In case you missed it, a leading economist is warning Congress against misguided government interventions in the private health care market that would boost Big Pharma’s profits and hike health care costs for everyone else. These policies would undermine pay-for-performance incentives in the commercial market that help pharmacy benefit managers (PBMs) negotiate against drug companies to deliver prescription drug savings for health plan sponsors and patients — American employers and families. Former policy director and chief economist for the U.S. House Committee on Ways and Means Alex Brill writes in a new blog: 

“Of particular interest is a provision that would have mandated that PBMs pass 100 percent of all price concessions (“rebates, fees, alternative discounts, and other remuneration related to utilization of drugs or drug spending”) to their commercial plan sponsor clients …

“In evaluating the appropriateness of a policy such as this, it is reasonable to ask two questions: First, what problem does this federal intervention and series of mandates seek to address? Second, will this intervention achieve its objective?”

If the goal of the proposals is to lower health care costs for patients, Brill asserts the opposite would happen – more money would go straight to enriching Big Pharma:

“What impact may this change have on the PBMs themselves? Two concerns should be considered. First, this additional degree of transparency with health plans may stifle PBMs’ willingness to offer more attractive contracting terms to larger plans. On net, the consequence may be fewer discounts and higher overall average fees to PBMs. 

“[…] The beneficiaries of such a consequence would be obvious: the drug manufacturers who pay these rebates, fees, and discounts.”  

Brill concludes with a warning of the hefty price tag of these policies for patients and families:

“But we know with confidence that preserving the incentive for PBMs to negotiate for lower net drug prices is critical for them to do so aggressively. Previously, I estimated that banning incentive structures among commercial plans could lead to health plan premiums increasing by $8.4 billion–$26.6 billion. While the magnitude of the risk associated with the policy discussed here is more modest, the direction of the impact can be expected to be the same. Plans will, on average, pay more, not less …”

Read the full blog from Brill HERE.

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PCMA is the national association representing America’s pharmacy benefit companies. Pharmacy benefit companies are working every day to secure savings, enable better health outcomes, and support access to quality prescription drug coverage for more than 275 million patients.