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GOP House opens the door for prescription drug reform

By Saul Anuzis
President of 60 Plus
American Association of Senior Citizens


Voters made clear in November that they want more action on what really matters to them. The new Congress has a chance to notch a major victory for average Americans by going after the real source of high prescription drug costs in this country: middlemen companies known as pharmacy benefit managers (PBMs).

Americans who think Congress took enough action to address drug prices in the Inflation Reduction Act this summer have been served a large helping of Democrat baloney. They're in for a rude shock when it turns out they're still getting fleeced at the pharmacy counter.

Granted, the Inflation Reduction Act has a few small silver linings. For one, the legislation caps out-of-pocket costs for Medicare Part D enrollees. It also limits Medicare beneficiaries' cost-sharing obligations for insulin to $35 per month.

Yet these measures alone won't do nearly enough for the quarter of Americans that have trouble affording prescription drugs -- including one-third of individuals with a serious health condition.

That's because Democrats' partisan legislation didn't do anything to address one of the most important drivers of high out-of-pocket costs: the price-inflating behavior of PBMs.

Insurers use PBMs to negotiate prices with pharmaceutical firms for inclusion of their products on favorable terms in plan coverage. But take a closer look to see how PBMs milk this process for all it's worth.

PBMs derive a great deal of their revenue by raking in a percentage of the list price of the medications they are negotiating over. This gives them an incentive to favor medications with higher list prices -- and for drug makers to increase list prices they know they will be discounting for insurers anyway.

While PBMs benefit from higher list prices, patients absolutely don't. For many health plans, in fact, the amount a patient pays out-of-pocket for brand-name medications is based on the drug's list price -- not on the discounted "net" price that PBMs negotiate. As list prices rise to allow for steeper discounts, patients are subjected to artificially high costs.

Democrats' Inflation Reduction Act utterly failed to address this gross abuse, instead focusing on policies that choke off revenue to pharmaceutical companies. But drug makers aren't the culprits here. More than half of every dollar spent on brand-name drugs goes to PBMs and other middlemen.

Ending this abuse of the system will lower drug costs for patients. Congress should start by stripping away the veil of secrecy PBMs currently operate behind. They should have to disclose the discounts they negotiate so patients can see how much insurers are really paying for medications.

Next would be to require coinsurance payments to be based on the net price of the medication, not the list price. That would diminish the PBM and insurer incentive for higher list prices.

Fortunately, the chairman of the House Committee on Oversight and Reform, Rep. James Comer, has already been doing yeoman work in shining a light on PBM abuse. The need for reform is urgent, and the time is now.

Saul Anuzis is president of 60 Plus, the American Association of Senior Citizens.

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