


What is Congress doing? Over the past several months, several committees in the House of Representatives and Senate have considered proposals claiming to address the challenge of high prescription drug prices. But these bills do not go after the true causes of higher drug prices. In fact, the proposals would further expand government interference in healthcare, pick winners and losers in the marketplace, and give Democratic lawmakers a political football to spike as we head into a presidential election cycle.
From the outside, it looks as if congressional committees are stumbling over one another to hold hearings on the high price of drugs just so they can impress their constituents and make it look like they are doing something. The result is a mishmash of actions with little consideration for how these proposals might impact healthcare costs, the marketplace, or patients. It is a mockery of the dignified process that patients and taxpayers deserve.
BIDEN IS LOSING THE GLOBAL SEMICONDUCTOR RACERepublicans, specifically, should be asking themselves why they are allowing further creep of government into healthcare while also empowering Democrats to claim a pyrrhic political victory on prescription drug prices.
In the Senate, for example, Sen. Bernie Sanders’s (I-VT) history of overheated rhetoric bashing Republicans and the private sector did not stop the majority of Senate Health, Education, Labor, and Pensions Committee Republicans from assisting with the advancement of S.1339 , a bill to further regulate the pharmacy benefit manager (PBM) industry.
Notably, Sens. Rand Paul (R-KY) and Mitt Romney (R-UT) objected to the legislation’s restrictions on choice and competition. Paul raised concerns about a crackdown on spread pricing, a tool used by pharmacy benefit companies to address erratic price changes. He noted that this policy interferes with freedom of contract and that many employers seek contracts involving spread pricing to save on per-claim administrative fees and to receive deeper discounts from the PBM. Almost half of small employers choose these kinds of PBM contracts (though contracts that involve administrative fees and pass all savings to the plan sponsor have gained popularity in recent years).
Even Democrats pushed back on Sanders’s rejection of the normal policymaking process — the lack of Congressional Budget Office (CBO) scores, the absence of private sector input, and an apparent refusal to abide by closed-door agreements with Republicans on how the hearing would proceed.
The process was poor. But the policy is much worse.
The proposed Senate policy would target pharmacy benefit companies, or PBMs, and impose restrictions on employers’ business decisions in providing prescription drug benefits. PBMs have few friends in the healthcare sector because when they do their job well, drug manufacturers' and pharmacies’ revenues are limited. But the patient pays less and most importantly has access to the drugs they need.
During the Trump administration, a regulation was finalized to prevent drug company rebates (secured by PBMs) to be used to decrease insurance premiums, instead requiring that they be used to discount drug prices at the pharmacy counter. CBO estimated that the increase in premiums for Medicare drug coverage would cost the government and taxpayers $177 billion over 10 years. So, while it may appear this regulation was good for patients, the resulting premium increases essentially made it a case of robbing Peter to pay Paul.
There are two ways to negotiate drug prices: let the private sector do it, as Medicare Part D and the commercial market’s PBMs do, or you can have the government set the prices (and call it negotiation), as the Democrats’ Inflation Reduction Act will do. PBMs exist to negotiate prices with drug companies and manage drug spending for insurers and employers. The work of PBMs generates value exceeding $145 billion . To use what has become a dirty word, they are “middlemen” — important intermediaries playing an undervalued role in the modern American economy. Sanders would rather place the government in this role.
On the House side, Republican-controlled committees have similarly pushed policies that violate free market principles and give the government the power to dictate how businesses write contracts and how patients get their healthcare. The House Ways and Means, Energy and Commerce, and Oversight committees have all held hearings and passed legislation that violate these principles of a free market.
Ultimately, the greatest threat to patient health and access to medicines is the Democrats’ push to nationalize our healthcare system, which would undermine the discovery, innovation, flexibility, and access to new medicines that make America the home of pharmaceutical discovery and innovation. Republicans should reject any effort to further insert the government into the healthcare system, including efforts targeting PBMs.
CLICK HERE TO READ MORE FROM RESTORING AMERICAJoe Grogan is a visiting senior fellow at the USC Schaeffer Center and served as domestic policy adviser to President Donald Trump from 2019-20.