PBM Concerns Induce Surprising Bipartisanship
Recent congressional focus on the business practices of pharmacy benefit managers (PBMs) has been intense. Six committees have held 11 hearings related to PBMs in the first 20 weeks of the 118th Congress, and legislation is advancing in both chambers. Surprisingly, PBMs seem to be one of the few things Republicans and Democrats can agree on. Earlier this month, Republican Senator Markwayne Mullens of Oklahoma quipped, “I kind of feel like Hell’s freezing over because Chairman Sanders and I actually agree on something, and it’s that something needs to be done with PBMs.”
To free-market-oriented policymakers (which has long described most Republicans), the case for government intervention rests on an identified market failure. When Republicans push for mandating transparency for PBMs and prohibiting certain PBM pricing strategies, what evidence of market failure are they leaning on?
Broadly speaking, the political rhetoric motivating PBM reform revolves around two complaints: community pharmacists argue that PBMs are providing insufficient reimbursement for their services, and pharmaceutical manufacturers argue that PBMs are forcing drug companies to increase their prices. These claims are regularly amplified by each of the respective trade associations.
Republican lawmakers’ eager acceptance of these claims is both a surprise and a triumph of special interests’ pursuit of legislative interference in the market with little more than anecdotal claims to support their views.
Hasty government intervention into the practices of commercial businesses did not formerly win such support from rank-and-file Republican lawmakers. Now, Republicans and Democrats alike seem eager to regulate without taking the time to fully understand the potential consequences of their own actions.
This rush to legislate also bypasses the federal regulator responsible for investigating concerns of this nature: the Federal Trade Commission (FTC). In fact, the FTC is in the midst of an elaborate inquiry into the PBM industry. That inquiry should be allowed to run its course before Congress considers intervening, as the findings may illuminate the most appropriate policy reforms.
Policymaking can have unintended consequences and is often difficult to reverse. In this case, the risks include outcomes that run counter to the broader objective of promoting competition and affordability across the entire pharmaceutical supply chain.