Skim At Your Own Risk

Let’s be honest – instruction manuals are daunting. They’re like foreign-language roadmaps in small print, with diagrams resembling abstract art more than practical guidance. No wonder we often opt for a quick glance, trust our instincts, and hope for the best.

Reading instructions can sometimes prove to be a lifesaver. Once, my son and I struggled with assembling his video gaming chair — essentially an office desk chair with extra cushioning everywhere. Neither of us had read the instructions at first and of course, we encountered an issue. Remembering my high school geometry teacher’s advice, “When all else fails, follow the directions,” I picked up the instructions, followed the steps, and solved the problem. It was the one time I felt like an engineering whiz!

This tendency to skip the details isn’t just limited to assembling furniture — it’s a learned behavior that seeps into other areas of life, like how we consume news. Merely reading headlines or skimming articles can leave us with incomplete and sometimes incorrect understandings. This holds especially true for recent articles on prescription drug costs.

The Blame Game
Research has consistently found that, overall, U.S. prescription drug prices are significantly higher, sometimes two to four times as high, compared with prices in other high-income industrialized countries. The multi-million dollar question is why? The answer depends on what you read.

This week, the Federal Trade Commission released an interim report titled “Pharmacy Benefit Managers: The Powerful Middlemen Inflating Drug Costs and Squeezing Main Street,” pointing squarely at PBMs for driving up drug prices. Many news outlets echoed these findings without critique. Similarly, recent articles from major outlets like the New York Times and the Wall Street Journal have also criticized PBMs for high drug prices and their negative financial effects on independent pharmacies and patients.

Given the FTC’s report and media coverage, the solution to high drug prices seems straightforward: either eliminate PBMs altogether or, at the very least, impose regulations on their operations.

Digging Deeper
First, the business model of Pharmacy Benefit Managers (PBMs) is certainly not perfect, and some reforms are appropriate. The current federal focus on the PBM industry has led to many changes in how they operate, but there is still more they can do.

The PBM business is one of the most complicated facets of healthcare, with its own unique language. This complexity poses challenges for legislators, lobbyists, journalists, pharmacies, payors, and patients alike, often leading to misunderstandings. For instance, patient advocates  wrongly attribute high out-of-pocket costs to PBMs, not realizing that insurance companies or plan sponsors set deductibles, co-insurance amounts, mail service requirements, and other benefit plan provisions. Misconceptions abound, including the belief that PBMs retain all drug rebates as profit or that Medicare and private-sector drug plans operate identically.

What is missing in the current discussion of high drug prices is the role of drug manufacturers. It is the drug manufacturers who set the prices—not the PBMs. These manufacturers are battling in court to prevent Medicare from negotiating the prices of ten drugs and spend tens of millions of dollars on lobbying. Additionally, drug companies continue to fund front groups with consumer-friendly names like Community Oncology Alliance and Alliance for Patient Access, which advocate for policies that benefit the pharmacy industry, not patients.

The recent headlines tell the story – the pharmaceutical industry has successfully deflected blame for high drug prices away from themselves.

Check out Beyond the Headlines for more on the PBM and pharmaceutical industries.

Happy reading,

Enjoy the weekend!

Best,
Suzanne
Suzanne Daniels, Ph.D.
AEPC President
P.O. Box 1416
Birmingham, MI 48012
Office: (248) 792-2187
Email: [email protected]