Economist warns Congress: Don’t let Big Pharma Push Overregulation to Undermine Free Market Forces and Drive Costs Higher

Ike Brannon, senior fellow at the Jack Kemp Foundation, is pushing back on Washington’s latest government overreach in a recent RealClearMarkets op-ed. Congress is taking aim at the wrong target by proposing misguided restrictions on pharmacy benefit managers (PBMs) and in doing so, they’re playing right into Big Pharma’s hands. 

Especially in state legislatures there is a fundamental misunderstanding of how the pharmaceutical supply chain actually works:

“Vertical integration itself is not inherently anticompetitive: It only becomes problematic if it directly facilitates exclusionary practices or abuse of market dominance, and no one is asserting that either of these is occurring in the PBM space. For instance, most patients can almost always obtain their drugs from the pharmacy of their choice.”

Read the full op-ed HERE.

Trish Regan, former FOX Business anchor, also recently discussed why policymakers should not dictate the business models of private companies on the Trish Regan Show. See highlights HERE. 

Brannon rightly warns that dismantling existing structures in the marketplace could lead to higher drug costs, less bargaining power against Big Pharma, and more red tape for patients and providers alike:

“There is a wealth of empirical evidence in economics suggesting that the potential consequences of banning vertical integration are significant, as it would lead to higher transaction costs, diminished bargaining power against pharmaceutical companies, and fragmented patient care, each of which would lead to higher drug prices. Disrupting these relationships could inadvertently hurt consumers and drive healthcare spending even higher. Indeed, integrated PBMs streamline drug distribution, leverage data to promote patient adherence, and efficiently manage formularies, all of which also help to control pharmaceutical spending in a market dominated by powerful drug manufacturers.”

The right path forward is clear: Allow proven market tools like PBMs deliver savings through negotiations with drug companies, efficiency, and scale:

“If policymakers genuinely seek to lower prescription drug prices and protect consumers, the solution is not to disrupt efficient, integrated pharmacy services but to enhance competition among drug manufacturers by reforming the FDA’s regulatory pathways …

“Let’s stop misdiagnosing the problem and start empowering competition. Consumers deserve real solutions, not symbolic regulatory interventions that risk making healthcare less affordable.”