Countless Americans are compelled to forgo expensive, life-saving prescriptions every year—not because of a shortage, but rather because of a system that was supposed to help them – the pharmacy benefit manager.
PBMs serve as vital actors in the administration of prescription medication benefits for individuals, employers, and government initiatives such as Medicare Part D. These businesses set the lists of approved drugs (called formularies), work with pharmacies to handle claims processing, and they bargain with drug makers for lower prices and better deals, which essentially makes them the gatekeepers of drug pricing.
Their enormous influence determines the price of pharmaceuticals and therefore millions of people’s access to drugs, making it a matter of life and death. In fact, a 2020 study shows that the number of deaths due to the inability to afford medications could be as high as over a million and this number is only going to increase as long as large fundamental flaws in our healthcare system continue to exist.
In particular, the issue of currently morally untenable transparency laws needs to change in order to save the lives of those in need of life saving drugs. Because of the seriousness of the situation, swift action is required to bring in a new era in which PBM openness guarantees that everyone can afford the medications they so desperately need.
Particularly when it comes to rebates and pricing strategies, PBMs operate with an almost indecent lack of openness in the murky reaches of the market. Nominally, PBMs negotiate rebates on expensive drugs that are supposed to reduce costs for consumers. But it often doesn’t work like that.
Essentially, PBMs can prioritize selling specific drug brands or types of drugs that boost profit margins over those that are more cost-effective, and in some cases are actually more beneficial for patients simply because the rebate system is biased in favor of the person who chooses the drugs. Due to PBMs’ large profit-taking from rebates that are meant to assist in reducing costs, consumers’ out-of-pocket costs rise. This clandestine operation raises prices and ultimately harms consumers. This phenomenon often snowballs to the point where medications become unaffordable for many people, which has tragic real-world repercussions, including avoidable deaths and severe health declines. Patients are forced to forgo essential medications due to exorbitant costs, which worsens their diseases and raises long-term healthcare costs. Not only is this an affordable healthcare catastrophe, but it is also a glaring moral lapse that disproportionately harms our most vulnerable communities.
Connecticut is one of the states, along with New York, that has actually done a remarkable job of addressing these inequalities. Specifically, these states have been able to combat palpable customer targeting by capping the price of insulin to halt the historical trend of making necessary drugs too expensive.
To further put this issue in context, one vial of Humalog Insulin’s price has increased over 1,000% from 1999 to 2019 which contributed to insulin prices in the United States being 10 times higher than all other developed countries. But while these price-controlling projects are a step in the right direction, federal oversight must be decisive due to the pharmaceutical industry’s cross-state expansion. Enacting comprehensive federal legislation as the only way to achieve the consistent transparency required to prevent PBMs from taking advantage of regulatory gaps.
Demanding that PBMs properly disclose rebate data and pricing procedures in accordance with federal rules is critical. Drug prices would drop significantly as a result of genuine competition sparked by such transparency.
Beyond just providing financial relief, this would greatly improve access to healthcare by lowering the cost of necessary prescriptions for everyone, fostering a more equitable and healthy society.
The demand for PBM transparency regulations to be changed is not just a suggestion for policy; it is a moral requirement and a cry for fairness in the healthcare industry. In order to fulfill every American’s entitlement to health and wellbeing, profit-driven PBMs’ obstacles must be taken down.
Lives are at stake, therefore we have to move quickly. Together, policymakers, medical experts, and the general public should support laws that guarantee medicine affordability and preserve human life.
Teddy Fleming is a rising junior at Trinity College, majoring in Philosophy and Public Policy and Law.