Lawmakers who want to lower drug prices should unite behind supply chain reform efforts
Last week, the Senate Finance Committee, chaired by Iowa Sen. Chuck Grassley, hosted the latest in a series of hearings on prescription drug prices. Congressional action on this topic is needed. Physicians such as myself see the adverse impact of high drug prices on our patients almost every day.
I am concerned that the biggest prescription drug cost driver is the complex supply chain that distorts and drives up prices. As Chairman Grassley said at the hearing, “Drug pricing is a complex issue. But I think we should all be asking: Should it be so complex?”
Last month, the Department of Health and Human Services proposed a new rule that would streamline the enormous distortions in the supply chain and direct the hundreds of billions of dollars of proceeds to help patients. Legislators led by Sen. Grassley should follow suit with companion legislation in Congress.
Pharmacy benefit managers (PBMs) control the prescription drug supply chain by acting as middlemen between drug manufacturers and insurers. They demand billions of dollars from manufacturers in return for access to insurance plan formularies (the list of drugs that insurance plans will cover). These payouts, known as rebates or kickbacks, exceed $150 billion annually — about one-third of total drug spending — and are the main culprit in drug price increases.
Potential generic drug competitors simply cannot pay the rebates necessary to access the market to bring the price down. They cannot afford to “pay to play.” The PBM’s charge their tolls and actually block competition.
The recent HHS rule requires that rebate dollars go directly to the patients who need them most at the pharmacy counter, finally bringing them some cost relief. By law, this executive branch action only applies to government insurance plans like Medicare and Medicaid. That’s why federal legislation is also needed to bring cost savings to the private market as well.
For the sake of patients across the country, let’s hope Chairman Grassley’s hearings help the public and our legislators better comprehend these issues.
Stephen L. Piercy is a urologist in Fort Dodge.