Two Senators Take on the Big Pharma Beast
Pharmacy benefit managers (PBM) keep drug costs down. Why is Congress blaming them for high drug costs?
A recent Pew Research poll confirms that the vast majority of Americans believe special interests and their campaign contributions dominate our political process.
They seem to believe that Big Pharma is the worst repeat offender of these pay-to-play tactics. They may be correct.
This did not go unnoticed by President Donald Trump, who, just days after being inaugurated, denounced high drug prices and promised to implement policies to ensure Americans get a fair shake.
Trump’s rhetoric was a radical departure from most elected officials who recognize and frankly appreciate the political largesse of PHARMA, whose member companies dole out millions to members of both political parties.
When Big Pharma tells politicians to jump, they seem to respond by saying, “How high?”
The political reach of pharmaceutical companies is astounding. A recent analysis found that the industry poured more than $373 million into lobbying and political contributions. Those numbers don’t include unreported contributions to third-party groups and organizations. For an industry that is often under rhetorical assault from both parties, it does a great job of protecting its profits and getting everything it asks for on its political wish list.
Their profits are substantial. According to a study published in the JAMA The profit margin (net income as a percent of total revenue) is nearly twice what it is for other non-pharmaceutical companies: 13.8% versus 7.7%/
The latest example is the drug companies getting Congress to introduce a bill that would de-fang pharmacy benefit managers (PBMs), the most effective entity working to keep drug prices reasonable.
PBMs are companies that manage prescription drug benefits for health plans. They play a significant role in determining the cost and distribution parameters of drugs — and they have a strong history of effectively fighting to secure the use of more drugs at lower prices in the marketplace.
Seema Verma, Centers for Medicare and Medicaid Services Administrator for President Trump, said, “I am thankful that we have the PBMs in the Part D program that are performing that negotiation on behalf of seniors.”
The Office of Management and Budget told Congress that, thanks to them, “we have seen a very dramatic shift towards generics and away from branded drugs.” In 2019, the Government Accountability Office even found that pharmacy benefit companies’ effectiveness at reducing drug costs by “offset Part D spending by 20%, from $145 billion to $116 billion.” So, it shouldn’t be a surprise that Big Pharma thinks these companies need to go, and they have opened their spending spigots to ensure it happens.
Somehow, with a straight face, members of Congress are telling constituents that PBMs are responsible for out-of-control drug prices, which is counterintuitive.
These members of Congress presumably look closely at the disclosures on the online advertisements you’re frequently seeing that trash PBMs The PHARMA industry also fashioned “research” claiming that PBMs drive up prices.
In a perfect world, politicians would run for the hills if corporate giants were running ads and producing “studies” to ensure they could raise prices. But when it comes to Big Pharma, some members are sadly doing the opposite.
This reality is not lost on principles members like Sen. Ron Johnson (R-WI), who said in a committee hearing that bills to regulate PBMs are pro-PHARMA bills that he will not support. He said that Sen. Rick Scott (R-FL), a former hospital company CEO, found “he had no negotiating power with drug companies unless he was large enough to do it.” According to Sen. Johnson, “That’s what PBMs are doing.” They are “large enough to actually negotiate lower prices” and “the proof is in the pudding.”
Hopefully, conservative stalwarts like Sens. Johnson and Scott can expose these Big Pharma efforts for what they are — cover to increase the drug companies’ bottom line. Hopefully, they can pressure enough of their colleagues to vote against the legislation so that common sense wins the day. The American people are tired of special interests buying out the halls of Congress, and the time is now for change.
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