DC Journal: To Lower Prescription Costs, Policymakers Must Keep Their Eyes on the Prize
By Kasia Mulligan, Patients Come First’s National Spokesperson
At the speed of today’s news cycle, it can be hard to keep up with the latest healthcare policy news coming out of Washington. While President Trump and Health and Human Services Secretary Robert F. Kennedy Jr. have drawn the most attention, there has been substantial activity on several health policy fronts. In particular, policymakers have been looking for ways to lower the cost of prescription drugs.
The bad news is that some in Washington are considering imposing price controls on certain medications, a solution that will have little effect on prices but damage American innovation in the long run. The good news is that there are tangible steps Congress and the president can take to help make medicine more affordable.
Instead of imposing destructive price control policies, policymakers should instead focus on reining in the Pharmacy Benefit Manager industry.
PBMs are monopolistic middlemen that make healthcare more expensive and less accessible to patients. Trump and his team recognize this and have taken action to crack down on PBM abuse through a recent executive order.
Experts have long bemoaned the harmful effects PBMs have had on the healthcare system. The three largest PBMs — Cigna’s Express Scripts, CVS Caremark and UnitedHealth Group’s OptumRx — control nearly 80 percent of the market, and the top six control nearly all of it. This level of concentration gives PBMs enormous power over what drugs patients can access.
Given this level of market dominance, it should not come as a surprise that PBMs have been repeatedly accused of engaging in anticompetitive behavior. According to a Federal Trade Commission report from January, the big three PBMs imposed giant markups, sometimes more than 1,000 percent, on critical medications used to treat serious conditions like HIV and cancer.
Beyond jacking up costs, one of the most egregious examples of PBM misconduct is “spread pricing.” This refers to the practice where PBMs charge payers, including government programs like Medicaid, more for a drug than they pay the pharmacy, pocketing the difference as profit. This allows PBMs to take a significant cut from the drugs’ prices and force patients to use the PBM’s preferred pharmacy, which is often owned by the same entity as the PBM, giving these middlemen massive control over the final price of medication.
This opaque scheme drives up costs for patients and employers while squeezing independent pharmacies. Indeed, a 2024 FTC report found that many local pharmacies, especially those serving rural communities, have been harmed by these unfair practices.
At a time when lawmakers look to cut waste, fraud and abuse from government health programs, putting an end to PBM spread pricing should be at the top of the agenda.
Trump’s executive order is a good first step toward reining in PBM abuse, but more needs to be done to address the damages caused by spread pricing.
Policymakers should explore ways to transition the industry from spread pricing and to a flat-fee model. By eliminating spread pricing, enforcing transparency, and stopping PBMs from steering patients to their own pharmacies, lawmakers can create a more competitive prescription drug market, ultimately lowering costs for patients.
Read the full op-ed in the DC Journal here.