Health Care

Pharmacy benefit managers are driving up health care costs for employers and employees alike—and they must be reformed as soon as possible, Rep. Buddy Carter (R-GA), Sen. James Lankford (R-OK) and other members of Congress said at a bicameral, bipartisan Capitol Hill press conference Wednesday.

What’s going on: Rep. Carter, Sen. Lankford and other lawmakers—including Reps. Mariannette Miller-Meeks (R-IA), Raja Krishnamoorthi (D-IL) and Nanette Barragan (D-CA)—are calling on House and Senate leadership to advance PBM reform legislation in Congress’ year-end lame-duck session.

• The House passed a bipartisan PBM reform bill last December, and seven congressional committees—in both the House and Senate—have approved PBM bills during this Congress.
• The NAM, long a champion of commonsense PBM reform, offered manufacturers’ strong support for the lawmakers’ efforts.

What they said: “Democrats and Republicans [alike] … recognize that PBMs are decreasing the accessibility, the affordability and therefore the quality of health care in America,” said Rep. Carter, who showed the crowd photos of real patients facing difficulties accessing medications due to PBMs.

• “Congress must act before the end of the year to save our constituents’ lives. That’s why I’m leading a bipartisan letter to the House and Senate leadership urging them to prioritize PBM reform during end-of-year negotiations and ensure that the bipartisan efforts we have worked on through the 118th Congress are enacted into law.”
• Added Rep. Miller-Meeks, sponsor of the NAM-backed DRUG Act: “Every American who utilizes prescription medications experiences the impact that PBMs … have on our health care system. Patients everywhere—and our independent pharmacists—deserve a health care system where patients always come first.”

Why it’s important: PBMs often dictate the prices that patients pay at the pharmacy counter—and their business model incentivizes them to increase those prices for their own benefit.

• PBMs take a cut of a drug’s list price and pocket a large portion of rebate savings that are supposed to go back to patients and employers.
• In addition, they operate without transparency into their pricing decisions, making it more difficult for employers to reduce prices or access savings.

Now’s the time: “We want leadership to be able to take [PBM reform legislation] up in the end-of-the-year package,” Sen. Lankford said at the press conference. “We don’t want to tell … patients, ‘Wait another two years and maybe we’ll get into it in the next session.’ Let’s actually get into it in this session.”  

NAM advocacy: The NAM has been at the forefront of the fight for PBM reform. Last month, it launched a seven-figure ad campaign urging the passage of reforms during the lame-duck session.    

The last word: “Manufacturers and manufacturing workers are facing increasing and unsustainable health care costs as a direct result of PBMs,” said NAM Managing Vice President of Policy Chris Netram. “Manufacturers agree with Rep. Carter and the bipartisan, bicameral members of Congress calling for reform: Congress must act urgently—in the lame-duck session—to increase transparency, lower health care costs and protect manufacturing workers.”

Washington, D.C. – Today, the National Association of Manufacturers voiced manufacturers’ support for efforts led by Rep. Buddy Carter (R-GA) to bring much-needed reform and transparency to pharmacy benefit managers. The NAM is a champion for PBM reform given that these underregulated middlemen drive up health care costs for manufacturers and manufacturing workers.

Following a press conference hosted by Rep. Carter to announce a bipartisan effort with dozens of members of Congress to push for PBM reform in the lame-duck session of Congress, NAM Managing Vice President of Policy Chris Netram released the following statement:

“Manufacturers and manufacturing workers are facing increasing and unsustainable health care costs as a direct result of PBMs. Manufacturers agree with Rep. Carter and the bipartisan, bicameral members of Congress calling for reform: Congress must act urgently—in the lame-duck session—to increase transparency, lower health care costs and protect manufacturing workers.”

Background: Last month, the NAM launched a seven-figure video and digital advertising campaign urging Congress to pass PBM reform legislation this year.

The NAM’s Q3 2024 Manufacturers’ Outlook Survey found that 78% of small manufacturers with fewer than 50 employees cite rising health care costs as a primary business challenge—the top concern among small business respondents in the survey.

To view the NAM’s latest digital ad, click here.

-NAM-

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

Washington, D.C. – The National Association of Manufacturers has launched a seven-figure video and digital advertising campaign urging Congress to pass legislation this year to bring much-needed reform to pharmacy benefit managers, whose practices increase health care costs for manufacturers and manufacturing workers. The NAM’s Q3 2024 Manufacturers’ Outlook Survey found that 78% of small manufacturers with fewer than 50 employees cite rising health care costs as a primary business challenge—the top concern among small business respondents in the survey.

“Manufacturers are clamoring for Congress to rein in PBMs this year. The momentum is with lawmakers to enact comprehensive reform in both the government and commercial health insurance market that increases transparency and reduces prices for everyone,” said NAM President and CEO Jay Timmons. “Manufacturing workers and retirees are spending more at the pharmacy counter, in large part because insurer-owned PBMs drive up their own profits by inflating prescription drug prices and pocketing discounts that biopharmaceutical manufacturers intended to be passed on to patients.”

Timmons continued, “Congress has an extraordinary opportunity in the lame duck to pass transformative legislation that increases transparency into PBMs’ business practices, delinks PBM compensation from drug prices and puts patients first.”

To view the NAM’s latest digital ad, click here.

-NAM-

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

Rep. Mariannette Miller-Meeks (R-IA) visited Cemen Tech in Indianola, Iowa, for an employee town hall about how pharmacy benefit managers increase prices for manufacturing workers.

The event, hosted by Cemen Tech Chief Financial Officer Josh Maurer, allowed workers to engage directly with Rep. Miller-Meeks on the affordability of their health care, including prescription medicines.

The issue: The town hall focused on the need to reform PBMs, underregulated middlemen that drive up the costs of prescription medicines for manufacturers like Cemen Tech, the world’s largest manufacturer of on-demand concrete mixing equipment.

• Rep. Miller-Meeks discussed the DRUG Act, NAM-supported legislation that she introduced, which seeks to lower health care costs by delinking PBMs’ compensation from the list price of medicines—removing their incentive to push for higher prices.
• “PBMs distort the market, increasing the cost of prescription drugs for businesses and their workers,” Rep. Miller-Meeks explained. “That’s why I’m working in Congress to pass PBM reform that reins in these powerful actors.”

Manufacturers’ concerns: “We’ve seen health care expenses skyrocket, and a big part of that is due to the lack of transparency surrounding PBMs,” Maurer said during the town hall.

• “Cemen Tech and other small manufacturers like us are committed to providing affordable health care to employees, but it’s becoming increasingly difficult. PBM reform that addresses these rising costs is absolutely necessary.”

Addressing employee concerns: Cemen Tech employees also spoke about their struggles with the growing burden of health care costs across the board. Rep. Miller-Meeks explained that her proposed reform would have far-reaching effects: “It’s not only about reducing drug prices—it’s about ensuring that businesses can afford to continue providing health care benefits to their workers,” she said.

NAM in action: In addition to supporting the “delinking” provisions in the DRUG Act, the NAM is working with Congress on legislation to make PBMs’ opaque business practices more transparent and to ensure that savings from rebates are passed directly to manufacturers and their workers rather than being pocketed by PBMs.

The bottom line: “Manufacturers like Cemen Tech are essential to our economy, and ensuring they can thrive means addressing the rising costs of health care,” said Rep. Miller-Meeks. “PBM reform will free up manufacturers to do what they do best—build facilities, develop new product lines, increase wages and benefits and help the American economy grow.”

Medical supply chains are critical to ensuring the health and security of Americans—and Congress should act to bolster their resiliency, the NAM told members of Congress this month.

What’s going on: “The COVID-19 pandemic brought to light the risks and instability resulting from concentration and choke points in medical supply chains, though the pandemic also showed how medical supply chains can quickly adjust to external shocks,” NAM Managing Vice President of Policy Chris Netram told Reps. Brad Wenstrup (R-OH), Blake Moore (R-UT) and August Pfluger (R-TX) in response to a request for information on how to improve medical supply chains.

What should be done: The NAM recommended that Congress should work with manufacturers “on a comprehensive approach to find ways to onshore, near-shore and friend-shore more of the medical supply chain,” Netram continued.

There are several actions the federal government should take to fortify medical supply chains, including:

• “[C]reating an environment where small businesses can continue to thrive” and where large companies can maintain their pandemic-era practices of “leveraging sources of domestic production when feasible, working with existing smaller suppliers to improve their reliability” and sourcing goods through new suppliers;
• Streamlining the Food and Drug Administration’s new-supplier certification process;
• Taking “creative steps to incentivize onshoring, near-shoring and friend-shoring, as opposed to imposing punitive or unworkable requirements to do so”;
• Passing the Medical Supply Chain Resiliency Act (H.R. 4307/S. 2115), which would authorize the president to strategically create new trade agreements specific to medical goods with our allies and partners;
• Strategically refining Section 301 tariffs on imports from China;
• Restoring “immediate research and development expensing and full expensing of capital equipment purchases,” ensuring “that the corporate tax rate does not exceed 21%” and making the pass-through deduction permanent; and
• Completing “reauthorization of the Workforce Innovation and Opportunity Act and expansion of Pell grant eligibility to short-term training programs,” as well as supporting solutions that incentivize companies to collaborate to reduce the manufacturing-worker shortage.

The bottom line: “[A]n approach that creates incentives that reduce the cost and complexity of moving supply chains can help U.S. manufacturers to be more resilient in the face of a future global crisis and better able to serve patients who depend on these products,” Netram said.

Drug price controls will “chill” critical innovation in pharmaceutical manufacturing and do nothing to address the underlying causes of high medication costs, Johnson & Johnson leaders said recently.

What’s going on: J&J Chairman and CEO Joaquin Duato and Executive Vice President and Chief Financial Officer Joseph Wolk told Bloomberg TV earlier this month that the pharmaceutical price controls mandated by the 2022 Inflation Reduction Act do a disservice to patients everywhere.

• “[T]he Inflation Reduction Act … is something that is misguided, and it’s going to chill innovation,” Duato told Bloomberg’s David Gura earlier this month. “When you chill innovation on investment in [research and development], then you have [fewer] cures.”
• The IRA gave the federal government authority to set prices for certain prescription medications in Medicare. In August, the Biden administration released the first 10 Medicare prescription drugs subject to those price controls, which go into effect in 2026.
• “I’d like to see a much more fact-based dialogue around the topic of drug pricing,” Wolk added. “About six years ago, Johnson & Johnson … was paying about 25% in discounts and rebates off [the] list price [of medications]. Today, that [figure is] 60%, yet the patients aren’t receiving the benefit of those discounts.”

The background: Pharmacy benefit managers are supposed to pass the manufacturer discounts they receive on to health plans and patients—but instead, they frequently pocket the discounts, the NAM has told Congress on several occasions.

• That’s one of several problematic business practices Congress must end by enacting comprehensive PBM reform, the NAM has said.
• Such legislation would do far more to benefit consumers than capping drug prices.

Cause and effect: The result of price controls will be fewer breakthrough cures and treatments for patients suffering from various illnesses, J&J told Bloomberg TV.

• “The number of medicines that will be there will be [lower], just because [fewer] investors would be putting money into developing new medicines,” Duato continued. “It’s going to be less attractive for investors to put money there.”
• And as Wolk said in another Bloomberg segment: “Investing in R&D, prioritizing R&D years in advance for [a drug] that may happen 10 years down the road is critically important.”

What should be done: If Congress truly wants to help patients with the cost of medications, it must focus on “the middlemen who are really driving up prices: pharmacy benefit managers,” NAM President and CEO Jay Timmons said recently.

The NAM this week advocated the passage of two pieces of manufacturing-critical legislation, successfully driving the agenda of a Wednesday House Energy and Commerce Committee markup.

What’s going on: The committee—with the NAM’s strong support—approved two bills that address longstanding manufacturing priorities:

• A congressional resolution disapproving of the Environmental Protection Agency’s harmful PM2.5 rule
• A bill instituting important pharmacy benefit manager reforms

Reversing an unworkable PM2.5 standard: The EPA announced a new, more restrictive particulate matter standard in February, reducing allowable levels from 12 micrograms per cubic meter of air to 9 micrograms—despite a standard of 9 being “essentially background levels in some of the country,” as the NAM has pointed out.

• “Manufacturers have sharply reduced particulate matter emissions, or PM2.5; as a result, industry in the United States has some of the cleanest and most efficient operations in the world,” NAM Vice President of Domestic Policy Chris Phalen told the committee.
• “Now, the vast majority of emissions are from sources well outside of our control, with fires, dirt roads and other nonpoint sources accounting for 84% of PM2.5 emissions,” Phalen continued. “[T]he EPA’s rule will make it more difficult for states to issue permits for the construction of new facilities or expansions of existing factories.”
• The committee’s PM2.5 resolution, offered under the Congressional Review Act, seeks to overturn the EPA’s unworkable standard.

Reforming PBMs: PBMs are unregulated middlemen whose business practices drive up health care costs for manufacturers and manufacturing workers.

• “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 practices, PBMs increase health care costs at the expense of all patients in America,” NAM Vice President of Domestic Policy Charles Crain said.
• Provisions in the NAM-supported Telehealth Modernization Act would increase transparency into PBMs’ business practices and delink their compensation from medicines’ list prices.

The last word: “Manufacturers commend the Energy and Commerce Committee for approving these important bills, which will reduce costs and enhance growth at manufacturers across the country—allowing our industry to continue to create jobs here at home and drive U.S. competitiveness on the world stage,” said NAM Managing Vice President of Policy Chris Netram.

To lower drug prices, Congress should undertake comprehensive reform of pharmacy benefit managers, not embrace price controls, the NAM told the Senate Tuesday.

What’s going on: “Biopharmaceutical manufacturers are a critical part of the manufacturing economy,” NAM Vice President of Domestic Policy Charles Crain said ahead of a Senate Finance Committee hearing on health care costs.

• In 2021, biopharmaceutical firms “accounted for $355 billion in value-added output to the U.S. economy … and directly employed 291,000 workers in the United States, with each of these jobs supporting an additional 4.1 jobs.”
• Crucially, biopharma companies are also responsible for the dozens of groundbreaking, lifesaving medications brought to patients annually.
• But their continued innovation and economic impact are under attack by both Inflation Reduction Act–mandated drug price controls and the largely unchecked actions of PBMs, Crain continued.

Threats to innovation: Instead of benefiting patients, “the IRA pricing mandates announced last month by the Department of Health and Human Services will … limit the capital manufacturers have available to put toward the astronomically high costs of developing a new medicine,” Crain told the committee, adding that the uncertainty introduced by price controls is also likely to dissuade early-stage investment in new treatments.

• Rather than impose further price controls, Congress should address the influence of PBMs, largely unregulated middlemen that “contribute to the skyrocketing cost of health care by applying upward pressure to list prices that dictate what patients pay for medicines at the pharmacy counter, pocketing manufacturer rebates and failing to provide an appropriate level of transparency about their business models.”

PBM reform: To truly lower health care costs, Congress must rein in PBMs, Crain said. The NAM has called on Congress to adopt specific PBM reforms, including:

• Increased transparency into PBMs’ business models;
• Rebate passthrough to ensure that 100% of negotiated savings get passed on to health plan sponsors and employees; and
• Delinking of PBM compensation from medication list prices.

The last word: “Instead of further embracing price controls, it is imperative that Congress act to lower drug prices by reining in PBMs’ problematic business practices and minimizing their ability to further damage the U.S. health care system,” Crain said.

• “All Americans deserve access to high-quality, affordable health care, and PBM reform is an impactful step toward this goal.”

Pharmaceuticals manufacturers are increasingly turning to radioactive drugs in their battle against cancers (CNBC). 

What’s going on: Eli Lily, Bristol Myers Squibb and others “have spent some $10 billion on deals to acquire or work with radiopharmaceuticals makers,” which produce drugs containing radioactive isotopes, predicting that the technology will be effective in treating multiple cancer types.

• Meanwhile, Novartis already has two radiopharmaceuticals, Pluvicto and Lutathera, available for cancer treatment, and several dozen more in development.

How it works: Radiopharmaceutical “drugs work by attaching radioactive material to a targeting molecule that searches for and attaches to a specific marker on cancer cells. The trick is finding markers that exist on cancer cells but not healthy cells. That can allow the treatment to deliver radiation to cancer cells and spare the rest of the body from the level of damage that comes with many cancer drugs.”

• Bristol Myers Squibb sees “opportunity [in] … combining radiopharmaceuticals with existing cancer drugs like immunotherapy, said Robert Plenge, Bristol’s chief research officer.”

More interest: Though radiopharmaceuticals have been around since the 1940s, they’ve only begun drawing big interest in recent years.

• Early this year, Bristol Myers Squibb completed a $4.1 billion acquisition of radiopharmaceutical startup RayzeBio.
• In 2023, Eli Lilly acquired radiopharmaceutical company Point Biopharma and signed partnerships with businesses that are developing treatments.

In-house production: Among the key criteria in Lilly’s search for a firm to acquire: “whether companies were prepared to manufacture the drugs,” according to Eli Lilly Executive Vice President and President of Lilly Oncology Jacob Van Naarden.

• “Radiopharmaceuticals aren’t easy to make, and Lilly wanted to make sure any initial acquisition could produce the drugs themselves instead of outsourcing the work.”

Safety and speed are everything: Each dose of Novartis’ Pluvicto has a GPS tracker to make sure it goes to the correct patient at the correct time, said Victor Bulto, president of the U.S. unit for Novartis. That’s because the therapies are only good for a few days once made.

• Novartis is “investing more than $300 million to open and expand radiopharmaceutical manufacturing sites in the U.S. so it can produce the drug and get it to patients quickly.”
• The pharmaceutical company “drives doses to destinations that are within nine hours from the factory to minimize the risk of disruptions from storms, Bulto said.”

Special considerations: Radiopharmaceuticals come with unique challenges.

• One health care network had to upgrade its medical license before it could be allowed to handle radioactive materials, and “[a] certified specialist needs to administer the drugs, which are given intravenously.”
• To avoid exposing people to radiation, patients taking the treatments must remain at a distance from others for a week or more following the injections, which they get every six weeks.

Big opportunity: Though full understanding of radiopharmaceuticals’ potential may be years away, “[i]f we can be successful in expanding the target and tumor type repertoire, this could be a very big class of medicines,” Van Naarden said.

Rep. Earl L. “Buddy” Carter (R-GA), a staunch advocate for health care reform and a community pharmacist by profession, visited RYAM’s manufacturing facility in Jesup, Georgia, in August to discuss manufacturers’ health care and tax policy priorities.

During the visit, Rep. Carter emphasized the critical need for pharmacy benefit manager reform as well as tax policies that support manufacturers’ growth and competitiveness.

The visit: Clay Bethea, RYAM’s Jesup plant general manager and vice president of U.S. wood procurement, led Rep. Carter on a tour of the cellulose specialties manufacturer’s facility, where he observed how pulp is dried and finished into sheets and rolls. Bethea highlighted the significant challenges the company faces due to rising costs in health care, particularly those driven by PBMs, and the looming expiration of key tax provisions in 2025.

• “We are proud to be a part of this community, creating jobs and driving economic growth,” Bethea said. “However, the rising costs of health care, particularly due to PBMs, and the uncertainty around critical tax provisions like R&D expensing and accelerated depreciation, are growing concerns for both our business and our employees. Reforming PBMs and maintaining tax policies that allow us to invest for the future are crucial to our ability to remain competitive globally.”

PBM reform: Rep. Carter has long been vocal about the need to hold PBMs accountable for their role in inflating health care costs.

• “PBMs have become powerful middlemen, often driving up drug prices while squeezing independent pharmacies out of the market,” Rep. Carter said during the tour. “It’s time for Congress to bring transparency and fairness back to the system.”
• Carter has introduced and supported several pieces of legislation designed to reform PBM practices, including a bill aimed at delinking PBM compensation from drug prices, improving PBM payments to pharmacies and increasing transparency.

Tax challenges: In addition to health care, Rep. Carter addressed the pressing issue of preserving tax reform.

• “The expiration of accelerated depreciation, R&D expensing and favorable tax rates could significantly hamper the manufacturing industry’s ability to grow and remain competitive globally,” Rep. Carter warned.
• “These tax provisions have been crucial for manufacturers like RYAM, enabling them to make significant investments in their operations and workforce. Losing them would not only impact these companies’ ability to innovate but also jeopardize jobs and economic growth in communities across the country.”

NAM in action: The NAM has long advocated for both PBM reform and the preservation of essential tax policies that drive the manufacturing industry.

• “PBMs are a significant driver of the rising costs of health care, and reform is essential to ensure that manufacturers can provide affordable benefits to their workers,” said NAM Vice President of Domestic Policy Charles Crain.
• “Congress also needs to act with urgency to prevent devastating tax increases scheduled for next year that will impact manufacturers across the country.”

The state-level view: Lloyd Avram, president and CEO of the Georgia Association of Manufacturers, echoed Rep. Carter’s concerns.

• “Manufacturers across Georgia are facing unsustainable health care expenses, and the uncertainty surrounding federal tax provisions only adds to the challenges,” Avram said. “Action on PBM reform and tax policy is essential to helping our industry remain competitive and continue providing good jobs in our communities.”

The bottom line: “Reducing health care costs and increasing transparency in the PBM system are crucial steps in lowering the overall cost of doing business in the U.S.,” said Rep. Carter. “However, to truly compete in the global economy, it’s important that we preserve the policies that have empowered manufacturers to innovate, expand and sustain jobs. Otherwise, the U.S. risks becoming a less attractive place for manufacturing investment, ultimately threatening our economic leadership on the world stage.”