Unholy Alliance Between the Left and Big Pharma Threatens More Big Government Intervention in Health Care
The following content is sponsored by Conservatives for Lower Health Care Costs.
Proposals that would massively expand the size of government and deliver a taxpayer-funded bailout to Big Pharma are making their way through Congress, thanks to a new disturbing alliance between leftist politicians and the country’s big pharmaceutical companies.
Conservatives and free market-focused economists are now speaking out about the disastrous implications of these policies, which would undermine the free market in the prescription drug market, taking away incentives for Pharmacy Benefit Managers (PBMs) to secure higher rebates when negotiating with Big Pharma. Those rebates help deliver savings to plan sponsors like small businesses to reduce prescription drug costs for their employees and provide better benefits.
Big Pharma’s push to “delink” incentives for PBMs to negotiate lower drug prices for employers and patients is driven by the $32 billion windfall it will receive in the commercial and Medicare Part D markets.
Republicans like U.S. Rep. Eric Burlison (R-MO) recognize that these proposals are “only going to increase the costs of prescriptions for patients,” and lead America down the path to a Socialist health care system. Rep. Burlison predicted:
I think that we’re on the road towards a single-payer solution, and if Congress wants to do it, that’s what we’re gonna get, is that people are gonna find their health care costs, their health care premiums, skyrocket… Every time Congress has anything related to health care, all it has done is cause patients to have less access, less choice, and increase the cost, reduce the quality. So, we can mandate it all day long, but if the marketplace isn’t able to provide it, it’s not gonna happen. I really, truly believe that [Congress] truly messes up the health care system. It’s no longer a free market, and the last bastion of any kind of choice in health care…the most innovative thing that’s happened in the last few years has been pharmacy benefit managers, who have been able to actually reduce the costs in negotiations in bulk. For us to kind of kneecap that program…it’s going to be beneficial to the pharmaceutical companies, but will not be beneficial to premium payers.
Economic experts recognize that the very foundation of a free market system – which the Left wants to slowly dismantle – is robust competition. As Joel Zinberg from the Competitive Enterprise Institute (CEI) explains, PBMs “enhance competition through group purchasing and negotiated discounts,” ensuring that patients and taxpayers pay less for prescription drugs:
PBMs are a pro-competitive creation of the market for prescription drugs that improve consumer welfare. They lower costs for drug insurance plan sponsors and their patient-customers through group purchasing and negotiations on a variety of contract terms leading to lower drug prices, better drug utilization, and improved health. The fact that PBMs have flourished in a free market confirms that they add value for participants in the prescription drug distribution system.
Unsurprisingly, Big Pharma companies detest any other actors in the pharmaceutical supply chain that loosen their monopolistic grip on setting sky-high drug prices to gouge patients, business owners, and taxpayers. As conservative health care economist Alex Brill, founder and CEO of Matrix Global Advisors (MGA), pointed out in a recent panel discussion, the push to undermine competitive forces in the prescription drug market is Big Pharma’s latest attempt to “point fingers” at PBMs to distract from themselves:
There’s an opportunity, I think, from the manufacturers’ perspective to constrain PBMs’ flexibility to their benefit, to the benefit of the manufacturers. So it is the politics of shifting the conversation: if nothing happens at least they have shifted the conversation away from themselves. If something does happen, there’s a potential for them to be beneficiaries…As you take away the tools and the incentives for PBMs, they might not do as well at driving down prices in the future as they have in the past. So, again, there’ll be winners and losers from that. So, the winners would likely be the drug manufacturers, and the losers would likely be the employers, who get higher premiums.
Ike Brannon, another conservative economist and Senior Fellow at the Jack Kemp Foundation, has questioned why any politicians who claim to be pro-free market would even entertain policies inserting more government into the prescription drug market, to the detriment of taxpayers:
Plan sponsors have a choice on how to compensate and contract with PBMs. At a time when health care costs continue to increase, constraining their ability to contract with PBMS will increase drug costs. It’s unclear why politicians who generally advocate for free market policies feel compelled to push for a policy that limits the prescription drug market without a beneficial outcome for taxpayers…Pharmacy benefit managers are one of the few mechanisms we have for constraining pharmaceutical prices. We should think carefully before taking steps to constrain them.
Meanwhile, local community leaders like Richard Kucksdorf in Bonduel, Wisconsin, recognize that “delinking” policies will have a detrimental impact on small businesses and their employees across the country:
We need to do something about lowering drug pricing and health care costs, but these kinds of policies will have the opposite effect. I hope Wisconsin lawmakers in Congress look at the data, speak to small business owners and recognize that “delinking” is the wrong approach to lowering prescription drug costs.
With the free market under attack by Big Pharma and the Left, conservatives have been left to protect what is perhaps the last “bastion” – as Rep. Burlison puts it – of choice left in the health care system: the pharmacy benefit market. Absent strong conservatives holding the line in the halls of Congress, the effort to put the Government fully in charge of the nation’s health care system – with Big Pharma raking in billions in new profits as a result – may very well succeed.
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