Even doing nothing would be better than passing Senator Cantwell’s bill to regulate away PBMs.

NRPLUS MEMBER ARTICLE C ongress is set to conduct a hearing this Thursday that could lead prescription drug costs to skyrocket. Indeed, members will be considering legislation from Senator Maria Cantwell (D., Wash.) that would regulate one of the best friends that Americans have when it comes to prescription drug cost savings: Pharmacy Benefit Managers (PBMs).

Senator Cantwell’s misnamed and misguided bill, the Pharmacy Benefit Manager Transparency Act (S. 127), may have been drafted with the best of intentions, but in attacking PBMs (the entities that manage prescription drug plans), it’s taking aim at the pharmaceutical industry’s good guys instead of its bad ones. And it will cost America’s seniors and taxpayers dearly.

That said, it’s understandable that Cantwell thinks PBMs are accountable for skyrocketing drug prices. For years now, industry stakeholders have floated a significant amount of lobbying dollars around Washington in an extensive lobbying campaign to dupe elected representatives. While Cantwell and a handful of other members have taken the lobbyists’ bait, it’s simply not true that PBMs are the reason drug prices have been rising so steadily.

When I served as the chairman of the House Energy and Commerce Committee’s Subcommittee on Health, I held a hearing on PBMs at the request of a subcommittee member. In preparation for the hearing, I looked deeper into the issue, digging beyond the anti-PBM talking points typically seen on lobbying sheets and high-dollar advertisements created by K Street. I quickly found that the data and facts tell another story.

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PBMs’ mission is simple — to get the best drug pricing they can for their clients, which includes anyone who purchases healthcare, whether they be employers, unions, or insurers. And the numbers don’t lie. They’ve been very effective in doing so.

Research from Casey Mulligan — former Chief Economist for the White House Council of Economic Advisors — shows that PBMs save at least $148 billion. The Government Accountability Office also found that they “offset [Medicare] Part D spending by 20%, from $145 billion to $116 billion.”

Rather than spending time regulating PBMs that are saving Americans money then, Cantwell and other legislators should turn their attention to the Pharmacy Services Administrative Organizations (PSAOs) that the PBMs fight on the frontlines of America’s drug pricing battles.

The largest PSAOs are owned by the nation’s top three drug wholesalers, which have all faced lawsuits from the Department of Justice and Federal Trade Commission for purported illegal, exploitative, or anti-competitive activities. So, it shouldn’t surprise America that these entities are acting on behalf of their vested interest to keep drug prices high.

In 2019, the Washington Post reported that multiple state attorneys conducted a sweeping investigation of “alleged price-fixing conspiracies,” which “boosted costs of common drugs as much as 1,000 to 4,000 percent.” According to the Post, “profits from allegedly inflated prices flowed from manufacturers through the prescription supply chain, according to investigators, starting with the nation’s three biggest wholesalers.” So yes, the Big Three wholesalers and their connected PSAOs may be a problem. PBMs, on the other hand, are not.

A handful of states have already begun to rein in the PSAOs on their own terms legislatively. Perhaps Congress should follow their lead. But even doing nothing would be better than passing Senator Cantwell’s bill to regulate away PBMs — the one true thorn in the PSAO’s side. If her bill passes, Americans can expect their already alarmingly high rate of drug price inflation to rise even more quickly.