Senator Chuck Grassley (R-Iowa) recently made waves claiming that pharmacy benefit managers (PBMs) are to blame for the volatility of insulin prices. It’s a bold statement, to be sure. But here’s the thing: the senator is absolutely right — and PolitiFact has confirmed as much.
On January 31, 2021, PolitiFact partnered with The Daily Iowan to release a fact-check on Grassley’s statement, ultimately providing the senator with its highest rating of “True” on the organization’s Truth-O-Meter™. “With their complicated discount negotiations,” PolitiFact concludes, PBMs play a role in driving upward the cost of insulin in America.
One fact that may surprise many is that the net price of insulin has been decreasing for years. But much to the dismay of those who depend on the drug to survive, those negotiated savings are rarely shared directly with patients — who see the list price of the drug climbing. As a result, patients with chronic conditions (like diabetes) are paying higher out-of-pocket costs. And unfortunately, PBMs’ business practices only exacerbate the situation.
PBMs — the middlemen of America’s healthcare system—are notorious for raising drug prices, and insulin is no exception. A 2018 study from the American Diabetes Association found that PBMs’ efforts to “negotiate” drug costs actually contribute to higher list prices. This system incentivizes higher list prices and larger rebates — only those discounts are not passed along to patients at the pharmacy counter, leading to higher health care costs.
Unsurprisingly, everyday Americans are the victims of this shady business practice and are forced to pay more for the medications they need to live healthily. One would expect that America’s patient advocates would be up in arms over this blatantly manipulative behavior. The AARP, for instance, is the largest special-interest organization in the nation. It claims to represent the concerns of millions of seniors throughout the United States on all issues of health care. Surely, it should care that PBMs and Big Insurance are hosing its members. Yet AARP is silent in the face of this injustice.
The real question isn’t whether PBMs bear significant responsibility for higher patient health care costs — they do. Instead, people should be asking: why doesn’t the AARP seem to care?
The frustrating answer is that, despite what the organization may claim, AARP doesn’t actually represent the interests of its members. Rather, it reflects those of its corporate funders: UnitedHealth Group (UHG) — the nation’s largest health care insurance company — and UHG’s wholly owned subsidiary, OptumRx. Each year, those businesses provide AARP with nearly 40 percent of the organization’s entire operating budget, dwarfing the amount received from membership dues. And here’s the kicker: UHG’s subsidiary, OptumRx, is one of the country’s biggest PBMs.
It’s no wonder, then, that AARP doesn’t jump at the chance to call out PBMs for the harm they are causing seniors. The “senior advocacy organization” is financially disincentivized from doing just that. Over the last decade, UHG has paid AARP well over $4.2 billion — funds that have seemingly bought the nonprofit’s fealty. “You don’t bite the hand that feeds you” is an adage the AARP has apparently taken to heart.
Unfortunately, this commitment to protecting PBMs and Big Insurance has left the AARP with little room to consider its members’ interests. In fact, in the case of rising health care costs, the two parties’ objectives are diametrically opposed. Seniors benefit from lower prices, but PBMs profit when they’re higher.
So where does the AARP stand? When faced with the clear fact that PBMs contribute to volatile insulin prices, the AARP’s silence says everything.
Jonathan Decker is executive director of American Commitment