Weeks ago, the major drug companies began fighting the Biden administration’s exploration of march-in rights — a mechanism that would effectively allow the White House to seize the patents of certain drugs it deems priced too high — tooth and nail.
Who can blame them? Intellectual property rights represent the cornerstone of American innovation, and without them, the United States’ healthcare industry will degrade into a shell of its current self. Prices will rise, consumer choice will decline, and job growth and healthcare access will drop dramatically. So, the drug companies have every right to argue that this government overreach is unwelcome news.
Yet, at the same time, the drug companies continue to fight in favor of other proposed regulations that fit their financial interests.
The pharmaceutical industry is spending millions of dollars on advertisements and lobbying
The drugmakers must know that PBMs have a history of lowering drug costs — often, by helping health plans make greater use of the cheaper generic drugs that compete with the brand names.
In testimony to Congress, the Office of Management and Budget stated that PBMs stimulated “a very dramatic shift towards generics and away from branded drugs” — “the primary explanation for why Part D in Medicare is costing a lot less than was projected initially.”
According to a 2019 Government Accountability Office study, those savings were astounding. The GAO found that PBMs helped to offset Medicare Part D spending by 20 percent, or $29 billion. A 2023 report from the Department of Labor’s Inspector General included similarly astounding statistics about how much PBMs save healthcare consumers.
And yet, the drug companies continue pushing to regulate these entities.
While it may seem impossible that anyone in Congress would listen to the pharmaceutical industry following the glaring insincerity found within the reasoning behind these two regulatory priorities, the truth is that money talks in politics. Between the 2016 and 2022 election cycles, the top 10 pharmaceutical firms gave over $50 million to members of both parties, and they have supported its legislative goals as a result.
Hopefully, there are enough free-thinking members of Congress to kill the drug companies’ PBM regulatory aspirations because history already shows that they represent a complete disaster for the vulnerable Americans the pharmaceutical industry claims it would help. Just look at the "rebate rule" that the last administration introduced to curtail PBMs' negotiating leverage. The Congressional Budget Office found that, if it went into effect, it would have boosted federal spending by over $170 billion. Is this really an idea that anyone should want to resurrect?
Congress should remain committed to healthcare policies that stimulate competition, enhance the quality of care, and drive down costs. That means defeating President Biden’s march-in rights plans, but it also means ensuring that PBMs remain protected from government interference as well. Succumbing to the pitfalls of overregulation and other interest group-driven regulatory efforts will not benefit anyone besides the self-interested industries that are pushing the measures.
In navigating the complex issues in the U.S. healthcare industry, Congress must strive for pro-consumer solutions, fostering an environment where innovation can thrive, and medications can become more accessible and affordable. This commonsense approach, grounded in the values of economic freedom and individual choice, will prove paramount to addressing the challenges facing our healthcare system today.
