Congress must stop drug wholesalers' price-fixing schemes

As a physician with over forty years of experience in the medical field, I could not be more disappointed with how profiteering has taken over America's health care industry.

The health care sector accounts for more than one sixth of our economy.  With so much money at stake, health care actors can't seem to help but enrich themselves — typically at the expense of patients. 

One of the biggest culprits turns out to be the drug industry, but in ways that the American public is generally unaware of.  It involves middlemen who have interposed themselves between the drug manufacturers and the consumer.  These middlemen contribute nothing to the well-being of patients — instead, they steal money from them, directly and indirectly. 

One middleman that has slinked into the health care system is pharmacy services administrative organizations (PSAOs).  These "service organizations" supposedly represent pharmacies at the negotiating table to get better prices on drugs.  But since many of the PSAOs are owned by the drug wholesalers, which have a vested interest in keeping prices as high as possible, these monopolies can inflate the cost of drugs at every point in the drug purchasing process.  Patients pay the inflated prices and come out losers. 

This headline from The Washington Post put it best: "Prescription drug wholesalers reaped windfall from alleged price-fixing."  Nearly every state and the Department of Justice have investigated this matter, which state attorneys general have dubbed the most extensive price-fixing conspiracy in United States history.  Their efforts, which culminated in a $400-million settlement and some ongoing lawsuits, deal with how some of the nation's most prominent drug manufacturers may have colluded to "boost the cost of common drugs by as much as 1,000 to 4,000 percent."  And the nation's three largest drug wholesalers, which control 85 percent of the drug market, may have allowed it to happen.

Patients shouldn't have to choose between putting food on the table for their families and taking the medications they need to stay safe and healthy, but this is the unfortunate health care landscape that many now face.  It is long past due for Congress to act to address these concerns. 

Congress has debated and considered many measures to address the continued calcification of the health care industry, but it's time for it to take its efforts a step farther.  Following the lead of a handful of states, it should root out the real problem: the middlemen who have taken hold of the drug industry.  Drug prices would be significantly lower if the middlemen were eliminated from the process of getting drugs into the hands of patients.  Only then will patients receive the relief they genuinely need and deserve.

Dr. Hal Scherz is founder and secretary of the Docs 4 Patient Care Foundation.

Image: Ben Harvey via Flickr, CC BY 2.0.

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