The Legislature Shouldn’t be Used for Protectionism

The Legislature Shouldn’t be Used for Protectionism

Like it or not, prescription drugs – and, importantly, the cost of them – play an ever-increasing role in many Louisianans’ lives. As skyrocketing inflation continues to squeeze our pocketbooks, these issues are more important.

I wrote last summer about legislation that would have had made this problem worse through an attempt to over-regulate an innovative industry called pharmacy benefit managers (PBMs). Last year’s proposals would have created additional government bureaucracy and attempted to tip the marketplace in favor of these companies’ competitors.

So often, intra-industry legislative fights are about using government to create a competitive advantage for one side or the other, usually under the guise of “consumer protection” or the like. We love our neighborhood pharmacists as much as anyone else, but we’ll always stand against protectionism, over-regulation, and growing government bureaucracy.

Not surprisingly, a similar set of issues is back up and being considered by legislators once again this year. This time, it’s looking at the audits that often happen in the course of business between PBMs and local pharmacies.

Essentially, the PBMs regularly conduct audits to check for over- or under-payment made. These audits can be cumbersome on the pharmacies, and with lots of transactions, complex to be compliant. And, of course, sometimes there’s disagreement over the appropriate payment or price. Evidence exists of bad actors – like in any industry – who have gamed such a system to get around rules, and that bad behavior should be curtailed.

The legislature is seeking to address some of these issues, but the proposals on the table might go too far by limiting the ability of PBMs to effectively negotiate for lower prescription drug prices. It provides further messiness to an already messy and complex system. In the Pelican dream world, all of health care would be consumer-driven and transparent. Alas, with government so deeply ingrained, this is a challenge, but we shouldn’t make it worse or try to keep out market-based competition. After all, that’s what leads to more options and better outcomes for patients and consumers.

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