The Business of the Election: Pharma's Lobbying Agenda
Election season is upon us. President Joe Biden and former President Donald Trump are projected to win the primary elections for their respective parties after significant victories on Super Tuesday.
While we will never discuss politics, the elections have significant business ramifications across industries. Lobbying dollars paint a clear picture of industry priorities. Below are the industries that spent the most lobbying Congress and federal agencies in 2023, per OpenSecrets:
The Pharmaceuticals/Health Products industry spent the most money lobbying last year and has been the largest spender each year since 1999.
One of the important topics on the lobbying agenda this year is the role pharmacy benefit managers (PBMs) play in rising healthcare costs.
PBMs are known as the middlemen of the healthcare industry. The top PBMs, CVS Health’s Caremark, Cigna’s Evernoth/Express Scripts, and UnitedHealth’s OptumRx, accounted for nearly 80% of prescription claims in 2022. They negotiate payments with drugmakers on behalf of plan sponsors (employers, health insurers, etc.) for prescription medicines. Plan sponsors pay PBMs a fixed amount for each drug regardless of how much is reimbursed to the pharmacy. In the example from the diagram below, the PBM retains $10, the spread between the payment from the insurance plan ($100) and how much is reimbursed to the pharmacy ($90).
Drugmakers have argued that PBMs are forcing them to raise prices for their products. PBMs ramped up spending on lobbying against several proposed bills requiring them to make their negotiations with drugmakers public, including the fees they earn on each transaction. Pharmaceutical Care Management Association (PCMA), the leading lobbying group representing PBMs, spent $15 million in 2023, up almost 100% from 2022, per Reuters.
