Transparency helps put the lid on drug prices
This week, the United States Senate is looking into the complicated world of high drug prices on April 9th. The Senate is pulling back the curtain to look at the middlemen of the prescription drug marketplace, a seldom understood or talked about group of companies called Pharmacy Benefits Managers (PBMs).
Even though you may not have heard of the term PBM, you certainly have heard the names of the three largest PBMs: CVS/Caremark, OptumRx and Express Scripts which control roughly seventy-five percent of the prescription drug marketplace. These PBM middlemen were all in the Fortune Top 25 companies by revenue in 2018, despite the fact that they do not make anything. To put it another way, the smallest of the top three PBMs is 33 percent larger than the biggest pharmaceutical company!
It might be hard to believe, but PBMs are responsible for determining which medication your doctor can prescribe, what medications your insurance company will pay for, and which pharmacy you can use. PBMs also decide how much to pay your pharmacist and how much you pay at the pharmacy counter. Bottom line: PBMs have a huge amount of power, and consumers are often left paying the price.
Louisiana has been fortunate to be a state that has enacted numerous state laws to curb the actions of PBMs. Last year, the legislature passed two landmark bills authored by Senator Fred Mills that bring transparency to patients. These bills require PBMs to disclose the rebates paid by manufacturers and to report how much of the rebates they keep. Consumers are also now required to receive notification of changes to a PBM’s list of covered drugs via a dedicated website. Most importantly, if a PBM and the insurer it works for subjects consumers to an excessive cost burden, they are now required to notify you that an excessive burden exists! This is the type of law that protects Louisianans.
I applaud the U.S. Senate, and specifically, Senator Bill Cassidy as a member of both the Senate Finance and Health Committees for jumping into this debate. We need federal action to protect taxpayer dollars in programs like Medicare and Medicaid, and we need to have some federal rules of the game. In short, we need transparency.
Former Supreme Court Justice Louis Brandeis said that sunlight is the best of disinfectants. That is what the PBM industry needs. Sunlight and lots of it. We need to know what type of discount the drug manufacturers are providing that never make their way to youthe customer. We need to know how much the PBM pays the pharmacist and charges your insurance company. We need to know why drugs are excluded from your list of available prescription drugs both generic and brand name and why your copayments are what they are.
Simply put, we need the U.S. Senate to shine the sun on the PBMs and then we need Congress to act to develop the much needed transparency in this broken market.
Louisiana State Senator