Prescription drug prices are hitting Americans hard. The average American spends over $1,150 a year on medication—more than anywhere else in the world.
One area of growing bipartisan agreement in Congress is the need for better regulation of Pharmacy Benefit Managers (PBMs). These middlemen play a significant role in negotiating prices between drug manufacturers, insurers, and pharmacies. But many lawmakers believe that PBM practices like marking up the costs of drugs they buy from pharmacies or keeping pharmacy rebates for themselves, contribute to higher drug prices. Research finds that PBMs lead to privately insured individuals paying $6 more per prescription, Medicare recipients paying $13 more, and uninsured individuals paying $39 more for each prescription. Additionally, the Congressional Budget Office estimates that government spending on prescription drugs in programs like Medicare and Medicaid would decrease by $1 billion over ten years by eliminating some price markups by PBMs.
Another bipartisan approach is increasing access to generics. These medicines work just like name-brand drugs and are allowed to compete on the open market at lower prices after an exclusive patent period has ended. Pharmaceutical companies reduce generic competition in various ways like filing for patents for nearly every aspect of a drug or for medically inconsequential modifications to an old drug.
Proposals include:
