The American people deserve a healthcare system that prioritizes their well-being over corporate profits, and it’s time that Congress take action to give it to them.
An Op-Ed by Nicole Malliotakis. As published in the Staten Island Advance
Imagine going to the doctor and being told you have a life-threatening condition that can only be treated with a daily dose of prescription drugs. You head to your local pharmacy (here on Staten Island, we’re lucky to have nearly four dozen), to pick up your medication, only to find out it’s either not available due to persistent shortages, or the price is double, triple or even quadruple what you had expected. For many families in New York City and across the country, this hypothetical situation has become a frustrating reality, with one third of American adults unable to afford their medications as prescribed. In fact, from 2006 to 2021, retail prices for the most commonly used drugs increased at a faster rate than general inflation every single year.
Making pharmaceuticals more affordable so you and your family don’t have to make the gut-wrenchingly unfair decision between purchasing groceries, paying rent, or potentially lifesaving drugs has been one of my top priorities since coming to Congress. There’s still work to be done, but in recent weeks I’m pleased to say that we’ve made significant progress toward addressing this issue.
While some blame for inflated prices lies on the rapidly rising costs associated with research and development, behind the scenes, predatory pricing techniques of Pharmacy Benefit Managers, otherwise known as PBMs, are what’s forcing local pharmacies to either raise their prices or face going out of business.
PBMs are third-party administrators, also known as “middle-men,” contracted by health insurance companies to act as intermediaries between insurance providers and pharmaceutical manufacturers. Originally established in 1960 to process claims for insurance companies and help them contain the cost of prescription drugs, PBMs have slowly and silently expanded their web of control in the drug price supply chain and have become the primary deciders of what drugs will be most accessible to consumers and how much they will cost.
PBMs maximize profits with three shady tactics: manipulating rebate structures, formularies, and spread pricing. Prescription rebate structures often incentivize PBMs to heavily favor more expensive drugs over equally effective and more affordable options. PBMs then create preferred lists of policy-covered medications, known as formularies, that often include drugs with higher rebates (the bigger the rebate, the more profit for the PBM). Lastly, PBMs often charge health plans more for drugs than their reimbursements, allowing them to quietly pocket the difference.
If that sounds confusing, it’s because it’s deliberately designed to be. Simply put, PBMs are raking in cash by dictating how much their competitors can make, crushing the ‘mom & pop’ pharmacies in your neighborhood that have no choice but to pass skyrocketing costs down to you.
While PBMs were initially created to improve our healthcare system and establish more transparency surrounding the cost of drugs for pharmacies, payers and patients, their business model has been disguised and consolidated, with three PBMs – CVS Caremark, Express Scripts, and Optum Rx – controlling 80 percent of the market. As a result, when PBMs negotiate with pharmacies or health insurers, they are likely negotiating within their own networks or with direct competitors, leading to a lack of competition that forces local ‘mom & pop’ pharmacies to compete on an unfair playing field and raise prices on consumers.
The lack of transparency surrounding PBM pricing techniques can make it hard to get accountability, however, Congress is taking decisive, bipartisan action to pull back the curtains on their deceptive practices and get the rising cost of prescription drugs under control.
I’ve joined Reps. Earl “Buddy” Carter (R-GA), Lisa Blunt Rochester (D-DE), and Jake Auchincloss (D-MA) in introducing the Protecting Patients Against PBM Abuses Act, bipartisan legislation that would “delink” PBM compensation from the cost of medications, removing the incentive for them to drive up prices, in turn, increasing transparency and addressing conflicts of interest.
I’m pleased to report that the House Committee on Ways and Means, of which I’m a member, unanimously approved our legislative language and reported it for consideration by the entire House. It was also unanimously given the green light by the House Committee on Energy and Commerce in a 46-0 vote.
“Bipartisan” can sometimes be a naughty word in Washington, but the unanimous passage of this legislation by two of the most powerful committees in Congress should send a clear message to leadership that cracking down on PBM abuses is an achievable goal that has garnered widespread support on both sides of the aisle.
The American people deserve a healthcare system that prioritizes their well-being over corporate profits, and it’s time that Congress take action to give it to them.