Healthcare costs are a massive burden to most Americans. Thirty-eight percent say they or their loved ones put off medical treatment last year due to intimidating costs. Over 80 percent of Americans believe drug costs are way too high. This is a serious problem for Americans. Unfortunately, the government may make this issue worse.
The Senate HELP (Health, Education, Labor, and Pensions) Committee recently approved a bill that would allow more government meddling in the healthcare industry. The committee, chaired by proud socialist Bernie Sanders (I-Vt.), advanced the PBM Transparency Act by an 18-3 vote. (The only dissenters were three Republicans.) The legislation aims to place more restrictions on the entire pharmacy benefit manager industry. The stated goal of the legislation is to reduce drug prices and curb the power of the major drug wholesalers. But the bill will actually do the opposite.
PBMs are third-party administrators of prescription plans. They work on behalf of plans offered by governments, unions, employers, and others to negotiate deals from drug wholesalers. By negotiating discounts and rebates with drug manufacturers, they reduce the price of medications, particularly for small businesses. These companies don’t have the scale to negotiate lower prices with Big Pharma companies on their own. PBMs give them the ability to get better prices for their customers.
But far-left progressives think the PBMs need to be penalized anyway. The effort against them is led by Sen. Sanders and Federal Trade Commission chair Lina Khan—both far-left radicals. Sanders admits that the legislation won’t lower drug prices and doesn’t go after those big pharmaceutical companies he rails against. But the senator insists on pursuing the legislation anyway. Khan believes PBMs hurt some pharmacies in their negotiations, thus she wants their power curtailed. Neither progressive points to how anti-PBM measures will benefit the consumer.
In fact, as Sen. Ted Cruz (R-Texas) noted in a February committee hearing, the FTC’s critical 2022 study of the industry didn’t bother to look into how PBMs affect consumers. This seems like a very important matter for our leaders to study. Before taking such heavy-handed action against PBMs, shouldn’t the government try to see whether such an action would help or harm Main Street?
Cruz also drew attention to the fact that previous FTC studies, untainted by Khan’s far-left influence, found PBMs actually lowered drug prices. Those past studies also reported that regulatory measures that are now included in the PBM Transparency Act would increase prices for consumers. It should come as no surprise that the government solution would worsen the problem.
The U.S. Government Accountability Office also reported that PBMs lower costs and save taxpayers money. “The government contracts with private companies, known as plan sponsors, to provide Medicare Part D prescription drug coverage. Pharmacy benefit managers work with plan sponsors to negotiate drug price rebates for Medicare, among other things. In 2016, these rebates offset Part D spending by 20%, from $145 billion to $116 billion,” a 2019 GAO report concluded.
Government intervention has a proven track record of making healthcare worse in America. Obamacare doubled the cost of individual healthcare, hurt small businesses, and barely reduced the number of uninsured Americans. It didn’t solve the problems its architects pledged to eradicate. Instead, it just further inserted the meddlesome bureaucracy into our lives and made healthcare coverage even more of a headache.
The efforts to curb PBMs will have a similar effect. Lawmakers want the appearance of doing something about out-of-control healthcare costs. But their solution is just to drive up the prices and hurt small businesses in the process. It’s Obamacare all over again.
Conservatives should be leery of any policy supported by Bernie Sanders and Lina Khan. They both want to dispense with the foundations and principles that made our country great and replace them with more government. That’s not the way to do business in this country—and it’s not the way to make healthcare more affordable.
The hard lessons of Obamacare should not be forgotten. Poorly-thought out government intervention can make America’s healthcare woes even worse.