You're Probably Getting Screwed by PBMs

How healthcare middlemen are hollowing out Main Street.

This week is National Small Business Week, but for many independent pharmacies across the country it is no time to celebrate as 2024 could be their last. Pharmacy Benefit Managers (PBMs) are using a range of anticompetitive conduct and immense market power to kill off independent pharmacies, particularly in rural communities.

Since 2003 nearly 16% of rural independent pharmacies closed and a recent survey found that nearly a third of pharmacies could close their doors by the end of this year. Meanwhile healthcare conglomerates are growing ever larger. CVS is now producing drugs it will sell in the stores it controls and UnitedHealthcare has created a behemoth that is the Standard Oil of healthcare and threatens the entire system.

If you want to learn more about the pharmacy crisis check out Pharmacists United for Truth and Transparency (PUTT), this video on GoodRx by Luke Slindee, and if you are in Minnesota - MnIndys - a grassroots pharmacy group.

YOU’RE PROBABLY (ALSO) GETTING SCREWED BY:

Vertical Integration in Healthcare

The American Economic Liberties Project (AELP) white paper mentioned in this week’s video is called “Medical Advantage and Vertical Integration in Healthcare.”

“Insurance giants like UnitedHealth Group are rapidly restructuring as vertically integrated conglomerates—fueled by wasteful government subsidies and a lax regulatory regime,” said Hayden Rooke-Ley, Sr. Fellow for Healthcare at the American Economic Liberties Project. “We know the risks of vertical consolidation and putting insurance companies in charge of care delivery: increased costs and denials of care, fewer independent practices and local pharmacies, and corporate executives empowered over physicians and their patients. But less recognized is how the prevailing model of government healthcare financing—epitomized by Medicare Advantage—is driving this latest wave of healthcare corporatization. It’s time for a new approach that embraces the government’s vital role in structuring the health care system toward public aims and restores power to clinicians and their patients.”

In Medicare Advantage, the government pays insurance companies roughly $500 billion annually to administer the benefit, $88 billion of which are overpayments relative to traditional Medicare.

You can also check out this op-ed in The Hill calling for a Glass-Steagall Act in healthcare, which was a law that kept commercial and investment banks separate to prevent the gambling of people’s money we saw during the financial crisis.

Lack of Enforcement of the Robinson-Patman Act

The Robinson-Patman Act is a Federal law from 1936 that prohibits anticompetitive practices (like price discrimination) by producers.

Here’s a great deep dive on the Robinson-Patman Act with antirust scholar Daniel Hanley of the Open Markets Institute on the Checkout Podcast hosted by Errol Schweizer.

NFL Owners and Taxpayer Dollars

In Pat Garofalo’s latest Boondoggle he talks about a piece of Tennessee legislation signed by Gov. Bill Lee last week that allows the Tennessee state Department of Tourist Development to keep contracts it negotiates with private businesses secret for up to 10 years. Those contracts will be shielded from public records law so long as the department’s director and the state attorney general agree that they meet the maddeningly vague standard of being of “a sensitive nature.”

The main benefactor of the new law is the NFL. Tennessee taxpayers have already put $1 billion into a stadium and this will add secrecy to the luring of getting a Super Bowl. 

Big Tech

Just a reminder that the first major antitrust trial of the 21st century will be having their final arguments on Thursday and Friday of this week. 

For more on what has happened and what to expect, Matt Stoller has been writing about it on Big. And for all of the happenings, you can follow along on Big Tech on Trial.

CEOs

In a classic case of whataboutism, Ryanair’s Michael O’Leary, who is up for a $108 million bonus, doesn’t see high CEO pay as a problem and said “Footballers are getting half a million a week.” I guess soccer players are jacking up the prices of airline tickets, too…

Corporate Profits

Corporate profits hit an all-time high in 2023. Profit margins were above 15 percent — a level not seen since the 1950s. News flash: Prices remain high because corporations got hooked on price-gouging and won't give it up.

And here’s a good video about it by Robert Reich.

SOME GOOD NEWS

Fun New Substack

JD urges you to check out New Country Traditions. It’s a newsletter and 120-minute weekly radio program. They blend classic country music from the past with emerging singers and songwriters redefining the genre for a new generation.

BEFORE YOU GO

Before you go, I need two things from you: 1) if you like something, please share it on social media or the next time you have coffee with a friend. 2) Ideas, if you have any ideas for future newsletter content please comment below. Thank you.

Break ‘Em Up, 

Justin Stofferahn