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Restricting Pharmacy Benefit Managers Could Decrease Competition and Increase Drug Costs

Joel Zinberg
Director at Public Health and American Well-Being Initiative

Joel M. Zinberg, M.D., J.D. is the Director of the Public Health and American Well-Being Initiative at Paragon Health Institute, and a senior fellow with the Competitive Enterprise Institute. A native New Yorker, he recently completed two years as General Counsel and Senior Economist at the Council of Economic Advisers in the Executive Office of the President.

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PBMs are a pro-competitive creation of the free market for prescription drugs that improve consumer welfare.

Congress is considering multiple bills that aim to restrict the ability of pharmacy benefit managers (PBMs) to negotiate discounts and rebates and to require the PBMs to disclose confidential contracting information. Several hearings are upcoming. In a new Competitive Enterprise Institute paper, I explain why these PBM measures will be counterproductive, resulting in reduced competition, higher costs, worsened health, and an end to market evolution that benefits actors in the drug-distribution system.

Most Americans have prescription-drug coverage either through private or government insurance. Nearly all of those drug-insurance-plan sponsors have found value in pharmacy-benefit management services that are administered by PBMs. The reason is simple: PBMs are a free-market solution that enhances competition through group purchasing and negotiated discounts that provide substantial economic and health benefits for consumers and taxpayers. 

The full article can be found in National Review.

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