Drug Price Legislation Inexplicably Exempts Important Market Forces

While the current Congress has only been organized for a few months, it has moved quickly on a number of issues, and one of those has been to study legislation that would limit the power of pharmacy benefit managers, or PBMs. However, it has inexplicably failed to consider the impact that pharmacy services administrative organizations or pharmaceutical wholesalers – who can also be construed as “middlemen” – have on the market. Congressional leaders should pause and properly consider the risks and harms to patients and employer health sponsors from hastily proceeding down the current legislative path.

Pharmacy benefit managers, or PBMs negotiate prices with pharmaceutical companies on behalf of governments, insurers, unions, and large employers. PBMs leverage the purchasing power of their collective clients to help negotiate lower drug costs with pharmaceutical companies, which often have a monopoly on their drugs via their patent.