In a recent piece, “The FTC’s Villains du Jour are the Pharmacy Benefit Managers,” Ike Brannon of the Jack Kemp Foundation rushed to the defense of murky corporations who have earned near universal condemnation for their greedy, dishonest business practices. In Congress, where there is overwhelming bipartisan support for PBM reform, the House Oversight Committee recently released the findings of its year-long investigation of PBMs. Among its findings:
- The three largest PBMs (CVS Caremark, Express Scripts, and OptumRx) “have used their position as middlemen and integration with health insurers, pharmacies, providers, and recently, manufacturers, to enact anticompetitive policies and protect their bottom line.”
- While the PBMs often brag about how much money they’re saving for insurance plans and patients, “evidence indicates that these schemes often increase costs for patients and payers.”
- The PBMs force drugmakers to pay “rebates” allowing their drugs to be covered by insurance, and that practice often prevents patients from getting lower-cost generic or biosimilar drugs.
- “PBMs use their position as middlemen to steer patients to the pharmacies they own rather than pharmacies that may have closer proximity or provide better care.”
Those were just some highlights. Days before, the Federal Trade Commission issued an interim report as part of its years-long investigation of the PBMs. The FTC reviewed documents from the PBMs themselves (the PBMs are withholding many more) and found:
- The merger of PBMs with insurance companies, retail chain pharmacies, and mail-order pharmacies has allowed the biggest three to control 80 percent of all prescriptions in the United States.
- The big three PBMs exercise near total control over what drugs patients may have and which pharmacies they may use.
- The big PBMs “appear to have the ability and incentive to prefer their own affiliated businesses, creating conflicts of interest that can disadvantage unaffiliated pharmacies and increase prescription drug costs.”
Sandwiched between these two scalding reports were blockbuster investigative pieces in the New York Times and Wall Street Journal that told the same story – one of market manipulation, self-dealing, and real-life patient suffering. In his piece, Mr. Brannon doesn’t address any of these findings directly. In fact, he seems to argue that monopolistic corporate middlemen are good for the system.
“Their (the PBMs’) most important task involves negotiating to reduce the costs of pricey prescription drugs, which they accomplish by using the market power they obtain from representing numerous healthcare plans. If a drug company refuses to provide a sufficient discount, a PBM’s clients may design their formularies so that there is a preference given for less expensive drugs,” he writes. But the FTC, the House Oversight Committee, and everyone else who’s investigated the PBMs find that the PBMs are doing precisely the opposite: They are negotiating for the most expensive drugs because the rebates are much bigger, and they’re keeping for themselves billions of dollars in rebates. The higher the cost of the prescription, the more money the PBM makes. Taxpayers and patients are paying more, so the PBMs can keep more.
Then, he says, “the notion that independent pharmacies are vital to the health of rural and small-town residents is also a big baffling.” Here he argues that it’s no big deal if millions of people lose their local pharmacy because PBMs are rigging the system, because mail-order drugs are better. Really?
In many rural and small-town communities, the local pharmacist is the only accessible healthcare provider. They don’t just dispense medicine. They counsel their patients, watch for dangerous drug interactions, package their medicines to maximize adherence, administer flu shots, COVID shots and other immunizations, monitor their blood pressure, help them control their diabetes, and perform mental health evaluations and many other healthcare services that mail-order pharmacies cannot deliver. Also, nearly all of them offer home delivery.
Local independent pharmacies save lives. PBMs don’t. Tragically, many local pharmacies are disappearing because of the PBMs and their indefensible greed. It’s a national crisis, and we applaud the FTC, leaders in both parties in Congress, the administration, and the many news outlets who are giving it the attention it deserves.
