NAM: PBM Reform, Not Price Controls, to Reduce Costs

TL/DR –

NAM (National Association of Manufacturers) stated in a Senate hearing that Congress should focus on reforming pharmacy benefit managers (PBMs) rather than implementing drug price controls to lower healthcare costs. Charles Crain, NAM Vice President of Domestic Policy, argued that price controls threaten innovation by limiting manufacturers’ capital and dissuading early-stage investment in new treatments. He proposed specific PBM reforms such as increasing transparency into their business models, ensuring 100% of negotiated savings is passed on to health plan sponsors and employees, and delinking PBM compensation from medication list prices.

In a Bid to Lower Drug Prices, Comprehensive Pharmacy Benefit Manager Reform is Required, Says NAM

Congress must aim for comprehensive reform of pharmacy benefit managers (PBMs) instead of embracing price controls to reduce drug prices, the NAM advised the Senate.

Biopharmaceutical Industry’s Significant Contributions

NAM’s VP of Domestic Policy, Charles Crain, stated that biopharmaceutical manufacturers are pivotal to the manufacturing economy. In 2021, these firms contributed $355 billion to the U.S. economy, employing 291,000 workers directly. Each of these jobs supported an additional 4.1 jobs. Moreover, they are behind numerous game-changing, lifesaving medicines each year.

Still, their continued innovation and economic influence are threatened by drug price controls mandated by the Inflation Reduction Act and the unchecked actions of PBMs.

Proposed Solutions for Lowering Health Care Costs

Crain argued that price controls introduce uncertainty and limit manufacturers’ resources for new medicine development. Instead, Congress must address the unchecked influence of PBMs, middlemen contributing to escalating health care costs through inflated list prices, lack of transparency, and pocketing manufacturer rebates.

To genuinely reduce health care costs, Crain stressed that Congress must control PBMs. NAM’s recommendations for PBM reform include increased transparency, ensuring that 100% of negotiated savings are passed to health plan sponsors and employees, and delinking PBM compensation from medication list prices.

Crain emphasized the need for Congress to tackle PBM’s problematic practices to lower drug prices, rather than endorsing price controls. He concluded, “PBM reform is a significant step toward ensuring all Americans have access to high-quality, affordable health care.”

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