Opinion: Georgia healthcare legislation would increase drug costs

Pill bottles

Pill bottles

Healthcare costs have long been a top concern for voters across the political spectrum. Legislators in several states, including Georgia with House Bill 867, are attempting to lower prescription drug prices by regulating pharmacy benefit managers (PBMs). But this bill will not achieve this objective, because inserting government control into healthcare has shown to do more damage than good, and limiting the ability of PBMs to negotiate lower prices for patients is an ineffective strategy to lower costs.

PBMs help to lower drug prices for more than 266 million Americans who obtain health insurance through PBM-administered plans. These plans are offered through employers, unions, state governments, insurers and other entities. PBMs are able to lower prices by negotiating at volume and obtaining substantial discounts on prescription drugs. The PBMs operate like wholesale stores with millions of members across the country that sell everyday goods at lower costs by utilizing bulk purchasing power.

PBMs use various methods to lower costs, including rebates, pharmacy networks, drug utilization reviews, formularies, specialty pharmacies, mail-order and audits. The savings are then passed onto patients who benefit from the lower costs. Georgia’s bill would allow for open cost disclosures of PBM private price negotiations, which would undermine this process and cause costs to increase.

If the Georgia legislature moves forward with House Bill 867, the ability of PBMs to successfully negotiate lower prices on behalf of their customers will be inhibited, resulting in fewer cost savings passed on to patients. Not only would it diminish negotiating power by imposing transparency requirements, but it also would offer an upper hand to PBM competitors by disclosing proprietary pricing negotiations. There would likely be a snowball effect that would result in price controls and higher prices after making this information public.

Any bill that would raise costs by limiting free-market solutions should be rejected. Americans are already suffering under the highest inflation in 40 years and accessing affordable healthcare is a top priority. House Bill 867 puts Georgians and their healthcare at risk and will negatively impact not only employer-sponsored plans today, but also limit options offered in the future.

The bill currently appears to exclude any state-based health plan from these regulations, which is an admission that the concept is flawed. It is unfair to retain cost-reducing plans for government employees but not for anyone else. Do as I say, not as I do unto others is applicable in this circumstance, and a strong argument that the bill is a bad idea. If this legislation effectively lowered prescription drug prices and was sound public policy, the legislature would fully apply the policy to all state-sponsored plans. It is still a bad idea even with this more-equal coverage.

The General Assembly should put patients first by making healthcare accessible and affordable for all. Undermining private-sector agreements made by PBMs that have consistently and significantly lowered costs for patients, which would be done if House Bill 867 is passed, will not achieve that goal.

Christina Herrin is director of health and science policy with Citizens Against Government Waste.