Legislative Proposal Aims to Regulate Healthcare Conglomerates and Promote Competition in Market

Lawmakers Want to Break Up Healthcare Conglomerates, Force Shedding of Pharmacies

A group of lawmakers, including Senators Elizabeth Warren and Josh Hawley, have proposed legislation aimed at breaking up healthcare conglomerates that own both pharmacies and pharmaceutical manufacturers. This move is part of an effort to increase competition in the market and drive down prices for patients.

To understand why this proposal has become necessary, let’s take a step back and look at how we got here. The pharmacy benefit manager (PBM) industry has grown significantly over the past few decades, with large companies like Express Scripts and CVS Caremark expanding their reach through acquisitions. This consolidation has raised concerns about anti-competitive practices and potential price manipulation.

In 2018, Senators Warren and Hawley introduced the “Stop Consolidation Now Act” to address these concerns. Their proposal aims to prevent healthcare conglomerates from owning both pharmacies and pharmaceutical manufacturers. This would be done by requiring companies like CVS Health, Walgreens Boots Alliance, and Rite Aid to spin off their pharmacy businesses or sell them to independent entities.

The reason for this proposed intervention lies in the complex web of relationships between these firms. Historically, PBMs have acted as a middleman between drug manufacturers and patients. They negotiate prices with pharmaceutical companies and then bill payers (such as insurance providers) on behalf of the government.

However, as these large PBMs grew, they began to acquire pharmacies and other healthcare services. This vertical integration has led to concerns that these companies might use their market dominance to stifle competition and drive up costs for patients.

Source: www.forbes.com