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During a press conference at Mar-A-Lago, President Donald Trump announced plans to take charge of the benefits manager (PBM) for a significant pharmacy.
“Honestly, these intermediaries are quite alarming; they earn more than the drug companies yet do little besides acting as middlemen. We aim to eliminate these intermediaries,” Trump stated.
He elaborated that removing PBMs would enable them to “cut drug costs to unprecedented levels.”
Trump referred to discussions held by Health and Human Services candidate Robert F. Kennedy Jr. and Medicare and Medicaid Services candidate Dr. Mehmet Oz regarding sweeping changes to PBM.
A key factor behind soaring prescription prices is the dominance of major insurance PBMs. Three powerful PBM intermediaries—CVS Caremark, Express Scripts, and Optumrx—control roughly 80% of the PBM market and handle drug benefits for over 270 million Americans.
PBMs boost profits by favoring more expensive drugs in their formularies, the lists of medications accessible to customers. They actually dictate how much patients pay out-of-pocket and the medications they can obtain by establishing preferred pricing and cost-sharing levels. If a drug isn’t on the formulary, an insurance company won’t cover it, and often, doctors won’t even prescribe it, even when it might be necessary.
Kevin Duane, a pharmacist from Jacksonville, Florida, recently addressed a House committee regarding oversight and accountability.
In essence, PBMs are incentivized to recommend pricier medications. Trump has initiated changes to this flawed system. In 2020, he introduced a policy allowing seniors to directly benefit from the rebates they pay to PBMs for preferential treatment on drug formularies by insurance companies. These rebates were designed to lessen costs for older adults. Trump could potentially save billions by outlining comprehensive plans to translate these savings into benefits for seniors.
“Patients aren’t wealthy individuals; they will now receive benefits,” Trump commented back then. “Today’s actions are crucial to ending this injustice and ensuring these discounts reach those who truly need them.”
However, President Joe Biden has repealed Trump’s rebate rules through the Inflation Reduction Act, denying many older adults essential savings.
Trump and his healthcare team are likely to reinstate the rebate guidelines along with substantial savings for seniors.
Recently, more than 20 conservative organizations urged Congress to back the Modernization and PBM Accountability Act (S. 2973), alongside initiatives for mental health, affordable medications, and extensions (S. 3430). These bills aim to realign profit incentives to benefit patients by linking PBM fees to medical pricing. Severing the connection between drug costs and PBM rate fees could help realign system incentives, ultimately reducing drug expenses for older adults.
Eliminating PBM intermediaries, reforming corrupt systems, and delivering savings to American seniors could set the stage for Trump’s healthcare agenda.
