How Trump’s FTC Can Keep Drug Prices Down for Working Americans

How do leading retailers like Amazon and Walmart deliver low prices to their customers? The companies buy so much from their suppliers that they can demand discounts. That dynamic applies in the health care industry as well, as companies called pharmacy benefit managers (PBMs) negotiate with pharmaceutical companies to keep prices down. But it’s up to the Trump administration to keep it that way. 

On Sept. 29, the Federal Trade Commission came one step closer to finally making a decision on the Biden FTC’s case against PBMs. A settlement will immediately benefit consumers while reinforcing the valuable role PBMs play in negotiating with pharmaceutical companies to drive down drug prices.      

PBMs negotiate drug prices on behalf of employers, insurers, and patients. Managing more than 90% of U.S. prescriptions (per the FTC) gives them leverage they need to demand discounts and rebates from Big Pharma.

The backdrop to the FTC case, which was filed shortly before last year’s presidential election, is the 1,200% rise in insulin prices from 1999-2017. The Biden FTC claimed that “even when lower list price insulins became available that could have been more affordable for vulnerable patients, the PBMs systemically excluded them in favor of high list price … insulin products”—because the more expensive drugs are, the bigger the rebates they receive. 

When I first took over as chair of the House Energy & Commerce Committee’s Health Subcommittee, I was a bit skeptical of PBMs because of all the negative ads I saw about them (which I later found out were sponsored by the pharmaceutical companies). However, when I dug into the data, I quickly noticed that the truth was far different from what some of the industry’s biggest players want us to believe.

The employers who hire PBMs love them. They are best thought of as akin to a bulk buyer at a market, using scale to drive better deals. If they weren’t buying in bulk, they would not have the leverage that’s needed with the pharma giants, which would drive prices even higher.

I’m sure, like in any industry, there are some bad actors, or at least some actors who have engaged in some brow-raising activities. Those entities should not escape punishment. That said, the overall net value of PBMs speak for themselves. 

Even the FTC’s complaint admits that PBMs pass on 90% to 98% of rebate dollars directly to their clients, as The Wall Street Editorial Board pointed out. Which raises the question: Did the Biden FTC even believe the arguments made in its own suit? 

After all, Biden FTC Chair Lina Khan was not shy in intimidating that she was unconcerned about bringing weak cases to court. She believed that pursuing cases that wouldn’t stand legal scrutiny was important as a means of convincing the legislature to expand the law to her progressive liking. 

Rather than taking the PBM case to federal court, the FTC filed it in its own administrative court—meaning the agency felt compelled to act as both prosecutor and judge. If the commission wasn’t confident that an independent judiciary would give the ruling it desired, that’s not a very encouraging sign.

All of this underscores the value of settling the PBM case, which is possible with Trump appointees now in charge at the FTC. 

Taking this case off the FTC’s books and instead reaching a settlement with bad actors would protect consumers while preserving employers’ ability to hold the pharmaceutical company’s feet to the fire.

Put another way, the FTC can punish any genuine misconduct while still keeping the buyers’ club that holds Big Pharma intact. 

If Amazon or Walmart saw a deal that delivered lower prices for millions of Americans, they’d take it. Washington should too.

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