By Josh Royal
Although the Palmetto State has more than its share of health challenges, particularly within our rural population, Big Pharma lobbyists are demanding legislators take action to restrict Pharmacy Benefit Managers (PBMs), entities that businesses like mine utilize to obtain bulk pricing discounts for healthcare and to negotiate for the inclusion of the cheapest drugs available within their health plans.
Everyone knows that bulk purchasing saves everyone money. That’s exactly what PBMs do, and the research and statistics on their success speak for themselves. The National Bureau of Economic Research found that PBMs save consumers quite a bit every year, as did members of the Obama administration.
Yet, just days ago, the Federal Trade Commission issued a report that seems to suggest it is getting ready to regulate these groups even though a previous FTC study found they are not a problem.
The drug companies, allergic to the concept of having to offer cheaper prices, are also pushing Congress to pass legislation, the PBM Transparency Act, that would erect barriers to how PBMs currently operate. This legislation is harmful for South Carolina business owners and residents.
While South Carolina’s economy is doing well overall, the state’s small businesses are not without struggles.
According to the most recent Small Business Needs Assessment Survey from the South Carolina Small Business Development Centers and the University of South Carolina Darla Moore School of Business, nearly 85 percent of the businesses that attempted to hire in 2022 reported hiring as a major or minor challenge. More than 40% reported weak sales as a major challenge, while more than three quarters stated that inflation has adversely impacted their business activity.
Yet, despite these struggles, they continue funding the bulk of South Carolina employees’ health coverage.
The Kaiser Family Foundation uncovered that the average premium for employer-sponsored family health coverage has eclipsed $20,000 annually, and more than 70% of this is financed by business owners directly. That’s a hefty expense.
To ensure we can offer quality, comprehensive, coverage for the great people of the Palmetto State, my fellow business owners heavily depend on PBMs to get us the best deals possible. But if the pharmaceutical industry gets its way and Congress passes the PBM Transparency Act, which would effectively allow the drug giants to charge whatever they’d like, we will be left with two choices.
One choice would be cutting back on the coverage that we subsidize, which would quickly pose problematic. Studies have shown that 33% of South Carolinians ages 19 to 64 have already stopped taking medication or skipped doses due to cost. These people are relying on us to finance the bulk of their prescription drug coverage. They would be devastated if we would have to make cuts.
The other choice would be keeping our health plans as-is but reducing hiring and business growth in other areas. That is not something that anyone in our state wants to hear — especially now, at a time when our state treasury is depending on our economy to continue growing to meet all our expenses.
We won’t need to make either of these choices if members of Congress do not allow the pharmaceutical industry to continue courting their offices and tosses its PBM regulatory bill in the trash.
Encouragingly, Sen. Lindsey Graham has already championed holding Big Pharma accountable. Other elected officials can do the same. This boondoggle has gone on for long enough.
Royal was born and raised in Charleston. He’s a sixth-generation Charlestonian. His entrepreneurial journey began at the age of 15. He now leads Aventus, a minority-owned business providing services to e-commerce brands.
