The following content is sponsored by Americans for Limited Government.
Trump ally Speaker Mike Johnson (R-LA) will start the president-elect’s plan to knock out the big insurance middleman in the end-of-year government spending package.
President-elect Donald Trump vowed to take on big Pharmacy Benefit Managers (PBMs) at a Monday press conference at Mar-A-Lago. “The horrible middleman that makes more money, frankly, than the drug companies, and they don’t do anything except they’re a middleman. We’re going to knock out the middleman,” said President Trump.
Trump said that Health and Human Services nominee Robert F. Kennedy, Jr. and Center for Medicare and Medicaid Services nominee Dr. Mehmet Oz had discussed reforming PBMs extensively, “These middlemen are, but they are rich as we’re going to knock out the middlemen. We’re going to get drug costs down at levels that nobody has ever seen before, and that really, I tell you, we spend more time talking about that with Bobby and with the executives and Oz, all of them. We spent more time talking about that than anything else.”
Trump ally House Speaker Johnson will start “knocking out” the PBM middlemen as soon as this week. Speaker Johnson said the spending bill to clear the decks for the incoming Trump administration and keep the U.S. government operating is almost done. He expects the bill text to be released this week. It could include a critical part of Trump’s healthcare agenda: cracking down on Pharmacy Benefit Manager middlemen who drive up drug prices for seniors.
One of the biggest reasons for high prescription prices is Big Insurance PBMs. Three giant PBM middlemen—CVS Caremark, Express Scripts, and OptumRx—control about 80 percent of the entire PBM market and administer drug benefits for over 270 million Americans.
PBMs inflate their profits by pushing more expensive medicines when designing formularies and the list of drugs available to their customers. By setting favorable prices and cost-sharing amounts, PBMs practically dictate the amount patients pay out of pocket and which medicines they can access. If a drug isn’t on the formulary, insurers won’t cover it; and often, doctors won’t prescribe it even if the patient needs it.
Kevin Duane, a pharmacist from Jacksonville, Florida, recently told the House Committee on Oversight and Accountability, “Patients and their doctors have virtually no say in what drugs are used, since the PBM essentially forces which drugs can be used – not because a drug is better or worse, but because the PBM can make more money from it.”
Essentially, PBMs are incentivized to prescribe more expensive medicines. It’s a broken system that Trump started to fix before. In 2020, Trump introduced a policy allowing seniors to directly benefit from rebates that drug manufacturers pay to PBMs for preferential placement on insurers’ drug formularies. These rebates were intended to reduce the cost of expensive medications for seniors. Trump presented a detailed plan to deliver these savings to seniors, potentially saving them billions of dollars.
“So, the patients are going to be now getting the benefit, instead of these very wealthy individuals,” Trump said at the time. “Today’s action ends this injustice and requires that these discounts go directly to the people. These are the people that need it.”
Unfortunately, Joe Biden repealed the Trump drug rebate rule with the so-called Inflation Reduction Act, preventing those seniors most at risk from getting the savings they needed.
President Trump and his healthcare team will undoubtedly bring back the Trump Rebate Rule and massive savings for seniors. In the meantime, Speaker Johnson and Trump’s allies in Congress can get a head start on Trump’s healthcare agenda.
Recently, over 20 conservative groups encouraged Congress to pass The Modernizing and Ensuring PBM Accountability Act (S. 2973). The bill would reset the money-making incentives to benefit patients by delinking PBM fees from the price of medicine. Breaking the link between the price of drugs and the fees PBMs charge will help to fix incentives in the system that drive up seniors’ drug costs and PBM profits.
Congress can pass the final bill before Christmas. Fix a corrupt system. Deliver savings to America’s seniors. It would be a great start to Trump’s healthcare agenda.
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