Understanding Competition in U.S. Prescription Drug Markets: Entry and Supply Chain Dynamics
Thank you for taking comments from the public. As an independent community pharmacy owner, I have a first hand and somewhat unique view of the prescription drug market. Simply stated, the prescription drug chain has WAY too many middle-men. The vast majority of these middle men add ZERO value or benefit to the end user: a human patient. From wholesalers to distributors to PSAOs to the monopolistic Pharmacy Benefit Managers (PBMs). Most of these middle-men are publicly traded corporations whose primary goal is not to contain costs or make people healthier, but rather to make sure shareholders and board members continually make more profits (have you seen CEO's salaries in the PBM industry?). PBMs were created in the 1970's to help insurance companies and pharmacies communicate and streamline the billing process. For a reasonable transaction fee, this was a really good idea. Boy how times have changed. I could go on for much longer than this space will allow on the mafia style business practices of PBMs. But the one point I want to make perfectly clear is this. Prior to PBMs, pharmacies and drug manufacturers had direct contracts to purchase prescription medications. Look at drug prices in the 60's and 70's. They were reasonable. Factor in inflation; still reasonable. Enter PBMs. Prices steadily start going up. Fast-forward to today where the "big three" PBMs control 80% of the prescription drug market. The PBM industry continually touts how they save money and control drug prices. But what do the statistical numbers say? Since 1987, prescription drug prices have actually gone up by, are you ready, 1010%. Let that sink in; >1000%!!! What about patients out of pocket expenses? In that same time, since 1987, patient out of pocket expenses have gone up 169%. Our sickest and most vulnerable citizens, who tend to also be our least wealthy, have to pay 169% more for meds than they did 30 years ago. So where has that money gone? Well, follow the green paper trail. The PBM industry handles pharmacy benefits for more than 253 million Americans. Again, 80% of those folks are controlled by the "big 3" PBMs (Express Scripts, CVS/Caremark, and OptumRX). In 2014 alone, those 3 behemoths had a combined revenue of 271.4 BILLION (with a B) American dollars. Conveniently, these companies are almost completely unregulated and are required to have ZERO transparency as to how/where those revenues come from or where they go. A recent study by the Wakely Consulting Group showed that CMS (specifically Medicare Part D) could save $3.4 Billion over 10 years by eliminating JUST ONE questionable and harmful "practice" PBMs employ. Imagine if all of a PBMs practices were brought to legislators and the publics' attention. I'm not saying we can fix this problem quickly. However, regulating PBMs and their practices as well as requiring a degree of transparency from them will go a long way very quickly in helping. Thank you for you time and consideration.