Pharmacy benefit managers are contributing to the skyrocketing cost of health care for manufacturers and must be reined in—and that’s why the NAM supports the bipartisan Delinking Revenue from Unfair Gouging (DRUG) Act, passed yesterday by the House Oversight and Accountability Committee.
What’s going on: PBMs, created in the 1960s with the intention of keeping prescription drugs affordable, are now doing the very opposite, the NAM informed the committee ahead of Tuesday’s markup.
- PBMs “increas[e] the price that health plan participants pay for medicines,” NAM Vice President of Domestic Policy Charles Crain said. “By applying upward pressure to list prices that dictate what patients pay at the pharmacy counter, pocketing manufacturer rebates and failing to provide an appropriate level of transparency about their business models, PBMs increase health care costs at the expense of manufacturers and manufacturing workers.”
- In addition to other reforms, the DRUG Act would require “delinking”—ensuring that PBMs charge a flat rate for their services rather than charging a percentage of a medication’s list price. This critical reform would “remov[e] PBMs’ incentive to put upward pressure on list prices in order to maximize their own profits,” Crain said.
Why it’s important: The NAM—whose advocacy, including a six-figure ad campaign, helped lead the DRUG Act to passage by the House Oversight Committee—“has long favored delinking PBM compensation from the list price of medications, including in the commercial market,” Crain continued.
- The NAM will continue to advocate for PBM reforms that “will benefit employers by making PBM contracts more straightforward, transparent and predictable—and will benefit workers by reducing the prices they pay out of pocket for their prescriptions.”
Washington, D.C. – The National Association of Manufacturers has launched a seven-figure television and digital advertising campaign opposing the Biden Administration’s new proposal that would allow the government to march in and seize the rights to groundbreaking innovations developed by manufacturers.
“This radical new proposal is a major threat to manufacturers in America and counter to the president’s goals of growing the sector,” said NAM President and CEO Jay Timmons. “Empowering the government to march in and seize the rights to private-sector patents and technologies threatens American innovation and R&D, putting millions of well-paying manufacturing jobs at risk. Policymakers must protect manufacturers’ intellectual property rights and stop this government overreach.”
To view the latest television ad, click here.
The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.75 trillion to the U.S. economy annually and accounts for 53% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.
The House passed a health care package on Monday that includes measures to curb some practices by pharmacy benefit managers, according to STAT News.
What’s going on: The Lower Costs, More Transparency Leadership Act, which passed on a bipartisan vote, “would equalize payment between hospital outpatient departments and doctors’ offices for administering medicines in Medicare, rein in some practices by pharmacy benefit managers and codify health care price transparency rules.”
- The vote on the measure was scheduled for September originally but was pushed back amid a larger funding dispute.
What it means: The package would prohibit PBMs from “spread pricing”—or charging Medicaid more than they pay pharmacies for medications.
- It would also require PBMs, “clinical lab test providers, imaging providers [and] ambulatory surgical centers … to be more transparent about their pricing.”
What’s next: “Some community health advocates hope Monday’s vote will jump-start negotiations with the Senate, where leaders have signaled they’re looking for more than what’s in the House bill,” POLITICO reports.
Our view: “House passage of the Lower Costs, More Transparency Act is a step forward for PBM transparency, but Congress must continue to advance reforms that ensure PBMs pass on prescription drug discounts directly to plan sponsors and patients as well as delink their compensation from the list price of drugs,” the NAM said on Tuesday.
Pharmacy benefit managers—companies that were first established to manage the cost of prescription drugs—are now driving up pharmaceutical prices for employers and patients, the NAM told the House Committee on Energy and Commerce this week.
What’s going on: While manufacturers remain committed to providing health benefits to their workers, PBMs are “[c]ontributing to the increasing costs of health care,” said NAM Vice President of Policy Chris Netram on Monday, ahead of the committee’s markup of 44 pieces of legislation.
- These measures included the Protecting Patients Against PBM Abuses Act and the Medicare PBM Accountability Act.
Why it’s important: PBMs operate with a virtual monopoly, as just a few of them now control up to 89% of the prescription drug market, Netram continued.
- PBMs operate with limited federal oversight and frequently steer business toward pharmacy networks owned by their parent firms.
What should be done: Congress should pass legislation aimed at changing the PBM model.
- “The complex formulas and opaque business practices of PBMs must come to an end,” the NAM wrote in a social post Tuesday. “Congress must address PBM reform to increase transparency, ensure pharmaceutical savings are passed to the plan sponsor and patients and delink PBM compensation from the list price of drugs.”
In related news: CVS Health “will move away from the complex formulas used to set the prices of the prescription drugs it sells, shifting to a simpler model that could upend how American pharmacies are paid,” The Wall Street Journal (subscription) reports.
The U.S. and 17 other countries have agreed to “a set of guidelines to ensure AI systems are built to ‘function as intended’ without leaking sensitive data to unauthorized users,” The Hill reports.
What’s going on: The 20-page document—unveiled last Sunday and published jointly by the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency and the UK National Security Centre—enumerates recommendations for everything “from AI system design and development to its deployment and maintenance.”
- The agreement discusses threats to AI systems, how to protect AI models and data and how to release and monitor AI systems responsibly.
- Other signatories include Canada, Australia, Germany, Israel, Nigeria and Poland.
Why it’s important: “This is the first time that we have seen an affirmation that these capabilities should not just be about cool features and how quickly we can get them to market or how we can compete to drive down costs,” said U.S. Cybersecurity and Infrastructure Security Agency Director Jen Easterly.
Washington, D.C. – National Association of Manufacturers President and CEO Jay Timmons released the following statement on the passing of former First Lady Rosalynn Carter:
“Rosalynn Carter will be remembered for a life of service—to our country and our world and in particular those who were too easily overlooked. As a First Lady who helped redefine the role, she was a champion for mental health care. And in the more than four decades since her family left the White House and redefined the post-presidency, her leadership at the Carter Center promoted peace and advanced humanitarian causes, including saving lives by eradicating diseases and strengthening democracy through monitoring elections. In Plains, Georgia, she and President Carter, with their trademark warmth and kindness, continued setting an example for all with a partnership that prioritized family and faith. The National Association of Manufacturers extends our condolences to President Carter and to the entire Carter family.”
The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.91 trillion to the U.S. economy annually and accounts for 53% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.
The pharmaceutical manufacturing industry is a critical piece of the U.S. economy, creating well-paying, valuable STEM jobs and contributing large sums in value-added output. However, federal price controls could threaten these benefits, according to a new study from the NAM.
What’s going on: The analysis, “Creating Cures, Saving Lives,” was released Wednesday and analyzes the industry’s contributions to the overall economy, as well as ways in which it could be affected by federal price control policies, such as those in last year’s Inflation Reduction Act.
- In August, the Department of Health and Human Services announced that it had chosen the first 10 drugs for prescription-cost negotiations required by the legislation.
- Last month, all 10 manufacturers “agreed to participate essentially because they had no choice,” according to reporting by The Hill.
- What’s more, pharmaceutical manufacturing is a major contributor to the American economy, and government regulations should help, not hinder, it.
- “Pharmaceutical manufacturers are a major contributor to the U.S. economy, employ[ing] millions of Americans and driv[ing] innovation,” said NAM Chief Economist Chad Moutray. “The industry’s investments in R&D have led to lifesaving treatments and therapies that have improved the quality of life for all Americans. This study explores the negative implications of price control policies on pharmaceutical leadership, putting American jobs and innovation in the health care system at risk.”
Washington, D.C. – The National Association of Manufacturers released a new study, “Creating Cures, Saving Lives,” which demonstrates the urgency of strengthening U.S. pharmaceutical manufacturing amid policy threats to the sector’s innovative, global leadership.
“Creating Cures, Saving Lives” analyzes the sector’s contributions to the broader economy and its commitment to R&D that drives the development of lifesaving treatments, such as advancements in therapeutics that fight cancer. The study further examines the ways that federal price controls on the sector, such as those contained in the Inflation Reduction Act, could jeopardize these treatments. The study comes at a critical time, as the Centers for Medicare & Medicaid Services recently announced the first tranche of treatments that will be subject to price controls.
“Pharmaceutical manufacturers are a major contributor to the U.S. economy, employ millions of Americans and drive innovation. The industry’s investments in R&D have led to lifesaving treatments and therapies that have improved the quality of life for all Americans,” said NAM Chief Economist Chad Moutray. “This study explores the negative implications of price control policies on pharmaceutical leadership, putting American jobs and innovation in the health care system at risk.”
“Creating Cures, Saving Lives” includes seven key findings on the importance of the pharmaceutical and medical manufacturing industry and the implications of price controls on the sector:
- The pharmaceutical manufacturing industry is a major contributor to the U.S. economy, and its impact is growing.
- The industry accounted for $355 billion in value-added output to the U.S. economy in 2021. The direct contribution from the industry of $192 billion is up 24% from just two years ago. The pharmaceutical sector was already an economically vital sector before the pandemic, and it has become increasingly more important in its aftermath.
- The pharmaceutical manufacturing industry fuels other sectors of the economy, supporting nearly 1.5 million jobs in America.
- The industry directly employs an estimated 291,000 workers in the United States, an increase of nearly 9% in the past 24 months. One job in the pharmaceutical manufacturing industry helps support 4.1 other jobs in the overall workforce.
- Industry employees are highly productive.
- Industry employees produce $1.2 million in output per employee. This is nearly six times more than the U.S. economy’s average output per employee ($208,084).
- A successful pharmaceutical ecosystem requires strong private-sector investment.
- The pharmaceutical industry invests 16.6% of its sales back into R&D. Indeed, the U.S. pharmaceutical industry invests nearly 3.5 times more in R&D as a percentage of sales than the average U.S. industry.
- The pharmaceutical manufacturing industry pays high wages and benefits to American workers.
- Annual average labor income per worker in the pharmaceutical manufacturing industry is more than $184,000. This figure is higher than some of the highest-paying industries in the country.
- The industry creates valuable STEM jobs.
- While roughly 6.6% of the U.S. workforce has a STEM occupation, some 25% of all jobs in pharmaceutical and medicine manufacturing are STEM-related. The pharmaceutical manufacturing sector employs more than four times the percentage of STEM workers employed in the overall workforce.
- Price control policies, like those in the IRA, may hurt U.S. pharmaceutical leadership.
- Price controls may deter advancements in health care by reducing investments in R&D, negatively impacting the nation’s economic prosperity.
The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.91 trillion to the U.S. economy annually and accounts for 55% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.
Companies’ health care costs are rising steeply, leading finance chiefs to look for alternative ways of attracting and retaining employees, according to The Wall Street Journal (subscription).
What’s going on: “Health-insurance costs, which are among the largest expenses for many U.S. companies, are projected to rise around 6.5% for 2024, according to consulting firm Mercer.”
- “The surge … may add significantly to costs for employer plans that Mercer said already average more than $14,000 a year per employee. Many companies are expected to take on most of the increases … ”
Why it’s happening: In addition to inflation and higher interest rates, rising health care price tags are the result of a combination of higher labor costs in hospitals and elsewhere in the health care system, a rise in elective care (which declined during the global pandemic) and a demand for new drugs.
The response: Finance officers are largely seeking ways to manage the growing costs without “add[ing] pressure to employees’ budgets as health care costs rise,” according to the Journal.
- Whether that will be possible in the longer term will depend mainly on the state of the labor market and how high prices rise.
- Some companies are considering sharing the increased cost burden with employees, while others are pushing preventive care as a way to save money down the road.
The last word: “Manufacturers feel a deep commitment to providing high-quality health care to their employees despite the increased costs of doing so,” said NAM Director of Domestic Policy Julia Bogue.
- “The NAM recently released ‘Manufacturers on the Front Lines of Communities: A Deep Commitment to Health Care,’ which details industry-wide health benefits and trends, as well as federal policy proposals that could jeopardize manufacturers’ ability to continue offering health care plans.”
The Justice Department has reached an agreement with the American Civil Liberties Union that would give benefits to thousands of migrant families separated at the border under the previous administration’s policies, according to ABC News.
What’s going on: “Under the proposed agreement, the Justice Department says, new standards would be established to limit migrant family separations in the future. The settlement would prohibit separations unless there are concerns regarding the wellness of the migrant child, national security issues, medical emergencies or in the case of criminal warrants.”
- The deal—on which a federal judge must still sign off—would also cover any medical costs incurred because of the separations.
- If approved, it would stay in effect for six years.
Why it’s important: “[U]nder the settlement, more than 3,900 children and their families would be eligible for temporary relief from future deportation for up to three years, with a chance to renew. Members of those families would also be granted work authorizations.”
- More than 75% of the originally identified families that were separated have either been reunited or given the information they need to reunite, according to a Biden administration official.
- “The agreement further expands the number of families that will be eligible for humanitarian parole and reunification, meaning that the ACLU and other organizations will be receiving information on separated families that was previously unknown,” according to ABC News.
Previous policy: A policy in place for four months in 2018 “mandated prosecutions for all suspected illegal border crossings, which led to parents being deported while their children stayed in U.S. custody or were placed in foster care.”
The last word: “The NAM has long called for policy that explicitly prohibits the separation of minor children from their parents, which is what we lay out in ‘A Way Forward,’ our immigration-policy document,” said NAM Director of Domestic Policy Julia Bogue.