Originally appeared on the MinnPost news website
In 2023, U.S. Sen. Amy Klobuchar, D-Minn., made headlines by confronting Ticketmaster over its anti-consumer practices. Following her example, the U.S. Justice Department announced last month that it was initiating antitrust action against the live entertainment giant.
While Klobuchar has successfully advocated for live music fans, it’s time for her and the other members of Minnesota’s congressional delegation to focus their attention on another middleman that’s negatively impacting consumers: pharmacy benefits managers (PBMs).
PBMs operate as the Ticketmaster for prescription drugs. They neither produce medicines like drug manufacturers nor sell them as pharmacies do. Instead, they hold a middle spot in the prescription drug market. PBMs work alongside health insurance companies to exploit their position and are often profiting at the expense of patients and pharmacies.
PBMs have been around for decades, but recent market consolidation and vertical integration have significantly expanded their influence. Currently, three main players dominate the PBM space, processing 80% of all commercial prescriptions. To make matters worse, each of these PBMs is part of a larger healthcare conglomerate, which includes a health insurer. For instance, both the PBM OptumRx and the health insurer UnitedHealthCare are under the same corporate parent company.
Although PBMs will make claims that they save money by reducing the costs for prescription drugs, it isn’t surprising that these savings will mainly benefit the corporate parent, not the patient.
In exchange for making a drug available on an insurer’s plan, PBMs will require drug manufacturers to offer discounts or rebates on every prescription filled. This means that insurance companies will rarely pay the list price for drugs while patients are billed through their co-pays and out-of-pocket expenses based on a drug’s full price. PBMs will also charge administrative or other fees to drug manufacturers based on the price of the drug.
As a result, insurers have extra financial incentives to ensure their customers can only access higher-priced prescription drugs and the PBMs have the power to limit this access on insurance company plans. A 2022 report from Xcenda found that two out of the three largest PBMs in the nation excluded generic insulins, which had prices listed at half the amount equivalent to brand product.
Through my firsthand experience in helping those living with pain, I have witnessed unnecessary suffering that has been created through consolidated corporate power in our healthcare system. Profit driven motivation should not prevent patients from accessing prescribed affordable medications. It is time for Congress to step in to prevent PBMs from padding their profits at the expense of patients.
The good news is that some members of Congress have begun targeting the PBM fees. Additionally, there is proposed federal legislation that would require PBMs and insurance companies to base patient expenses on the lower price that is negotiated with manufacturers. But for a change to occur considering the influence of corporate healthcare conglomerates, especially in an election year, it will require the vocal support from Minnesota’s elected leaders, beginning with Klobuchar and her Democratic colleague, U.S. Sen. Tina Smith.
Without congressional action, issues with PBMs are likely to get worse. One drug manufacturer, Novo Nordisk, recently told the U.S. Senate that it only receives 25% of the list price of their drugs and data shows that between 2018 and 2022, PBM fees doubled to $7.6 billion. Today, more than half of every dollar spent on prescriptions goes to insurers, PBMs and other actors who have no role in innovation or finding cures.
Last year, Klobuchar and others acted when the failures of the middleman in the entertainment business prevented Taylor Swift fans from buying concert tickets. A similar action is needed in the prescription drug market to ensure patients have access to affordable medication.
Kelli Carlson, of Minneapolis, is a patient advocate and works as a finance consultant for Apparatus GBC.
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