Posted by Michael Wonder on 01 Oct 2018
Abolishing drug rebates may push consumer drug costs higher
26 September 2018 - The Trump Administration has repeatedly said that controlling high drug prices is a top priority, and earlier this year it released a fifty-point plan for accomplishing this.
In the last few weeks it has taken steps to fulfil one of those points, namely its pledge to curtail the role of Pharmacy Benefit Managers (PBMs) in negotiating rebates for the purchasers they serve, including employers, unions, and government programs.
President Trump has insisted that “eliminating the middlemen,” that is, the PBMs, would push drug prices lower. However, that notion is a facile non-solution: In a convoluted market in which consumers have little incentive to economise, PBMs play an important role in constraining the costs of prescription drugs, and there is no valid reason to believe that abolishing them would reduce prices.
