OPINION
It's no secret by now that pharmacy benefit managers (PBMs) use underhanded practices to warp the free market, fleecing patients in order to line their own pockets.
These drug middlemen employ anti-competitive, opaque tactics to drive up patient costs and limit prescription drug access.
The upcoming House Oversight Committee hearing on July 23 presents a prime opportunity for Congress to examine PBM practices that have broken our healthcare system closely.
With truth on their side, it is a fundamental imperative that lawmakers sharply curb the power of PBMs to protect patients and stand up for free market values.
PBMs have grown to dominate the prescription drug market. A recent Federal Trade Commission (FTC) report focused on the vertical and horizontal concentration in the PBM market found that the six largest PBMs manage almost 95% of all prescriptions filled in the U.S.
This has allowed these intermediaries to transform into cronyist rent-seekers who prioritize siphoning as much money out of the pockets of patients as they can, reportedly overcharging cancer patients for treatments and running small pharmacies (which are essential components of rural healthcare) out of business.
While the sheer dominance of the six largest PBMs is concerning, the power of the top three alone, which process nearly 80% of the nation’s drug claims, should sound sirens for any true believers in the free market.
Each of the "Big Three" also exists under the umbrella of a massive healthcare conglomerate — CVS Health, Cigna, and UnitedHealth Group (UHG).
The world’s largest insurance company, UHG, is particularly dominant. The nearly $400 billion umbrella company controls over 2000 subsidiaries, including home health providers, surgery centers, physician groups, a bank, and PBM OptumRx.
Branded by Sen. Roger Marshall, R-Kan., the "Standard Oil of healthcare," UHG is a prime example of healthcare consolidation and market control to the extreme.
Breaking up Standard Oil revolutionized consumer access to energy in the United States —consider what it could do for prescription drugs!
What’s to blame for the influence UHG and other big insurer-PBMs now wield?
One thing is for certain: companies cannot accumulate this much power on their own.
They rely on political partnerships with powerful individuals to skirt rules and regulations that exist to protect the free market. To cite one obvious example, PBMs are exempt from anti-kickback corruption laws.
In a medical world where the interplay between drug companies and medical practitioners is tightly controlled, this seeming loophole must be sewn shut.
Other forms of these shady alliances are more covert, and they involve two other major players: AARP and left-wing politicians willing to enable PBM practices in exchange for political and financial support.
So, how does this partnership work?
To start, UHG pays "royalty fees" to AARP. While the term "royalty" may invoke the idea of a small portion of total profits, from 2007-2017, the AARP raked in more than $5.3 billion tax-free from UHG.
This massive amount of funding serves as the base of the unholy alliance. With those critical funds in hand, the AARP, which claims to advocate on behalf of seniors, turns around and backs the Democrats’ agenda and liberal politicians — regardless of what that means for those they claim to represent.
Unfortunately for those seniors, this meant spending over $60 million on advertisements advocating for the passage of Biden’s disastrous Inflation Reduction Act (IRA).
This wasteful spending bill raided Medicare, a key program for seniors, to fund green energy projects and has been deemed unsuccessful by a majority of voters.
This unpopularity doesn’t matter to the winners of the IRA.
Regardless of how patients feel about the law, the big insurer-PBM giants helped the Democrats achieve this "victory" and now reap the benefits of the financial windfall the law provides and receive cover from antitrust scrutiny. Moreover, AARP sold out to allow this to happen.
The upcoming House Oversight Committee hearing provides an opportunity for members to scrutinize PBM practices and partnerships. PBMs operate in anything but a free market and do anything but fulfill their original purpose — driving costs down.
Members of the committee must seize this chance to publicize the truth about PBM practices and then enact much-needed legislation to halt them.
Cronyism always harms consumers — whether it be their pocketbooks or their physical health. When it comes to PBMs, it does both, and Congress has an obligation to do something about it.
An obligation, and now a golden opportunity. It's our sincere hope that they will seize that opportunity and solve this problem, now and for all.
(A related article may be found here.)
Andrew Langer is director of the CPAC Foundation’s Center for Regulatory Freedom and Executive Director of the Coalition Against Socialized Medicine (CASM).
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