FTC Attack on PBMs May Raise Prices

Unintended consequences. That’s what often happens when politicians try to fix one problem but create another.

The Wall Street Journal editorial board says that’s exactly what will happen from the Federal Trade Commission (FTC) lawsuit targeting pharmacy benefit managers (PBMs). They say, “Lina Khan claims she’s trying to lower prices, but the Federal Trade commission Chair’s attacks on business often do the opposite. Consider her new charge against pharmacy benefit managers (PBMs), which could result in higher healthcare premiums for all Americans.”

Democratic commissioners on Friday voted 3-0 to bring a complaint against PBMs for extracting rebates from drug makers in return for preferential placement on insurer formularies. The agency filed the charges in its administrative tribunal where it nearly always wins. (The two Republican commissioners were recused.) Congress has been debating how to regulate PBMs, but Ms. Khan isn’t waiting. She’s seeking to effectively ban PBM rebates by deeming them an “unfair method of competition” under the Federal Trade Commission Act.

The FTC’s essential charge is that PBMs play insulin manufacturers Novo Nordisk, Eli Lilly and Sanofi against each other to obtain higher rebates, which their clients use to reduce premiums for all patients. The complaint says PBMs’ “insatiable demand for larger rebates” has led to “artificially inflated list prices that are disconnected from the actual cost of the drugs to insurers,” and “many patients’ out-of-pocket expenses are directly or indirectly tied to these inflated prices.”

Yet even the FTC admits that net insulin prices after rebates have declined over time. This suggests competition fueled by the PBMs is working. But patients who pay co-insurance on medicines—which is set as a percentage of a drug’s list price—or who have high deductibles can get slammed by high list prices.

WSJ editors say, “As the FTC complaint notes, health plans can mitigate high list prices “by applying drug rebates directly at the pharmacy counter when the patient purchases the drug”—known as a point-of-sale rebate. It says employers aren’t doing this, but why is that the PBMs’ fault?”

The FTC says PBMs use rebates to inflate their profits, but this is contradicted by the complaint’s admission that they pass on 90% to 98% of rebate dollars to their clients—i.e., employer, union and Medicare Part D plans. A recent study by the healthcare research firm Nephron Research found that rebates accounted for only 13% of PBM profits in 2022.

In any case, plans have increasingly moved to point-of-sale rebates. This is one reason average insulin out-of-pocket costs fell to $21.19 from $31.52 between 2018 and 2022. Nearly 80% of insulin prescriptions cost less than $35 a month out of pocket in 2022.

The FTC complaint also points out that the three insulin makers last year slashed list prices on their most popular products by 65% to 78%. They also capped out-of-pocket costs at $25 to $35 a month for patients regardless of insurance. Yet the complaint says that even though insulin has become more affordable, PBMs still extract large rebates for other drugs that result in higher list prices. True, but those drugs aren’t the focus of the complaint. Generic competition has resulted in prescription drug prices rising at a third of the rate of overall consumer prices over the last five years.

The WSJ editors then raise an important question: “If rebates are a problem, why does Congress require them for government plans? Drug makers must pay Medicaid rebates that start at 23.1% of a medicine’s average price and can exceed 100%. The Trump Administration tried to ban rebates in Medicare, but the Congressional Budget Office estimated it would substantially raise senior premiums and increase government spending by $170 billion over 10 years. Congress blocked the rule. Yet now Ms. Khan wants to ban rebates in private insurance.”

This is typical federal dual standards – “One standard for thee, but not for me.” Just as the federal employees have a far better healthcare insurance system than the rest of us, they also want a different standard for rebates in government insurance plans than for the private sector.

WSJ editors summarize the situation: “The political irony is that PBMs have grown in size and power owing to government policies. Their vertical integration is a byproduct of ObamaCare’s insurance regulation, including its cap on profits. No less than ObamaCare architect Peter Orszag recently lamented that “the stance of the antitrust authorities is directly and problematically opposed to the thrust of other policies. Government has made a mess of healthcare financing, and Ms. Khan would make it worse.”

Cell Phone Ban in Schools Spreading

Politicians are finally waking up to the reality that cell phones are destroying our youth. Most of us have realized this for quite some time, but legislation to address the problem has been slow in coming.

The U.S. Surgeon General, Dr. Vivek Murthy, may have been the motivating force that changed all that.  In June, Dr. Murthy called for warning labels on social-media platforms, saying urgent action is needed to address a mental health emergency involving young people. Murthy says warning labels, similar to those on alcohol and tobacco products, should accompany platforms to “regularly remind parents that social media has not been proved safe.”

The negative impact cell phones have on education has been equally obvious for quite some time. Finally, state education officials are stepping up to solve this problem that threatens the education of our future generations.

Mark Bauerlein, writing in The Epoch Times, tells us on September 3, South Carolina Board of Education approved a new policy to “create a phone-free environment” in public schools throughout the state.  He says it is altogether clear on the negative impact of phones in kids’ hands. They are “electronic distractions,” says the policy, a threat to “focus and engagement.” We have no talk here of how handy the devices are, how they bring the universe of knowledge to a teenager’s eyes with a few taps. Those rosy descriptions of equipped youth that were so common a dozen years ago are missing. The policy is blunt and firm. A kid who sneaks a phone into a classroom “will be subject to progressive consequences in the student code of conduct and disciplinary enforcement procedures.”

This represents a major shift in attitudes across the country. Similar bans have already been passed in Arkansas, Florida, Indiana, and Louisiana. In July, Virginia Gov. Glenn Youngkin sent out an executive order stating “the necessity of implementing cell phone-free education in Virginia’s K–12 public schools.” Last month, California Gov. Gavin Newsom sent a letter to all schools decrying “the pervasive use of smartphones in schools.” New York Gov. Kathy Hochul and New York City Public Schools Chancellor David Banks are pushing bans, too, and 350 schools in the state have already established prescriptions of their own.

This shows this movement is not just one of one political party, but across the ideological spectrum, from liberal California to conservative Florida. Both parties have come to realize the cell phone in the classroom represents a threat to the education of our future generations. Baurlein says, “As phone use moved down the age ladder, test scores fell and emotional problems rose. The impairments were there for all to see 10 years ago. Only the titanic force of Silicon Valley marketing coupled with ordinary human frailty maintained the cachet of the phone long past its expiration date. Now that the awareness has reached the very top politicians, not just researchers and intellectuals of a skeptical bent, the truth is out and the right steps are being taken.”

Now the burden falls on parents, where it should have always been. Parents need to put limits on cell phone use at home, especially at the dinner table. My wife and I recently had dinner at a restaurant and the table next to us was four teenagers with their parents and all six were engrossed in their cell phones! Not a word of conversation between them. The dinner table has always been a time of connecting with friends and family – not with your cell phone!

These new state policies on cell phone use in the classroom give teachers a chance to take back control of their classroom and make learning the primary focus of school. What a novel idea!

Olympic Athletes’ Dietary Revolt

 

It used to be the Olympics was all about amateur athletic competition between nations. Those days are long gone. Today, we have professional athletes competing against other professional athletes. Gone are the days of amateurs in the Olympics. I don’t mind the shift to professionals as much as I mind the increasing political agenda of many nations. The Paris Olympics took politics and liberal political correctness to a whole new level – as one would expect from a liberal nation like France. The bizarre opening ceremony with its sacra religious depiction of The Last Supper even drew a rebuke from the liberal Pope Francis.

But today I’m writing about the controversy that received less attention – the French attempt to force the athletes to eat politically correct food! It’s no secret that Europe in general and the French in particular are climate change alarmists. But it was unexpected they would try to force athletes from all over the world to conform to their ideas about a “climate friendly diet.”

Dr. Charles Cornish-Dale, writing for The Epoch Times, tells us the French made a commitment that 30% of the food offered to the athletes should be vegetarian “to reduce the Games carbon footprint.” Naturally, the athletes revolted. Dissatisfied with the choices in the canteen, teams such as the Australians started flying in their own food instead. Teams complained, and to stave off a potentially damaging revolt, reports suggest that the organizers brought in 700 kilograms (about 1,543 pounds) of eggs and at least a metric ton of meat to replace “fake meat meals and non-dairy options.”

Dr. Cornish-Dale says, “Having to bring in extra meat and eggs was an embarrassment for the organizers, of course, but it was just as disappointing for advocates of plant-based diets more generally, who were hoping for a stunning vindication of their own dietary choices. The first plant-based Olympics: See, you really can break world records without eating meat, eggs, or dairy! Paris was intended to be the definitive test of a claim that’s made regularly now on behalf of plant-based diets, including in the 2018 documentary “The Game Changers,” which surprisingly was co-produced by a famous bodybuilder, a man who built his legendary physique with precisely the kind of foods we’re now being told we must abandon: superhuman quantities of steak, chicken, eggs, raw milk, and cream.”

Medical school taught me that a purely vegetarian diet cannot provide all the nutrients required for a healthy metabolism. Olympic athletes, perhaps the most health-conscious beings on earth, understood this and they revolted. They were only interested in peak performance at the games, not “saving the planet.”

Dr. Cornish-Dale goes on to say, “The Olympic athletes, by voting with their plates, reminded us of what we already know—or should know: A vegetarian, and especially a vegan diet, is maladaptive. Plant foods are not the foods we should be reaching for when we want to perform at the highest level. In fact, a diet built solely on plant foods will not make us healthy even in our day-to-day lives. Far from it.”

This misguided belief that the planet can be saved by altering our food sources has gotten out of hand. Some are calling for the abandonment of animal proteins in favor of laboratory-grown meat. In response, Florida Governor Ron DeSantis banned lab-grown meat in the state and producing or selling lab-grown meat is now punishable with a fine and up to 60 days in prison. DeSantis said his aim was to protect Florida’s “vibrant agricultural industry against acts of man, against an ideological agenda that wants to finger agriculture as the problem, that views things like raising cattle as destroying our climate.”

The French may have had good intentions, but foisting their ideas about climate change on a population of world-class athletes only reinforced the beliefs of many that climate change activists are unconnected to reality. However, this virtue signaling by the French may have one beneficial outcome – perhaps it will promote honest debate about what’s really going to impact climate change and what a really healthy diet is all about.