Secretive pharmacy middlemen drive up Iowans’ drug costs
Iowa’s U.S. Sen. Chuck Grassley again is turning his attention to exorbitant pharmaceutical prices.
Grassley this year has filed a series of bipartisan bills meant to give Americans access to cheaper drugs. He’s calling special attention to an industry of secretive middlemen in the pharmacy business.
Grassley and his fellow Republicans are firmly opposed to price-setting regulations, but they see a role for the federal government to play in ensuring transparency in the industry. Market forces are conspicuously absent in the health care industry, which conservative reformers say leads to higher prices and worse outcomes.
“The pricing supply chain needs a big dose of transparency to rein in anti-competitive shenanigans that cause sticker shock at the pharmacy counter,” Grassley wrote in a recent statement.
Pharmacy benefit managers, or PBMs, work between insurance companies and pharmaceutical manufacturers to negotiate drug prices. In theory, they are intended to keep drug prices down but in practice they might be responsible for driving up drug costs.
The companies, Grassley says, operate under “a web of secrecy.” They often arrange discounts in the form of rebates, but due to a lack of transparency in the system, some unknown portion of those savings are withheld by PBMs instead of being passed along to consumers. That gives them an incentive to keep prices high so they can reap bigger rebates.
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