Schaeffer Center Co-Director Erin Trish told a U.S. Senate committee on Thursday, February 16 that opaque pricing by pharmacy benefit managers (PBMs) creates mystery in the drug distribution system, “and where there is mystery, there is margin.”
Trish was part of a panel of witnesses called to testify before the Committee on Commerce, Science and Transportation, which is preparing for a vote on the Pharmacy Benefit Manager Transparency Act recently reintroduced by Sen. Maria Cantwell (D-Wash) and Sen. Chuck Grassley (R-Iowa). The legislation seeks to shine a light on PBMs and empower the Federal Trade Commission (FTC) and state attorneys general to stop unfair and deceptive PBM business practices.
PBMs negotiate for lower drug prices on behalf of company health plans, insurers, unions and government entities. But their negotiations are secret and evidence points to the PBMs keeping more of those negotiated discounts for themselves rather than passing them to patients.
“Prescription drug markets are complicated, and it takes a lot of boxes and arrows to show you even a simplified version of how the dollars and goods flow,” said Trish, who is also an associate professor at the USC Mann School of Pharmacy & Pharmaceutical Sciences. “While this complexity keeps health economists like me in business, it still remains a mystery to most Americans.”