About 28% of American adults report that affording their prescription drugs is a substantial challenge, and the U.S. spends more on medication than any other comparable nation. Multiple stakeholders are involved in the high prescription costs, but there is significant controversy over who is primarily to blame.
Merith Basey, executive director of Patients for Affordable Drugs, identifies pharmaceutical companies as key culprits. According to Basey, these companies exploit the patent system to maintain monopolies on their drugs, which keeps prices high. Tactics like patent thickets and pay-for-delay deals—where brand-name drugmakers pay generic competitors to delay market entry—are instrumental in this process. Even though policies are shifting with the Inflation Reduction Act to allow Medicare to negotiate drug prices, pharmaceutical companies have already started challenging these reforms through a series of lawsuits.
The pharmaceutical industry’s main trade group, Pharmaceutical Research and Manufacturers of America (PhRMA), however, lays the blame chiefly on pharmacy benefit managers (PBMs) and insurers. According to PhRMA spokesperson Cat Hill, “middlemen” hinder competition and inflate prices. Hill emphasizes that the U.S. patent system fosters innovation and competition, facilitating a high rate of generic drug use in over 90% of prescriptions. Concerns remain that PBMs are capitalizing on higher-priced medicines while limiting coverage of more affordable generics and biosimilars.
Basey agrees that PBMs play a significant role, pointing to the lack of transparency in their operations. “They were set up to support patients and lower drug prices, but the evidence suggests they are benefiting themselves and insurers, which is increasing prices for patients,” she said during a panel discussion at the AHIP 2024 conference. She highlighted ongoing Federal Trade Commission investigations and relevant legislative proposals in Congress aimed at curbing PBM practices.
Adam Kautzner, president of PBM Express Scripts, defended the organization’s efforts to lower costs, noting that they service over 100 million Americans and negotiated significant savings last year. Express Scripts’ recent report pointed out a 1% reduction in out-of-pocket costs for members in 2023.
The debate over who is accountable for high prescription drug costs shows no promise of resolution as both pharmaceutical companies and PBMs continue to accuse each other. As Basey articulates, “They’re both part of the problem and they both blame the other. And yes, the other is part of the problem, but there’s no accountability.” With several legislative initiatives pending in Congress, the path to achieving lower drug prices remains complex and contested.
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