ATAP Op-Ed - Don’t Let Middlemen Off the Hook in the Drug Pricing Debate

https://dcjournal.com/dont-let-middlemen-off-the-hook-in-the-drug-pricing-debate/

 Don’t Let Middlemen Off the Hook in the Drug Pricing Debate

Posted to Healthcare August 19, 2025 by Robert Levin

 President Trump’s recent directive to 17 pharmaceutical manufacturers demanding that U.S. drug prices align with the lowest prices in other developed countries has thrust the issue of prescription drug affordability into the spotlight. The goal, making medications accessible for American patients, is one we all share. The path to achieving it matters, and the current approach risks missing the mark by overlooking a critical player in the crisis, pharmacy benefit managers (PBMs).

Physicians and patient advocates have long warned about PBMs’ role in increasing costs. We applaud efforts to lower drug prices, but we urge policymakers to confront the root causes of the broken system, starting with the practices of PBMs.

Unlike other developed nations, the United States relies heavily on PBMs to negotiate rebates, manage formularies and control pharmacy reimbursements. The three largest PBMs dominate the market, often prioritizing profits over patients. Studies and income statements reveal the PBM industry pockets billions by exploiting the gap between a drug’s acquisition costs and its reimbursement rates, funds that could reduce out-of-pocket costs or expand access to treatments.

The president’s most-favored-nation pricing model aims to cap U.S. drug prices at levels seen in Switzerland, Norway and Ireland, extending this framework across Medicaid, Medicare and commercial markets. It also proposes distribution models that bypass traditional middlemen. While bold, this plan fails to address a uniquely American problem: the unchecked power of PBMs, the intermediaries that inflate costs and distort the drug supply chain. A significant concern with this model is the unintended consequences, one that could result in artificially low reimbursements tied to MFN pricing that may push physician practices and independent infusion centers to close their doors, affecting patients who rely on access to treatments.

Trump’s focus on affordability is commendable, but MFN pricing is a half-measure. Without tackling PBMs, price reductions will be illusory, absorbed by middlemen while patients see little relief. Congress and the administration must pair reforms with PBM accountability, prohibiting spread pricing, mandating rebate pass-throughs, delinking PBM fees from the drug list price, and enforcing transparency in formulary decisions.

Some have pointed to direct-to-consumer or direct-to-business drug distribution models as an innovative workaround to the PBM-dominated supply chain. While these models can offer faster access and price transparency, they often come at a hidden cost to patients. Because these arrangements typically bypass insurance, patients are left paying out-of-pocket for medications in addition to the pricey premiums they already pay for health coverage. Worse still, these payments frequently fail to count toward deductibles or out-of-pocket maximums, meaning patients shoulder more of the financial burden without moving any closer to relief under their insurance plans.

Rather than alleviating systemic cost pressures, this shift risks creating a dangerous two-tiered system, one where patients must choose between affordability and insurance coverage. It’s a patchwork solution that treats a symptom but ignores the underlying problem that remains, a profit-driven intermediary system that forces patients to pay more, one way or another.

Instead of regulating these middlemen, the MFN model targets manufacturers, leaving PBMs’ profits untouched.

This distinction is critical. Other countries with lower drug prices don’t contend with PBM-driven price inflation. Imposing foreign price ceilings without dismantling this architecture risks misdirecting reform. Worse, it threatens to cripple physician-administered care settings, like independent infusion centers that operate on slim margins and could collapse under artificially low reimbursements. These centers are lifelines for patients with chronic conditions, and their loss would devastate access to care.

The evidence proves that PBMs often incentivize higher list prices to maximize rebates, which they retain rather than pass on to patients. The practices of PBMs aren’t efficient; they are exploitative. By focusing solely on manufacturer prices, we’re treating symptoms while ignoring the disease.

There’s a better way. We support robust PBM reform, like measures in the House-passed reconciliation package that would bar PBMs from tying revenue to a drug’s list price in Medicare Part D. Replacing percentage-based rebates with flat, fair-market service fees would eliminate the perverse incentive to favor high-cost drugs over equally effective, lower-cost alternatives. This would restore transparency and accountability, ensuring savings reach patients.

Our infusion clinics, patients and country cannot afford another misstep in the drug pricing crisis. PBMs have operated in the shadows for too long, profiting at the expense of those they claim to serve. It’s time to hold them accountable and treat the real disease. Only then can we build a system that works for patients, not profits.

Dr. Robert Levin is the president of the Alliance for Transparent and Affordable Prescriptions. He wrote this for InsideSources.com.