Big Pharma's Congressional Power Play
As a former union official and currently serving county commissioner, I am tired of seeing the seemingly never-ending ads on the Internet and television from PhRMA, the trade association that represents the major drug manufacturers, advocating that Washington politicians take regulatory action that would pad its member companies’ bottom lines.
Healthcare is one of the biggest problems for ordinary Americans. Over 70 percent of Americans say the current system fails them. Eighty-seven percent of Americans say that a political candidate’s plan to reduce health costs is important to how they will vote. It’s an issue that weighs heavily on the nation’s conscience.
Most politicians are smart enough to recognize this concern, but some of them are not offering serious, well-thought-out solutions. Rather than take on Big Pharma, which actually controls the drug prices, too many of them are listening to the calls to action in PhRMA’s Internet and television ads. At PhRMA’s behest, they are seeking to regulate pharmacy benefit managers (PBMs), which help people get affordable drug prices, instead.
PBMs are third-party administrators of health plans, including the ones I oversee for my county. The nation’s health plan sponsors hire them to negotiate with pharmaceutical companies and get lower medication costs for their beneficiaries.
PhRMA claims that PBMs pocket excessive amounts of the cost-savings they accrue, but this isn’t true. The data shows that 65 percent of every prescription drug goes to pharmaceutical companies compared to just six percent to PBMs. PhRMA can finger-point all it wants, but the data speaks for itself.
PhRMA’s advocates also claim that only insurance companies support PBMs. This too is false. I’m not a lobbyist or consultant for the insurance industry, yet I endorse them wholeheartedly because I have seen firsthand how they lower drug prices for the health plan beneficiaries I’m tasked with protecting as a county commissioner.
I’m not alone. A new survey conducted by the Coalition for Affordable Prescription Drugs found that nearly 9 out of 10 employers say PBMs help them get more affordable healthcare for their employees. Ninety-seven percent of those employers who contract directly with these services say they were satisfied with the results.
Employers seem to have few concrete issues with PBMs. Eighty-nine percent of employers say interactions with PBMs are transparent, with 43 percent saying they’re very transparent. Employers also say these services allow them to do more for their employees, with 90 percent reporting that they use the rebates from PBMs to reduce employee spending on healthcare.
This isn’t the only survey to show these results. A Bank of America study released last April showed high favorability toward PBMs among employers. That survey found that businesses reported a significantly lower increase in drug spending compared to the general inflation rate. Employers said PBMs’ services allow them greater flexibility, more options, and lower costs overall.
But don’t take just the word of employers and government administrators like me. The U.S. Government Accountability Office also finds that PBMs offer serious benefits to ordinary Americans. According to the esteemed agency, “the average price PBMs obtained from retail pharmacies for 14 brand name drugs was about 18 percent below the average price paid by customers without third-party coverage.” The National Bureau of Economic Research reported in a 2022 study that PBMs provide $148 billion in savings for healthcare recipients every year.
Yet, Big Pharma’s lobbyists want Congress to take these benefits away and force employers to face higher costs and fewer options in their health coverage. The only ones who will benefit from this are the drug makers themselves.
Like doctors, Congress should adopt the principle of “first, do no harm” when it comes to solving America’s healthcare crisis. Cracking down on PBMs would violate this principle and worsen the problem. Washington needs to get serious about this issue and listen to the vast majority of America’s health plan sponsors — from county and state governments to private employers who provide healthcare. They want flexibility and greater options when it comes to health coverage. Regulating PBMs would give them the exact opposite of that, and that’s something that no one should want.
Jonathan C. Kinloch is a Wayne County, Michigan commissioner for District 2 and represents the Wayne County Commission on the Board of Detroit/Wayne Integrated Health Network (the county’s Mental Health Authority), serving more than 1.8 million Detroit and Wayne County residents.
