Are you one of the millions of Americans who have been prescribed at least one medication? Are you enrolled in a prescription drug benefit plan through your employer?
Well, hang on to your proverbial hat. The pharmaceutical industry and big government have a new plan in mind for us and our employers, and it likely involves bringing inflation to your prescription drugs and wallet.
How Big is the U.S. Prescription Drug Market?
Over 131 million adults—or two out of every five U.S. citizens—has been prescribed at least one medication. According to the American Pharmacists Association, Americans spent some $633.5 billion in total prescription drug spending in 2022. That’s a lot of us and quite a market for large pharmaceutical corporations, or “big pharma” as the industry is often called.
But, hey, some lobbyists and federal officials seem to think, “Why not grow it further by a few tens of billions of dollars?”
The Prescription Drug Market: How It Works
Many employers across the nation offer quality, affordable prescription drug benefits to employees and their families. They are able to provide discounted prices through employer-based prescription drug benefit plans.
So, how are employers typically able to get discounts through prescription drug benefit plans for the workforce and their families? It can be a little complicated, but here’s a thumbnail sketch of how the market works.
Employers are able to purchase prescription drug benefit plans that save workers and their families from paying full retail price for medications. Behind the prescription drug benefit plans are “pharmacy benefit companies.” Pharmacy benefit companies are hired by large employers or prescription drug benefit plan providers. They exist to negotiate with pharmaceutical corporations, and their mission is to achieve price concessions, or rebates, relative to the retail prices that big pharma has set for its products. The savings through the price rebates are then passed along to employers, employees, and their families in the form of discounts through employer-provided prescription drug benefit plans.
To give you some idea of the impact they have on our bottom line, pharmacy benefit companies annually save individuals participating in prescription drug benefit plans over $1,000 and employers nearly $900 by negotiating lower prescription drug costs and sharing those savings with employers, workers, and families.
So, What’s the Problem?
Big pharma and some liberal members of Congress have been working to introduce legislation that would essentially outlaw the prescription drug market as we know it.
How so?
Remember those price rebates that we mentioned earlier…the ones that translate into discounts for the workforce and their families participating in prescription drug benefit plans? Well, big pharma and some members of Congress have actually introduced bills that would prohibit the price rebates from being passed along to employers, employees, and their dependents.
But prohibiting the savings from being shared with individuals, families, and businesses would lead to higher prices, right? Not according to big pharma. Some of the lobbyists and industry executives who are leading the charge say there is no need for the middleman; the pharmaceutical companies are ready to make price concessions directly. There is no need to involve those pharmacy benefit companies in negotiations.
Wouldn’t it be awesome if pharmaceutical companies would just slash their prices and let all of us benefit from huge, independently offered discounts for medications? Do you know of any industries or markets that work quite that way?
Some researchers aren’t sure the new model big pharma is pushing will work out quite so positively. In fact, some studies have projected that healthcare premiums could rise by $40 billion annually if this liberal “reform” is enacted. And what about pharmaceutical industry profits? Those same studies project that big pharma profits would increase by $32 billion annually if the legislation liberals and the industry are advocating for becomes federal law.
What Can We Do to Stop This from Happening?
So, what can we do to make sure big government politicians don’t cause chaos and out-of-control inflation in the prescription drug market? Contact your U.S. Representative and both U.S. Senators, Ron Johnson and Tammy Baldwin. Let them know we are watching. Let them know it is hard enough to afford necessities in this Biden economy, and we will not sit silently if Congress decides to adopt big pharma’s new profit plan at our expense.
By the way, if you do call or write Sen. Ron Johnson, and you should, please make sure to thank him. He has been standing up for us and voting against such bills.
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