Commentary: ‘Delinking’ Proposals in Washington Would Upend Our Pharmacy Benefits and Cost Taxpayers Billions

by Wes Warrington

 

As the CEO of Resolve Diagnostics, a company dedicated to lowering patients’ costs and encouraging transparency in the health care sector, I feel compelled to speak out against a new development at the federal level that could jeopardize affordable health care for millions across America. The Senate Finance Committee, as well as other Congressional committees, are currently considering ‘delinking’ legislation targeting pharmacy benefit companies, which has the potential to wreck the fundamental economics of our nation’s health care sector.

The proposed ‘delinking’ policies would bar performance-based incentives for pharmacy benefit companies that successfully secure rebates. These rebates are an integral component of these entities’ ability to negotiate lower drug costs and secure savings for health plan sponsors and patients. If passed, the legislation will have far-reaching implications that could erode the foundation of accessible, affordable health care plans, negatively impacting employers, patients, and taxpayers. 

The ramifications of eliminating these incentives, as revealed in a comprehensive National Bureau of Economic Research (NBER) paper by University of Chicago Economics Professor, Casey Mulligan, cast a grim shadow over the future of our health care system. Mulligan’s research reveals that the proposed legislation would lead to increased drug prices, decreased drug utilization, and a direct transfer of billions of dollars annually from patients and taxpayers to big pharmaceutical companies. Additionally, Mulligan found that such policies would lead to a surge in federal spending on Medicare Part D premiums, increasing the amount from $3 billion to $10 billion per year.

Furthermore, this legislation would reduce competition among pharmacy benefit companies, erecting barriers between them and health plan sponsors. This impediment to the free market would prevent healthy competition from reducing the prices that patients pay at the pharmacy counter.

Perhaps most concerning, one recent analysis from health care economist Alex Brill found that ‘delinking’ policies could result in a shocking $26 billion hike in premiums for those that get their health insurance from their employer or other commercial health insurance, ultimately resulting in what he terms as a “potential big pharma bailout,” of more than $32 billion annually. This bailout will come directly from the wallets of patients, taxpayers, and plan sponsors, including small businesses with limited resources. As a business owner myself, I can say for certain we cannot afford these additional expenses. 

The research shows that the proposed legislation will inevitably result in substantially higher costs for consumers, not the savings that some politicians and special interests claim will come. If we want to ensure patient-centered solutions are introduced, we need all members of Tennessee’s delegation to stand up for their constituents by opposing these proposals and safeguarding our pharmacy benefits. 

It’s important for our elected leaders to recognize that ‘delinking’ policies will do nothing but wreak havoc on our health care system, inflate drug prices even more, and reduce access to critical medications for those who need them most. We need solutions that encourage cost reduction through increased competition and prioritize patient well-being, rather than policies that serve to benefit a few at the expense of the many. I trust that those who represent us in Washington will oppose the misguided ‘delinking’ policy proposals that would undermine health and financial well-being of all Americans.

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Wes Warrington is the CEO of Resolve Diagnostics in Franklin, Tennessee.

 

 

 

 

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