The House Budget Committee’s recent hearing, “Breaking Up Health Care Monopolies: Examining the Budgetary Effects of Health Care Consolidation,” brought attention to a critical issue facing American consumers: the increasing consolidation within the healthcare industry. Members of Congress highlighted the concerning impact of insurer-pharmacy benefit manager (PBM) conglomerates on patient access to quality care and the growing role of these behemoths in driving up patient costs.
The three largest PBMs control a staggering 80 percent of the prescription drug market in the United States, wielding considerable influence over the pharmaceutical industry. To make matters worse, major PBMs today are vertically integrated with insurers, giving them more power to bully other players in the system into submission. These entities act as a chokepoint in the supply chain, managing prescription drug benefits for millions of Americans. As big insurer-PBMs continue to consolidate power, patients are suffering the costs.
As House Budget Chairman Jodey Arrington (R-TX) explained, “This vertical consolidation is actually shifting incentives and increasing drug costs for Americans.” He’s right. These healthcare middlemen leverage their market power to leverage massive kickbacks from manufacturers (around $200 billion annually, which they pocket), as well as determine what drugs patients have access to, the pharmacies patients can use, and the prices and out-of-pocket totals for consumers.
This consolidation, exemplified by giants like OptumRx and UnitedHealth Group, poses significant harm to Americans. The vertically integrated system cuts out competition to benefit the largest players who often prioritize their own financial interests over those of patients, leading to higher drug costs and limited choices for patients. Between 2017 and 2020 alone, the U.S. lost over 2,300 independent pharmacies, driven out of the market by large PBMs’ anti-competitive practices.
Many lawmakers rightly express frustration over this anti-free market behavior. For instance, in a recent House Energy and Commerce hearing, Representative Buddy Carter (R-GA) voiced his determination to challenge the dominance of UnitedHealth, stating, “I’m going to continue to work to bust this up.” More members should rally around these efforts and keep the pressure on the large entities that put their profits over patients’ interests.
These committee hearings are crucial opportunities to do just that and allow lawmakers to advance transparency and accountability within the healthcare industry. By shedding light on the corrosive influence of anti-free market practices, members of Congress can better identify solutions to safeguard consumers’ healthcare access. Policymakers must work to restore competition and choice in healthcare, ultimately benefiting American patients and consumers.
