As an employer, I know I have a responsibility to my employees to provide high-quality health coverage, but recent legislation in Congress is threatening my ability to do so. With over fifty percent of Alabama residents relying upon their employer for health insurance, it is critical that employers have the ability to make the necessary, and right, choices for their employees.
I am proud to provide quality health care coverage for my employees. However, recent legislation being pushed by legislators like Senator Bernie Sanders and Representative Alexandria Ocasio-Cortez threatens my ability to make these choices. When I am prevented from providing quality, affordable benefits to my employees, the reality is that many of them will leave for other companies that can provide them.
The harmful policies being pushed by the radical Left are taking away employers’ flexibility to design our own prescription drug benefits and undermine the savings we use to help our employees. When we are denied this flexibility in choice, our employees and their families suffer the consequences. Specifically, recent proposals have been aimed at preventing incentives for pharmacy benefit companies to effectively secure discounts and rebates.
The savings that pharmacy benefit companies secure are directly passed back to plan sponsors like me. Without these savings, we would be stuck with higher premiums for our employees, leaving them trapped in a cycle of rising costs and dwindling benefits. As a plan sponsor, I’m able to decide what to do with these rebates and it has been game-changing to be able to offer better, more comprehensive health offerings for my employees.
According to Ike Brannon, a senior fellow at the Jack Kemp Foundation, the stated goal of this new anti-pharmacy benefit company legislation is to keep “middlemen” in check, but this legislation would only destroy any incentive pharmacy benefit companies have to reduce drug costs for patients.
As a plan sponsor, I have a choice. In order to benefit my employees, I choose to contract with pharmacy benefit companies to provide me with a range of options. When I am limited in my choices, costs increase. Pharmacy benefit companies need to be able to work within the free market, without excessive government mandates, to maintain the flexibility I need in our workplace.
It is no wonder that pharmaceutical companies are lobbying to place restrictions on pharmacy benefit companies. Pharmacy benefit companies are compensated based off how much savings they secure from pharmaceutical companies through negotiation. Of course, drug companies want restrictions to be placed on pharmacy benefit companies because they are effective in negotiating discounts on prescription medications.
The latest ‘delinking’ proposals – which would give pharmacy benefit companies a flat rate for each successful negotiation – would eliminate any incentive to successfully negotiate lower drug prices. One recent analysis from University of Chicago Professor of Economics Casey Mulligan found that, in just the Medicare Part D program, ‘delinking’ policies would increase costs for taxpayers and patients by $18 billion while increasing premiums $3 billion to $10 billion. New research from Senior Fellow at the American Enterprise Institute (AEI) Alex Brill found if this policy was implemented in the commercial market, it would increase premiums up to $26 billion, increasing health care costs for hardworking patients who rely on their employer for coverage. We simply cannot afford this policy.
As a result, pharmaceutical companies would receive more than $32 billion in drug profits as a result – making it abundantly clear as to why they are pushing so hard for these policies.
It makes sense to compensate pharmacy benefit companies based off how successful they are in doing their job because it incentivizes them to secure better rebates which, in turn, helps plan sponsors and their enrollees save money. What doesn’t make sense is taking the incentive away from these companies and allowing health care costs to skyrocket. If ‘delinking’ is instituted, it will become harder and harder for me to provide quality, price-effective care to my employees. With ‘delinking’, it’s not the pharmacy benefit companies or the drug companies that will pay the price, it will be everyday Americans and their families, priced out of getting access to the critical prescription medications they need to stay healthy.
Our legislators need to stand up to the Socialist Left and fight for our free market. ‘Delinking’ and removing incentives for pharmacy benefit companies to secure savings will only cause drug prices to skyrocket. The people of Alabama need our entire congressional delegation to push back against these policies and fight for small business owners like me, and my employees. The flexibility that pharmacy benefit companies provide is critical to being able to provide my employees with quality benefits.
I hope our elected leaders in Washington will stand with Alabama’s business owners and our hard-working employees by saying yes to increasing competition in the pharmacy benefit marketplace and no to ‘delinking.’