Middle Men In Healthcare Creating High Costs
“Middle men” are causing a crisis in health care that’s hitting everyday Americans in the wallet and preventing them from getting the care they need. They have contributed to soaring health care costs and medicine shortages.
On May 11th of this year, the President held a press conference and stated “We’re very much eliminating the middlemen. The middlemen became very, very rich. Whoever those middlemen were — and a lot of people never even figured it out — they’re rich. They won’t be so rich anymore.”
Who are these “middle men”?
Decades ago, Group Purchasing Organizations (GPOs) and Pharmacy Benefits Managers (PBMs) were introduced to streamline purchasing of drugs and medical supplies for hospitals and insurance companies, but the 1987 Medicare Anti-Kickback Safe Harbor statute exempted these middle men from penalties for taking kickbacks (they prefer to call them rebates) from suppliers, but the patient never saw the benefit. They have a Get Out of Jail Free card and they’ve used it well for the last 30 years.
A consortium of Physician led advocacy groups have been working tirelessly on behalf of the patients that rely on their drugs but simply can’t afford them because of the ever-increasing costs of drugs in our country. Their relentless efforts to work with legislators in a bi-partisan fashion seems to have made an impact. According to Chief Executive Officer of Pfizer, Inc. in July of 2018, “Drugmakers will likely get rid of secret discounts to middlemen that have become a focus of the U.S. drug-cost debate. We’re going to go to a marketplace where we don’t have rebates.”
Although this response from Pfizer is positive, there is nothing that says these practices will not re-emerge over time. Furthermore, Pfizer’s leadership does not speak for the numerous manufacturers of medical supply and medications. In fact, the lobby efforts of the middlemen have escalated considerably year after year and significantly in the recent year in an effort to protect the Safe Harbor Provision in the Anti-Kickback Legislation.
Repeal of the Safe Harbor Provision would reduce costs of drugs and healthcare supplies by an estimated 30% and may save Medicare and Medicaid anywhere from $50 to $75 Billion annually. Healthcare costs is the primary issue in our country and it is a personal one, not a partisan one. A bipartisan effort to support physicians and patients so medications and supplies can be affordable by asking your Representatives to support the repeal of the Safe Harbor statute is something everyone can get behind.