25 Nov Congress: Pass end-of-year PBM reform to ensure a more equitable healthcare system
Congress is back in session with a stacked year-end agenda. Amid the flurry of legislative activity — from budget negotiations to must-pass bills — one priority must not be sidelined: pharmacy benefit manager (PBM) reform.
Patients, civil rights groups, and multicultural organizations have long called for Congress to rein in rising healthcare costs. The business practices of these supply chain middlemen are inflating drug costs and deepening inequities in our healthcare system. Now is the time to heed those calls and deliver meaningful reform.
Across the country, rising out-of-pocket healthcare costs are stretching household budgets to the breaking point. Pharmacy bills, in particular, have become unmanageable — especially for low-income and minority communities.
A recent Kaiser Family Foundation poll lays bare the scale of this crisis: A majority of Americans are concerned about affording prescription drugs, with larger shares of Black and Hispanic individuals reporting they were very or somewhat worried. These disparities highlight the stark reality that communities of color, already facing higher rates of major chronic conditions, bear an outsized burden of higher costs for essential medications.
PBMs are at the center of this affordability crisis. As intermediaries that negotiate drug prices with pharmaceutical companies on behalf of insurers, PBMs wield enormous leverage — yet they are largely unregulated. Their opaque practices and profit-driven incentives have entrenched a system that puts corporate gains ahead of patient needs.
Earlier this year, the Federal Trade Commission released an interim report on the current PBM system. Among the report’s key findings:
- The market has become dominated by three PBMs controlling nearly 80% of all prescriptions filled in the US.
- PBMs develop the formularies that influence whether insured patients can access the drugs their doctors prescribe and at what cost.
- PBMs squeeze smaller pharmacies out of the market by self-preferencing their own pharmacies and imposing unfair contract terms.
- PBMs steer patients away from lower-cost drugs because their business model incentivizes them to prioritize drugs with higher list prices.
These practices have created an anti-competitive environment that keeps drug costs high at the expense of low-income and underserved Americans. HEC’s recent white paper affirmed this point, concluding that PBMs “enrich themselves by receiving enormous discounts on brand prescription drugs and refusing to pass their savings on to end consumers.” In doing so, this system harms people “who should be its greatest beneficiaries — underserved communities and people on fixed incomes.”
A lack of oversight and accountability has allowed billions of dollars’ worth of benefits to bypass patients. The need to overhaul the status quo is undeniable. Congress must act by advancing targeted reforms to delink PBM compensation from the cost of drugs, inject more transparency into PBM negotiations, and ensure PBMs share the savings they negotiate directly with the patients who need them.
With the clock running down on the 118th Congress, there’s no time to delay PBM reform. Ensuring equitable access to life-saving medications must take precedence.