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New bills in Congress aim to curb prescription drug prices

AYESHA RASCOE, HOST:

In the final weeks of Congress, lawmakers in Washington are hoping to curb the power of pharmacy benefit managers, or PBMs. These are essentially the middlemen between pharmacies and health care companies, steering the choices of drugs for consumers and influencing how much insurers and patients will pay for medicines. Lawmakers proposed bills in the House and Senate that would outlaw companies from owning both a pharmacy and a PBM. Bruce Japsen is a senior health care contributor for Forbes and is here to tell us more. Thanks for being with us.

BRUCE JAPSEN: Thanks for having me.

RASCOE: Can you first explain, like, what is the role these PBMs play in the health care industry?

JAPSEN: Yeah, it's interesting. Pharmacy benefit managers, or PBMs, as they're called - they kind of came on the scene in the 1990s, and - believe it or not - many of them were created by drug companies, and they were designed to buy drugs in bulk - kind of a middleman - and negotiate a better price and then manage the prescription cost by buying these drugs in bulk for an employer or for the government. And they did a lot of good things when they started, including, you know, they pushed not just mail order, but they went from 30-day prescriptions to 90-day prescriptions, but then they evolved. And that is where some of the problems are happening because now a lot of the big ones are owned by health insurance companies.

RASCOE: So let's take an example like CVS Health. It's a health care company. It also owns a PBM called CVS Caremark. I use that. And it also owns more than 9,000 retail pharmacies, which I use. How would a company like this be affected?

JAPSEN: Basically, CVS says, hey, if we have more leverage and we own the health insurance company and we own the PBM and we also can maybe give you steeper discounts if you use our pharmacies, we're going to get a better deal on the drug prices. Well, when people don't see their drug costs going down, then they say, wait a minute, what's going on here? Some people would say that by these companies getting bigger and controlling kind of the entire supply chain, the incentives are a little misaligned if CVS is also getting in the business of developing their own generic drugs and pushing people to this product or that product. I think that's what's going on, and I think what some of the bills in Congress would do is say, hey, wait a minute, this needs to be broken up a little bit, and the PBM should be its own thing, rather than being a part of this big company.

RASCOE: I mean, and I know it would depend on the specifics of the law, but essentially, like, CVS Health wouldn't be able to own the PBM CVS Caremark.

JAPSEN: Correct. Yes.

RASCOE: But in a practical sense, if this bill were passed, what would it mean for consumers?

JAPSEN: I mean, I think what Congress would say is you break this up, you make the PBM separate, and then you have more PBMs out there that aren't just three PBMs controlling 80% of the prescriptions, but they're going to compete against one another, and they're going to negotiate to get better deals and all this other stuff. But we had a CEO of a PBM at our Forbes Healthcare Summit last week who says, well, you know, if you make things more transparent and so forth, that's generally a good thing, but what any business always fears is that when you start adding layers of regulations, this executive is already saying, that's going to add to cost. So I think whatever Congress does here, they have to be very careful because it could add to cost.

RASCOE: This bill was introduced the week after the murder of the UnitedHealthcare CEO. There's been a lot of ire surrounding the health care industry. What do you make of the timing of these bills?

JAPSEN: I mean, it's very unfortunate here. We have a gentleman who has two kids, who was killed. And what's come out of this with this whole idea that people are extracting their rage on the health care system - Congress is responding to that, and they're making no bones about it. I would say that it would not surprise me if they're under more pressure to pass something.

RASCOE: Well, what do you think about, you know, this pressure that maybe Congress is facing right now because there is this uproar about health care? Obviously, there are just a few weeks left in this congressional session. Do you think that we could see real movement on these bills in the next few weeks or, you know, next year in the new congressional session?

JAPSEN: I would tend to say that something probably won't happen right away. And even though everybody wants to reform the system, when you start - the lobbies involved here are very powerful, the health insurance companies. I would tend to say that the odds of something to be passed on something so complicated before the end of the year and before the Biden administration leaves are highly unlikely. So I would say a lot of it is political optics, and the people that are in power are going to be the Republicans, and they would tend to be more friendly with the insurance industry and the pharmacy benefit managers and the drug industry. So I would not bet the farm that anything major is going to happen.

RASCOE: That's Bruce Japsen, senior health care contributor for Forbes. Thank you so much for joining us.

JAPSEN: Thanks for having me.

(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Ayesha Rascoe is a White House correspondent for NPR. She is currently covering her third presidential administration. Rascoe's White House coverage has included a number of high profile foreign trips, including President Trump's 2019 summit with North Korean leader Kim Jong Un in Hanoi, Vietnam, and President Obama's final NATO summit in Warsaw, Poland in 2016. As a part of the White House team, she's also a regular on the NPR Politics Podcast.

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