Posted on Thursday, December 12, 2024

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by Outside Contributor

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Odds are that you’ve seen ads recently that sought to inform you in one way or another about pharmacy benefit managers, also known as PBMs.  These little-known middlemen, long operating in the shadows, are finally in the spotlight for their role in driving up healthcare costs. America’s manufacturers and pharmacies agree: reforming PBMs’ business practices will reduce out-of-pocket costs for workers, retirees and their families. Thankfully, there is a bipartisan solution within reach.

PBM reform is the 118th Congress’s unfinished business. Members of Congress worked throughout the last two years to craft bipartisan legislation that addresses some of the problems with PBMs. Unfortunately, if members of Congress don’t finish the job and pass PBM reform before Christmas, they’ll have to go back to the drawing board next year and start the process again. We should make sure they don’t pass up this opportunity.

PBMs are supposed to help government and employer health plan sponsors negotiate cost savings with insurers and biopharmaceutical manufacturers. In practice, PBMs profit by inflating costs, pocketing savings meant for patients, creating incentives to raise prices even more, and reimbursing pharmacies below cost. Biopharmaceutical manufacturers provide discounts to lower costs of medicines for patients, but even these discounts are often siphoned off by PBMs instead.

The result? Higher prices for medicines and treatments.

With just three insurer-owned PBMs dominating 80 percent of the market, Americans are paying more in return for fewer choices at pharmacies. One in five seniors is going without medicine because they just can’t afford the cost, and small manufacturers are struggling to shoulder skyrocketing healthcare costs. In the National Association of Manufacturers’ most recent Manufacturers’ Outlook Survey, nearly two out of three manufacturers called rising healthcare costs a major business concern. For small- and medium-size manufacturers, healthcare was their top concern.

There is an issue of national competitiveness. Employers want to invest in their people and communities, but PBM-driven cost hikes are diverting resources from wages, hiring and innovation. It’s no wonder that two-thirds of voters want PBM reform sent to the president’s desk by the end of the year, according to a recent poll conducted by the National Association of Chain Drug Stores.

Congress has heard this call. Over the past two years, a bipartisan group of lawmakers crafted and advanced PBM reform legislation, which the House passed by a decisive 320 to 71 vote. Down the hall, the Senate Finance Committee approved separate bipartisan reform legislation that could easily pass both chambers right now without much controversy. All in all, seven congressional committees have passed PBM reform legislation during this Congress.

These reform bills will bring transparency to PBMs, reduce incentives to drive up healthcare costs and ensure that savings intended for patients actually reach them. The only stop left is for Congress to attach PBM reform to a must-pass bill before the end of the year. If lawmakers kick the can into next year, the legislative process will have to start from scratch, delaying relief for patients and businesses.

Even with this progress, more work will be needed in the new Congress. Aligning reforms for the government and commercial insurance markets will help manufacturers better support their employees while reducing costs for millions of workers and families.

Passing PBM reform now would deliver immediate relief to patients’ wallets, strengthen shop floors and lower prices at the primary counters nationwide. PBM reform is one thing that Congress can agree on before the end of the year. Patients, pharmacies and manufacturers shouldn’t have to wait any longer.

Reprinted with permission from DC Journal by Steven C. Anderson.

The opinions expressed by columnists are their own and do not necessarily represent the views of AMAC or AMAC Action.