Rhetoric in Washington, DC around high and rising drug prices continues to intensify. As Congress considers potential legislation, these efforts come as the prices Americans pay for new drugs coming to market are rising faster than ever – far ahead of inflation.
In an effort to avoid further regulation, drug companies – who have sole discretion over how they price their products – are pointing fingers at PBMs as to why prescription drug prices continue to rise.
It makes sense that drug companies and their well-resourced trade association, PhRMA, would want to place blame on PBMs. The reality is that PBMs – the negotiators who work on behalf of 255 million Americans in the private and public sectors to get better prices – are the only counterweight to the monopolistic power of drug companies, who alone have discretion over how they price their prescription drugs.
PBMs go toe-to-toe with drug companies on behalf of employers, unions, and health plans to lower drug costs. These entities are crucial for businesses large and small, who could not have the same leverage negotiating with drug companies alone. Because of their work, PBMs save each consumer they serve more than $1000 every year in lower drug costs.
In addition, PBMs create competition among drug makers. Removing PBMs as the negotiator would leave patients and taxpayers on the hook to pay significantly more for the medications they need to stay alive.
Recently, PhRMA and other companies began suing the federal government to try to stop the negotiation of drug prices in Medicare Part D under the Inflation Reduction Act. Some drug company executives have even suggested that they would rather pull their drugs out of Medicare entirely if they have to negotiate their prices.
Instead of enacting bills that would ultimately raise drug costs and hurt Americans’ pharmacy benefits, Congress should focus on constraining Big Pharma’s high prices and promoting competition in the prescription drug marketplace among them. By limiting the patent thickets that delay affordable alternatives to expensive brand drugs, or taking action to limit “product hopping,” which pushes patients to more expensive drugs even when more affordable generics become available, our leaders in Washington have an opportunity to hold Big Pharma accountable and help Americans better afford the medicines they need.