents the free market from working efficiently to lower drug prices.

Congress must legislate to stop abuse of the system

Author Wayne Winegarden, director of the Pacific Research Institute’s Center for Medical Economics explains in an article in Forbes how PBMs game the system for their own benefit:

"PBMs, and their affiliated insurers, earn more revenue when medicines have high list prices because high list prices enable PBMs to negotiate larger discounts. Since PBM compensation is based on the size of the discount, the larger the discounts, the more revenues they earn. Consequently, PBMs prefer drugs with artificially high list prices. The current fees PBMs charge to pharmacies, employers, and manufacturers, now an even larger revenue source, are also linked to drugs’ list prices. This link between PBM fees and drugs’ list prices creates another bias toward higher list prices."

 Mr. Winegarden is right. High list prices pile up a patient’s out-of-pockets costs, while the discounts negotiated seldom reach the patient’s pocket.

Congress needs to legislate to stop this abuse. Fortunately, PBM reform, including delinking PBM profits from high drug prices, enjoys broad bipartisan support.

I applaud Congresswoman Harshbarger for her support for The DRUG Act and Congressman Tim Burchett for passing this in the House Oversight Committee. Our entire congressional delegation should join Senator Blackburn, Congresswoman Harshbarger and Congressman Burchett in advocating for including Medicare and commercial delinking of PBM profits in the healthcare package that will accompany the upcoming Continuing Resolution.

It’s time to put patients first, lower drug prices and to quit benefiting go-betweens like the PBMs.

Patsy Writesman is a nationally recognized health care speaker, consultant and owner of ManageHealthCareCosts.com.