Virginia patients continue to struggle to balance health care costs with other daily living necessities. As state legislators explore different paths to improve access to care for communities across the commonwealth, commonsense solutions that will effectively lower costs and other barriers that patients face at the pharmacy counter must be at the forefront. To improve access to innovative treatments for Virginia patients, Congress must prioritize reform of powerful but little-known health industry middlemen called pharmacy benefit managers (PBMs) that are driving up costs for Virginians.
PBMs work between drug manufacturers and health insurers to negotiate medication rebates and discounts for the health plans they are hired to represent. However, due to a lack of regulatory oversight, PBMs are able to operate with little transparency and oftentimes fail to pass negotiated savings on to the patients they claim to serve.
These for-profit middlemen have morphed into a health industry giant, dictating what treatments patients can access and what their cost-sharing requirement would be — with no experience in prescribing medicine or patient care. PBMs can require only certain drugs be covered by a health plan, impose arbitrary rules around access to provider-prescribed medications, and raise cost-sharing requirements for patients at the pharmacy counter by not passing on negotiated discounts. Perversely, PBM revenue is directly linked to the list price of a medicine, so PBMs are incentivized to recommend treatments that would yield the most profit for them, not the best outcome for a patient.
Virginians living with chronic health conditions, such as cardiovascular disease, arthritis, diabetes, or asthma, require consistent access to their prescribed medicines to manage their symptoms and maintain their quality of life. However, a 2019 survey found that many Virginians are concerned about their ability to afford the cost of their medications.
When patients are confronted with high out-of-pocket costs, they are more likely to abandon their treatment plans and suffer adverse health outcomes and higher long-term medical costs as a result. More than a million Virginians were hospitalized in relation to a chronic condition in 2021. Reliable access to prescribed treatments could help alleviate exacerbated symptoms and unnecessary hospitalizations, but PBMs continue to block access to innovative treatments patients need.
The Federal Trade Commission (FTC) recently published an interim report resulting from a two-year inquiry into PBM practices, which found that increasing concentration and vertical integration with health insurers and pharmacies has allowed the six largest PBMs to manage nearly 95% of all prescriptions filled in the U.S. This overwhelming consolidation fuels anti-competitive behavior in the health care industry, disadvantaging independent pharmacies and driving up out-of-pocket costs for patients.
More than 1,400 biotechnology companies call Virginia home, and these companies provide over 26,000 jobs. Investments into Virginia’s burgeoning life sciences and pharmaceutical industries continue to grow, with over $2.5 billion invested in the past five years. If Congress does not take action to curb the anti-competitive behavior of PBMs, Virginia’s innovation ecosystem could lose out on critical resources that could drive the development of new lifesaving treatments and cures for patients.
We applaud Sen. Tim Kaine, D-Virginia, who is a member of the Senate Health, Education, Labor and Pensions (HELP) Committee, for his proven commitment to reforming PBMs, particularly through the introduction of the bipartisan Delinking Revenue from Unfair Gouging (DRUG) Act. By requiring PBMs to charge a flat fee for their services, the DRUG Act would alleviate misaligned incentives for PBMs to prefer drugs that would yield the most revenue for themselves, an important step toward lowering out-of-pocket costs for patients. The Senate HELP committee and Congress must also improve transparency around PBM practices and ensure that patients are on the receiving end of all negotiated rebates.
PBMs have flown under the radar of legislative scrutiny for far too long in Virginia. It is crucial that Congress prioritize patients over third-party profits and move quickly to advance federal reform of these profiteering middlemen to protect patients in the commonwealth and beyond.
John Newby is chief executive officer of the Virginia Biotechnology Association. Contact Newby at john.newby@vabio.org.