Restricting Pharmacy Benefit Managers Could Decrease Competition and Increase Drug Costs

PBMs are a pro-competitive creation of the free market for prescription drugs that improve consumer welfare.

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Congress is considering multiple bills that aim to restrict the ability of pharmacy benefit managers (PBMs) to negotiate discounts and rebates and to require the PBMs to disclose confidential contracting information. Several hearings are upcoming. In a new Competitive Enterprise Institute paper, I explain why these PBM measures will be counterproductive, resulting in reduced competition, higher costs, worsened health, and an end to market evolution that benefits actors in the drug-distribution system.

Most Americans have prescription-drug coverage either through private or government insurance. Nearly all of those drug-insurance-plan sponsors have found value in pharmacy-benefit management services that are administered by PBMs. The reason is simple: PBMs are a free-market solution that enhances competition through group purchasing and negotiated discounts that provide substantial economic and health benefits for consumers and taxpayers. 

Read the full article on the National Review.