While prices in the pharmaceutical market continue to rise, Congress has failed to address the role of Pharmacy Benefit Managers (PBMs). As patients face rising costs and pharmacies go out of business, state governments have stepped in with a patchwork of rules. In their rush to regulate, states often do so blindly, prioritizing immediate restrictions over transparency. Instead, states should start by shedding light on the opaque PBM industry — not for regulators, but for employers, insurers, hospitals, pharmacies and patients.
Transparency through reporting requirements is the reform most favored by employers, with 85 percent support. While transparency doesn’t directly lower prices, it allows employers and insurers to choose which PBMs they do business with and creates more informed negotiations. This incentivizes PBMs to compete.
Before rushing in to micromanage the industry, policymakers should adopt the path that provides the information needed to thoughtfully evaluate other regulations. Regulating without transparency risks locking in inefficient market structures and stifling better alternatives.
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Justin Leventhal is a senior policy analyst for the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit www.TheAmericanConsumer.Org or follow us on X @ConsumerPal