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Congress Must Eliminate Prescription Drug ‘Middlemen’ to Lower Costs


Prior to the August recess, Congress made bipartisan legislative inroads to advance a series of bills that aim to improve access to and delivery of health care for millions of Americans. Although an overhaul of the system remains an implausibility given the divided government, these incremental reforms could provide an opportunity for meaningful improvement. When Congress returns in September, it should fast-track these efforts for passage.


Among these are bills that aim to lower prescription drug costs for patients. Spending on medicine in the United States has grown by nearly half in just 10 years. And policymakers — Republicans and Democrats alike — believe they have a plan to temper prices. Their strategy is focused on reining in the “middlemen” of the drug supply chain.


These middlemen — called Pharmacy Benefit Managers, or PBMs — choose which drugs health insurance plans will cover. But without proper regulatory guardrails, the door-keeper role grants PBMs considerable power to game the system, if they want, at the expense of patients struggling to afford medication.


Some middlemen allegedly were able to squeeze kickback payments out of drug makers in exchange for access to the consumer market. In a perfect world, these “rebates” would be passed down to patients as savings at the pharmacy counter.


How much money are we talking about? One estimate, in a report released by Rep. Buddy Carter (R-Ga.), says patients could save more than $200 billion collectively on prescription drugs every year.


Some PBMs encourage the use of more expensive drugs when cheaper alternatives are available. Why? Because the level of profit isn’t determined by the number of prescriptions but by the total cost. So, when a patient — or by extension, a health plan — pays more for a medicine, the middleman can rake in more cash.


A series of proposals in Congress would help address these schemes and more. For example, the Modernizing and Ensuring PBM Accountability Act would de-link the revenue collected by middlemen from a drug’s price within Medicare, eliminating the incentive to favor more expensive medicine for older Americans. The Pharmacy Benefit Manager Reform Act would get the ball rolling to help transfer drug-maker rebates to patients as financial savings. And the Protecting Patients Against PBM Abuses Act would inject transparency into the drug supply chain, so that policymakers and the American people can better understand what’s been happening behind closed doors.


Beyond working to lower prescription costs, Sen. Ted Cruz (R-Texas) has introduced legislation that would empower patients with more control over their health care dollars. Notably, the bill would free Americans from the dusty employer-based health insurance model that has been around since the 1940s.


More specifically, it would give individuals the option to purchase their own medical coverage with pre-tax Health Savings Accounts. Not only might the change relieve financial stress for small businesses that have difficulty affording employee coverage, but it could make health care plans portable — providing stability between jobs.


As a practicing direct primary care physician, I’ve seen how the current health care system can leave patients stuck between the proverbial “rock and a hard place.” When Congress gavels back into session next month, members have the opportunity to push meaningful, bipartisan health care reforms over the finish line.



About the Author: Chad Savage, M.D., (@chadsavagemd) is a policy fellow at the Docs 4 Patient Care Foundation, the founder of YourChoice Direct Care in Brighton, Mich., and a partner of the Job Creators Network Foundation, the research and education arm of the Job Creators Network.

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