Americans shouldn’t have to wait for drug supply chain middlemen to be held accountable

As the old saying goes, time is money. That’s why the Federal Trade Commission’s (FTC) refusal to commit to a timeline for concluding its investigation into Pharmacy Benefit Managers (PBMs), the middlemen of the drug supply chain, is so concerning.

The FTC announced in June that it would be opening an investigation into PBMs. The announcement was good news for those working to lower prescription drug prices. But summer has come and gone, and the FTC appears to be dragging its feet. During a recent hearing before the Senate Competition Policy, Antitrust, and Consumer Rights Subcommittee, FTC Chairwoman Lina Khan refused to commit to a timeline as to when Americans can expect this investigation to conclude.

Americans can’t afford to wait. Spending on pharmaceuticals has nearly tripled since 2000. And consumers are being squeezed across the board as the price of everything from gasoline to beef has exploded over the past year. Inflation is complicated and there are many reasons why prices increase. Bad weather, supply chain hiccups, or changes to consumer preferences are all factors.

But unlike with the cost of food, automobiles, or paper towels, there is one clear reason why pharmaceutical costs are ballooning: PBMs.

As the middlemen of the drug supply chain, PBMs control the flow of medicine from drugmakers to the consumer market. And in their role as middlemen, PBMs use their leverage to game the system and enrich themselves. You see, drugmakers already provide discounts alongside their products. But those discounts never make it to the patient at the pharmacy counter. PMBs pocket most or all of it.

In 2020, PBMs raked in nearly $200 billion in rebates from the drug supply chain—a growth of nearly 80 percent compared to 2014. And because the scheme is largely hidden from the public eye, the situation is likely to just get worse.

The lack of transparency is compounded by the fact that the PBM industry has developed a vertical structure, meaning the largest PBMs are predominantly owned by the largest health insurers. Roughly 75 percent of the PBM market is owned by insurers Aetna, United Healthcare, and Cigna.

The FTC noted in its investigation announcement that PBMs “have enormous influence on which drugs are prescribed to patients, which pharmacies patients can use, and how much patients ultimately pay at the pharmacy counter.” And yet PBMs continue to claim their opaque rebate system is actually saving consumers money.

We probably don’t need an investigation to show that this hundred-billion-dollar middleman industry isn’t the cheapest way to get important medication into the hands of those who need it. But that doesn’t mean Americans should have to wait to get more details about how PBMs drive up drug prices. In the meantime, many people can bypass PBMs by finding a direct care physician who is able to dispense medicines at wholesale prices.

With prices soaring on food, gas, and other vital goods, there’s never been a better time to ensure that Americans have affordable prescription drug prices. It’s time for the FTC to commit to completing its investigation into PBMs in a timely manner. Congress cannot properly regulate PBMs until it has a better grasp of just how much influence they truly have.

Dr. Molly Rutherford is an independent physician practicing in Kentucky and a partner of the Job Creators Network Foundation.