We don’t get to pick and choose who gets to enjoy constitutional rights and who doesn’t. They apply to all of us — even the large healthcare companies everyone seems intent on crusading against these days. Sometimes it comes down to freedom of choice versus monopolies, and restricting certain healthcare-related businesses while granting monopolies to others isn’t fixing the problems, but creating new ones.
Arkansas ran face-first into this reality at the end of July, when federal judge Brian Miller temporarily blocked Act 624, which would have prohibited pharmacy benefit managers (PBMs) from owning pharmacies in the state. Finding in favor of PBM plaintiffs CVS Health and Express Scripts, Judge Miller said the law appears to discriminate against out-of-state businesses in violation of the Constitution’s Commerce Clause. Miller determined that the pharmacies would face irreparable harm if Act 624 were enforced, including unrecoverable economic losses and disruptions to patient access to medications, particularly for TRICARE beneficiaries, seniors, and those with complex conditions.
The ruling is significant as other states like Vermont, Texas, and New York are considering similar PBM restrictions. This means that the outcome of this case could influence policies across the country.
PBMs negotiate the cost of drugs with insurance plans and drug manufacturers, working to help patients get the best price possible for their prescriptions. They are third party negotiators that work with insurance plans and drug manufacturers to help patients get better prices for their prescriptions. However, they’ve been coming under intense bipartisan scrutiny for supposedly driving prices up instead. President Donald Trump and several GOP-led states have been making headlines this year for going after PBMs. But it was Joe Biden’s Federal Trade Commission (FTC) that really got the game going just as Biden was leaving office. In January, the FTC published a report finding that PBMs charged significant markups for specialty drugs — findings that were skewed from the outset by focusing on specialty drugs with high R&D costs — a few months after the agency sued the nation’s three biggest PBMs.
With gridlock freezing congressional action, states are taking matters into their own hands. That is why Arkansas Governor Sarah Huckabee Sanders signed Act 624 into law back in April, which bans PBMs from owning pharmacies with a troubling exemption: Walmart.
While Walmart isn’t named, the law exempts any pharmacy that “exclusively services the employees and dependents of the pharmacy employer while utilizing the affiliated pharmacy benefits manager in this state.” Walmart, which is based in Arkansas, is the largest employer in the state, and it appears the original law was rewritten to give Walmart a pass.
If this sounds like a monopoly in the making to you, that’s because it very likely is. Walmart is not a PBM, but it does technically operate pharmacies affiliated with PBMs. And the corporation has announced plans to expand its pharmacy operations in the state while competitors like CVS get pushed out — not because of fair market competition, but because the government has stepped in to pick winners and losers via sweeping legislation.
This issue extends far beyond Arkansas, as 39 mostly Democratic state and territory attorneys general signed a letter asking Congress to prohibit PBMs from owning or operating pharmacies. States are also looking for other ways to control PBMs, but another recent federal injunction in Iowa raised similar constitutional issues. In this case, U.S. District Court Judge Stephen Lochner argued that Iowa’s law overstepped the bounds of state law, getting in the way of ordinary Americans accessing the healthcare they need. He stated that the law violated the First Amendment’s protections for commercial speech.
There’s no denying drug prices in the United States are far too high. We pay nearly three times more for prescription drugs than any other developed country. But the solution can’t be to deny constitutional rights to those we blame for the problem — or, frankly, anyone else.
PBMs have taken a lot of heat in recent years for the rising costs of drugs. But studies indicate that they really do keep drug costs down. A report from the Government Accountability Office (GAO) found that PBMs lowered costs on drugs for Medicare Part D by 20 percent. Another report claims PBMs save consumers over $1,000 each year.
Stacie Dusetzina, professor of health policy and an Ingram Professor of Cancer Research at Vanderbilt University School of Medicine, Department of Health Policy, testified at an FTC public listening session, “Without PBMs, it is likely Americans would pay more for their medications than they currently do…It’s important to recognize that rebates do lower overall spending on prescription drugs, so we should value rebates that are negotiated.”
In short, these companies keep us from paying even more for drugs, but we’re still watching politicians turn them into convenient scapegoats for inflated drug costs.
Yes, we have to do something about skyrocketing drug costs, but the solutions we enact must uphold the Constitution. Trampling down the rights we all hold dear is a slippery slope that will only cause more pain — and inevitably higher drug prices. More competition is better; granting monopolies will drive costs up. Some refer to this kind of preferred treatment in the marketplace as “crony capitalism,” but it’s not capitalism at all, it's the government dictating market conditions.
The problem is the issue is so complex that people don’t understand it. They want to put a superficial band-aid on the problem instead of getting to the root of the disorder. While we all agree that most issues are better regulated by the states than by the federal government — federalism — that’s not the only part of the Constitution. States can make bad laws that violate other parts of the Constitution. Trampling on the Constitution to grant monopolies to preferred corporations reeks of socialism.