Now that the election is over and Congress is in its lame duck session, one of the most pressing issues is reforming the abusive PBM industry. PBMs — or pharmacy benefit managers — are the middlemen in the prescription drug pipeline and have been charged with manipulating the market and inflating the cost of medicines for patients.
In fact, the Federal Trade Commission recently initiated a lawsuit against the top three PBMs — CVS Health’s Caremark Rx, Cigna’s Express Scripts and UnitedHealth Group’s OptumRx — saying these companies created a “perverse drug rebate system” that artificially inflates the cost of insulin.
The FTC charges that the three PBMs, which control 80% of all prescriptions in the United States, have abused their power by rigging the pharmaceutical supply chain for their own profit at the expense of patients. The PBMs are charged with incentivizing manufacturers to inflate insulin list prices, restricting patients’ access to more affordable insulins on drug formularies, and shifting the cost of high list price insulins to vulnerable patient populations.
Due to these exploitative rebating practices, patients suffered from skyrocketing prices of lifesaving drugs, such as insulin. For example, according to the FTC’s lawsuit, in 1999, the average list price of a brand-name insulin, Humalog, was only $21. Less than 20 years later, in 2017, it increased to more than $274, a staggering increase of more than 1,200%.
As a result of these astronomical price increases imposed by PBMs, Americans with diabetes are rationing their medication and jeopardizing their health. In 2019, one in four diabetes patients was unable to afford insulin, according to the FTC. And some patients have even died because they couldn’t access affordable treatment.
The complaint charges that, even when lower list-price insulins became available that could have been more affordable for vulnerable patients, the PBMs systemically excluded them in favor of high list-price, highly-rebated insulin products.
Shockingly, these PBMs collected billions of dollars in rebates and fees while insulin became increasingly unaffordable.
Clearly, our lawmakers and regulators have a responsibility to crack down on these unfair and abusive practices. The FTC’s lawsuit is not the first, and voters recognize the need to reform this industry.
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In fact, according to a Morning Consult poll, more than two-thirds (69%) of registered voters agree that Congress should consider legislation to reform pharmacy benefit managers’ role and actions in health care to be “must-pass legislation” before concluding its work in 2024.
To date, seven committees of jurisdiction across both chambers of Congress have voted overwhelmingly in favor of PBM transparency and reforms. Here in New Jersey, Gov. Phil Murphy signed several bipartisan measures into law to establish greater oversight of PBMs. However, legislative leaders recognize that this industry still needs greater reform. Drug pricing is a complicated issue, but it’s easy to see that prescription drug middlemen are putting profits ahead of patients.
New Jersey patients deserve access to the best, affordable drugs our high-quality health care system has to offer. Patients Come First New Jersey applauds our lawmakers at the state and federal level for exposing the disreputable practices of drug middlemen to ensure transparency, accountability and affordability for all Garden State patients.
Jeanette Hoffman is executive director of Patients Come First New Jersey, part of a national patient advocacy organization that fights against policies that create barriers for patients and cause delays in innovation.
