The battle for Speaker of the House is finally over, with Rep. Mike Johnson emerging as the new leader in the lower chamber. Now, Congress must move to provide financial aid to Israel following the horrific terrorist attacks, as well as work to avoid a looming government shutdown right here in our own backyard.
But beyond actions needed to respond to—and avert—crises, lawmakers should not lose sight of other meaningful policy reforms that are brewing. Notably, a plethora of bi-partisan bills are being considered in Congress that would foster transparency, increase oversight, and create accountability within the prescription drug arena.
The reforms are sorely needed as Americans and businesses prepare to navigate increasing healthcare costs in the new year. Prices are set to increase by up to 8.5 percent in 2024, which as a recent Reuters headline alarmingly notes is the “biggest healthcare cost jump in a decade.” And given that spending on medicine in the U.S. has increased by nearly 90 percent over the past decade, it’s clear that patients are feeling an intense financial squeeze from this jump.
Compromised family budgets aren’t the only consequence of ballooning costs. Rising prices are jeopardizing health.
One survey finds that nearly 40 percent of Americans don’t take medications as prescribed because of cost. Some patients are going so far as to ration dosages by cutting pills in half, delaying refills, or even not taking prescribed medication altogether. These types of behaviors have been linked to half of treatment failures, roughly 125,000 fatalities, and up to one-quarter of hospitalizations annually in the U.S.
Fortunately, lawmakers are well poised to take concrete action that will help rein-in the prices patients pay for prescription drugs. More specifically, policymakers are taking aim at the middlemen of the drug supply chain called Pharmacy Benefit Managers (PBMs). These entities act as intermediaries between drugmakers and the consumer market and are responsible for a large part of the ballooning drug costs.
Left with few guardrails and a system that is in desperate need of transparency, a handful of PBMs have taken control of the vast majority of the drug market in the U.S. As a result, they are able to game the system.
Among their schemes, these middlemen leverage their doorkeeper role to the consumer market to pocket manufacturer-provided discounts that should be passed on to patients at the pharmacy counter as financial savings. How much is siphoned off? It’s an estimated $200 billion annually in discounts—costing Americans struggling to afford prescription drugs big time.
Some middlemen also encourage the dispensing of more expensive medication when more affordable alternatives are available. Why? Because the money-making potential isn’t rooted in the number of prescriptions but in total cost. So, when a patient—or by extension, their health insurance—shells out more cash for a higher price point drug, the middleman can earn bigger profits.
A flurry of legislation moving through Congress would help to address this PBM tactic—efforts that are gaining traction.
The DRUG Act, for example, would restructure payments for PBMs to a flat fee rather than being based on the price of a prescription—stripping the middlemen of incentives to steer patients towards more expensive drugs. The Protecting Patients Against PBM Abuses Act would foster transparency and accountability within the drug supply chain. And the Pharmacy Benefit Manager Reform Act is a good first step towards delivering drugmaker rebates to patients as financial savings.
Over the past few weeks, Congress has been paralyzed by infighting in the U.S. House of Representatives. But now with the speakership battle concluded, policymakers can get on with conducting the people’s business. Getting incremental healthcare reform efforts across the finish line should be among their top priorities.
Dr. Tom Price served as the 23rd U.S. Secretary of Health and Human Services. He is a senior healthcare policy fellow at the Job Creators Network.