Editor’s Note: The following is a testimony delivered by Neeraj Sood to the U.S. Senate Committee on the Judiciary on May 13, 2025. More information about the hearing can be found here.
Key Points:
- A substantial portion of what Americans pay for prescription drugs is captured by intermediaries in the distribution system, some of whom neither develop nor directly provide these medications to patients.
- Vertically-integrated pharmacy benefit managers-insurers-pharmacies earn higher profits from their investments compared to the average firm in the S&P 500, suggesting lack of competition in these markets. This trend in vertical integration raises significant antitrust concerns.
- Our study of the insulin market shows that PBMs are doing part of their job—negotiating lower prices from manufacturers—but failing at another crucial aspect: ensuring these savings benefited patients and the healthcare system more broadly.
- The current system of confidential rebates and rising list prices benefits all firms in the pharmaceutical supply chain at the expense of the American patient.
- Increasing price transparency, giving PBMs the fiduciary responsibility to act in the best of interests of health plans and their members, reforming rebates, and addressing antitrust concerns from vertical integration can help make the prescription drug market more competitive and work better for the American patient.
Full testimony is available here. Schaeffer Center research on PBMs is available here.
