West Virginia is leading the way on tackling the growing problem of rising prescription drug costs. In April, state lawmakers passed and the governor signed into law legislation that regulates the middlemen of the drug supply chain, which are a core reason behind inflated pharmaceutical prices. West Virginia is the first state to adopt the monumental policy – a move that will save patients big time at the pharmacy counter.
The best part? It won’t cost taxpayers a dime.
Pharmaceutical companies already offer discounts and rebates alongside their products as a way to encourage consumer use. But standing between drug manufacturers and patients are middlemen known as Pharmacy Benefit Managers (PBMs). PBMs were initially created to help shepherd a drug from the production line through the complex web of insurance companies, health care plans and hospital networks to the consumer market. It’s a service that warrants an honest fee. But over time, these middlemen began to increasingly game the system.
Fast forward to 2021 and PBMs are siphoning tens of billions of dollars a year from the pharmaceutical supply chain – profiting at the expense of patients. In 2018, for example, PBMs collected more than $160 billion in rebates and discounts nationwide that could have gone to consumers as financial savings. West Virginia’s new law will simply force PBMs to share some of the discounts already provided by drug companies with patients as savings at the pharmacy counter. It’s a win-win policy.
As the middlemen pricing scheme is unraveled, more states are jumping on the bandwagon and following in West Virginia’s footsteps. North Dakota recently passed a law that calls for a mandatory two-year study of drug pricing issues in the state – focusing on the role of PBMs. And Montana is among other states that are considering legislation to regulate the clandestine activity of middlemen.
PBMs have also caught the eye of federal officials.
At the tail end of 2020, then President Donald Trump took executive action that would have applied a cost-saving measure similar to that of West Virginia’s new law to prescription drugs acquired through Medicare Part D. But, unfortunately for patients who are struggling to afford their medication, President Joe Biden delayed the implementation date. In all likelihood, the executive action will be put on the back burner permanently by the current White House.
In response, Congress should bypass the administration and propose a federal bill that targets the profiteering practices of PBMs. It’s a strategy key national health care policy experts – including former Health and Human Services Secretary Tom Price– have recently endorsed. Prominent Democrats have even acknowledged their desire to address drug prices. It just needs to be accomplished without shrinking the number of lifesaving medications available to Americans.
Health care costs in the U.S. are frequently a topic of national conversation. But rarely is a spotlight focused on the covert activity of middlemen that jack-up prescription drug prices for patients in order to line their own pockets. I’m proud that my home state of West Virginia is leading the way on implementing a solution. Lawmakers in other states and at the federal level should take note.