Two senators take on the Big Pharma beast

The views and opinions expressed are solely those of the author.

A recent Pew research poll confirms that the vast majority of Americans believe that special interests and their campaign contributions dominate our political process.

They seem to believe that Big Pharma is the worst repeat offender of these pay-to-play tactics. They may be correct.

This did not go unnoticed by President Donald Trump, who, just days after being inauguratedhe denounced high drug prices and pledged to implement policies to ensure Americans get a fair shake.

Trump's rhetoric was a stark departure from most elected officials who recognize and frankly appreciate the political largesse of PHARMA, whose member companies dole out millions to members of both political parties.

When Big Pharma tells politicians to jump, they seem to respond by saying, “How high?”

The political reach of drug companies is staggering. A recent analysis found that the industry poured more than 373 million dollars in lobbying and political contributions. These figures do not include unreported contributions to third-party groups and organizations. For an industry that is often under rhetorical assault from both parties, it does a great job of protecting its profits and getting everything it asks for on its political wish list.

Its benefits are substantial. According to a study published in JAMA The profit margin (net income as a percentage of total income) is almost double what it is for other non-pharma companies: 13.8% vs. 7.7%/

The latest example is drug companies getting Congress to introduce a bill that would eliminate pharmacy benefit managers (PBMs), the most effective entity working to keep drug prices reasonable.

PBMs are companies that manage prescription drug benefits for health plans. They play an important role in determining the cost and distribution parameters of drugs, and have a strong record of fighting effectively to ensure the use of more drugs at lower prices in the market.

Seema Verma, administrator of the Centers for Medicare and Medicaid Services for President Trump, said“I'm grateful that we have PBMs in the Part D program who are conducting this negotiation on behalf of seniors.”

Office of Management and Budgets he said Congress that, thanks to them, “we've seen a very dramatic shift toward generics and away from brand-name drugs.” In 2019, even the Government Accountability Office Found that pharmacy benefits companies' effectiveness in reducing drug costs “by offsetting Part D spending by 20%, from $145 billion to $116 billion.” So it should come as no surprise that Big Pharma thinks these companies need to go and have opened up their spending sprees to ensure this happens.

Somehow, with straight faces, members of Congress are telling constituents that PBMs are responsible for out-of-control drug prices, which is counterintuitive.

These members of Congress are presumably looking closely at the online ad disclosures you frequently see that PBMs trash The PHARMA industry also engineered “research” claiming that PBMs drive up prices.

In a perfect world, politicians would run for the hills if corporate giants ran ads and did “studies” to make sure they could raise prices. But when it comes to Big Pharma, some members are unfortunately doing the opposite.

This reality is not lost on principled members like Sen. Ron Johnson (R-WI), who said in a committee hearing that the bills to regulate PBMs are pro-PHARMA bills that he will not support. He said Sen. Rick Scott (R-FL), a former CEO of the hospital company, found that he “had no bargaining power with drug companies unless he was big enough to do it.” According to Senator Johnson, “that's what the PBMs are doing.” They are “big enough to negotiate lower prices” and “the proof is in the pudding”.

Hopefully, conservative stalwarts like Senators Johnson and Scott can expose these Big Pharma efforts for what they are: cover-ups to boost pharmaceutical company bottom lines. Hopefully, they can pressure enough of their peers to vote against the legislation so that common sense wins the day. The American people are tired of special interests buying the halls of Congress, and now is the time for change.

Dr. Michael Busler, Ph.D. is a public policy analyst and professor of finance at Stockton University, where he teaches undergraduate and graduate courses in finance and economics.

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