Reality Check: Pharmacy Benefit Managers Offer Little Benefit to Americans

Pharmacy Benefit Managers (PBMs) are working overtime to sway the hearts and minds of lawmakers in their favor by pouring money into messaging that supports their current role in the pharmaceutical supply chain. These healthcare middlemen want to control the narrative to maintain their status quo benefits which means billions of dollars for them at the expense of everyone else in the system. With all the noise this debate has been generating, it’s important for taxpayers and policymakers to look past the rhetoric on this issue and just consider the facts.

The data shows that American patients are losing more of their hard-earned money to PBMs. According to a recent report from Rep. Buddy Carter (R-Ga.), 69 percent of every dollar spent on prescription drugs goes toward these increasingly powerful middlemen through a variety of means. Part of the reason for this is that the three largest PBMs have worked hard in recent years to secure 80 percent of their market (up from 48 percent in 2010) and effectively monopolize the industry.

They are now using this outsized influence to their own benefit. For example, PBMs take full advantage of their market power to negotiate more than $200 billion worth of rebate savings per year from drug manufacturers and keep these savings for themselves, with the costs shifting to consumers. This is why it comes as no surprise that PBMs’ profits are continuing to increase drastically, rising $3 billion between 2017 and 2019 alone.

The rapid rise of the largest PBMs over the past decade is warping the healthcare system and the incentives that guide it. PBMs do not push lower-cost options because they can make a killing off higher list prices and have the power to prioritize these higher-cost drugs with little competition. This greed has clear and devastating effects on patients as it pumps up prices on needed medications like insulin, with a $425 box of insulin pens landing $339 in rebates for PBMs. This dynamic pushes costs up and up.

It’s more important than ever to keep this evidence at the forefront of the conversation about PBMs. These organizations are trying to drive the conversation and shape legislation on Capitol Hill, and they just might succeed if lawmakers and the public are shielded from the dark reality that PBMs have created in our healthcare system.

Consider the implications if the middlemen do achieve their goal of driving the narrative in Washington. PBMs would be protected from both scrutiny and, their worst nightmare, practical legislation that checks their power. They’d continue to block consumers from seeing the savings they negotiate from manufacturers. They’d continue to prioritize higher-priced drugs to pump up their profits. And they’d continue to corner their market, drive down competition, and increase their power and influence as middlemen. Any remaining traces of transparency and accountability could be driven out of our system entirely.

Taxpayers are already stretched too thin from the irresponsible levels of government spending that are keeping inflation stubborn and taxes high. Both parties have an interest in curbing excessive costs for their constituents and one of the most direct and effective ways this can be achieved is by tackling the PBM problem head-on with investigations, hearings, and comprehensive legislation. This will require a Congress that is committed to building the very transparency and accountability that PBMs are trying to snuff out. The time for action is now.