Ban the Middleman Act

Pharmacy Benefit Managers or “PBMs” don’t manufacture prescription drugs. They don’t dispense prescription drugs. They just extract profit by operating as middlemen in the space between drug manufacturers and patients. Every single reform attempt has taught them a new way to game the system. The only solution is elimination, not regulation.

Consider the Ohio problem: PBMs have historically used a tactic known as “spread pricing” where they charge employers and insurers more for prescription drugs than they pay pharmacies to distribute the drugs, keeping the difference as profit. Ohio banned this corrupt practice in Medicaid in 2018 after PBMs overcharged the state by $225M in a single year. PBMs simply pivoted. They pay pharmacies above contract, then claw back the difference. Net savings: zero.

Nobody needs PBMs.

Every function PBMs perform either already exists or can be replaced by a public entity at lower cost, with no conflict of interest. The VA and Medicaid negotiate drug prices directly without PBMs, and they get the same or better pricing. Claims processing is just an IT function. Independent pharmacies design formularies. CMS already negotiates some prescription drug prices under the Inflation Reduction Act, passed by Democrats in 2022. PBMs offer zero additional value. They exist to line their own pockets at the expense of Americans struggling to afford prescription medication.

As Michigan’s next U.S. Senator, Dr. Abdul El-Sayed will introduce legislation to:

1. Abolish the PBM middleman business model entirely. That includes rebate aggregators, Group Purchasing Organizations, and utilization management entities, sunsetting them over a three year transition period. He will ban the rebate system entirely, requiring drug discounts to be upfront and visible to patients at the point of sale.
2. Bar PBMs or other entities from blocking or delaying access to lower-cost generic drugs and biosimilars through prior authorization requirements, step-therapy mandates, or other administrative hurdles, ensuring these medications are automatically placed on more affordable tiers than their brand-name counterparts. This guarantees patients can access affordable medication without interference from middlemen protecting their own profits.
3. Expand CMS drug price negotiation under the Inflation Reduction Act Medicare drug negotiation authority to cover all federally regulated plans. This will allow for direct manufacturer-to-payer negotiation under public transparency rules for commercial markets, using CMS-published reference prices as a floor.
4. Create a public pharmacy benefit administrator through a CMS-run claims processor and benefit administrator available to employers, self-insured plans, and small insurers at cost. That means no profit motive, no manufacturer contracts, no affiliated pharmacies, and therefore no extra costs passed on to consumers. 
5. Require decisions regarding drug coverage and pricing to be made by independent medical experts–not insurance or drug-industry insiders–by establishing transparent committees free from pharmaceutical industry influence, similar to the systems used by the VA and state Medicaid programs. Drug placement would be based on clinical evidence and cost-effectiveness, not rebate size.
6. Make sure any pharmacy meeting defined safety and dispensing standards is automatically in-network. Reimbursement floors will be set by a public rate-setting authority to protect independent pharmacies from the below-cost reimbursements that have shuttered them.
7. Establish an independent pharmacy transition fund financed by repayments from PBMs found to have engaged in anticompetitive pricing to support independent pharmacies harmed by decades of PBM self-dealing, with priority for rural and underserved communities.