Joe Biden has left the White House, as have his inflationary policies. Unfortunately, the consequences from his administration’s blame dodging for the high cost of everything remain dangerously intact.
One of Biden’s many scapegoats were Pharmacy Benefit Managers (PBMs), who are employed by both private and government health plans to negotiate with drug manufacturers to bring down prescription costs. PBMs improve market efficiency and save consumers money, but in Biden’s world, they’re another politically convenient culprit somehow behind the runaway inflation of the last four years.
An eleventh-hour report from Biden’s Federal Trade Commission (FTC) fails to convincingly substantiate his charges. The report declares that PBMs “charge significant markups for cancer, HIV, and other critical specialty generic drugs.”
Only 1 to 5 percent of American patients use specialty drugs — meaning drugs that treat complicated or rare diseases — and they tend to be more expensive and see faster price increases than other pharmaceuticals due not to PBMs, but to R&D: the research and development costs of specialty drugs are high, and because so few people use them, those high costs get spread among relatively few patients.
In other words, the Biden report intentionally examines the most inflation-prone drugs to skew the results and then points a misleading finger at PBMs.
The FTC’s study contradicts reams of other research, including from the government, which has found PBMs play a positive role in making prescription drugs more affordable. A GAO report, for example, concluded that in 2016, PBMs lowered spending on Medicare Part D, which covers prescription drugs, by 20 percent, saving taxpayers $29 billion in just one year.
Meanwhile, government agencies that haven’t used PBMs waste significant taxpayer dollars. An Inspector General report for the Department of Labor found that because the DoL had failed to employ a PBM, it overspent on prescription drugs by more than $321 million between 2015 and 2020 alone.
showed in one study how PBMs, by being able to respond more nimbly to changing market conditions, outperform centralized state Medicaid purchasing. They observed, “in Illinois PBMs were able to move much more swiftly into significantly cheaper generic alternatives when they became available in 2019… Had Michigan been able to react with the alacrity of the PBMs in Illinois it could have saved taxpayers as much as $50 million per year.”
Another GAO study reported that PBMs had saved patients an average of 18 percent on 14 leading name-brand drugs. Other research indicates PBMs save the average patient more than $1,000 every year, and for every $1 spent on their services, they reduce costs by $10.
As CVS puts it, “PBMs are one of the few parts of the prescription drug supply chain specifically dedicated to lowering costs.” Think about how expensive American healthcare is — one study found we pay 278 percent more for prescriptions than people in other countries, thanks largely to a bevy of government interventions and ill-conceived policies. Why would we want to remove one of the precious few internal checks we have on rising costs?
For Big Pharma, which is leading the lobbying charge against PBMs, the answer is clear. The drug companies want to raise prescription prices and PBMs are standing in their way.
For Joe Biden, the answer is also clear. The ex-president is focused on his legacy and needs to blame someone — anyone — for rising prices.
The Biden administration has been tormenting PBMs for years. In 2024, the FTC sued the nation’s leading PBMs for supposedly driving up the price of insulin. The study that informed their suit was so politicized that the FTC’s leading economist resigned one day before its release.
The truth about PBMs is simple: they get results. If PBMs are so underhanded and bureaucratic, why would pharmacies, to say nothing of Biden’s own federal government, use them? Why are their services included in the health insurance plans of 275 million Americans?
Back in 2015, Joe Pitts, then a congressman from Pennsylvania and the chairman of the House Energy Subcommittee on Health, launched a congressional investigation into PBMs. Pitts said he was prepared to look “deeper into the issue, digging beyond the anti-PBM talking points typically seen on lobbying sheets and high-dollar advertisements created by K Street.” He later wrote an essay arguing that PBMs were hardly the malign force they’ve been made out to be.
Now the FTC, the agency responsible for harassing PBMs, is being overseen by similarly evenhanded leadership. Donald Trump has nominated Andrew Ferguson, former solicitor general of Virginia, to be its chairman, replacing the fanatically anti-business Lina Khan. Ferguson has expressed at least some skepticism over the FTC’s scathing assessments of PBMs.
Ferguson should end the government’s PBM persecution once and for all. The tens of millions of Americans who save every year on prescription drugs warrant nothing less.
Brian Garst is Vice President of the Center for Freedom & Prosperity
Image: Pixabay
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