Nevada is facing several economic challenges. Unemployment is the second highest in the country. Inflation is making life hard as food and energy prices remain high. Even housing costs are skyrocketing, while health care costs continue to rise.

Unfortunately, recent actions by the Biden administration will make life even more expensive for the great people of this state.

The most recent example is its Federal Trade Commission’s (FTC) Sept. 20 suit against key health care savings groups that we depend on as state team members to keep Nevada’s health care spending and costs reasonable.

The groups the FTC is targeting, called pharmacy benefit managers (PBMs), are the best friends of Nevada’s health plan operators, which supervise the health plans and benefits of all the state’s public sector workers, including my own health plan. 

PBMs are negotiating agents used to keep Big Pharma in line. Just as employees have unions to lobby for their interests, health plan operators have PBMs to prevent the drugmakers from walking all over this state’s employees.

In general, PBMs are big companies. Each PBM manages the health care affairs of thousands upon thousands of businesses, which is good because Big Pharma are Goliaths themselves. The only way you can defeat a bad Goliath is with a good one.

Since PBMs manage the health care affairs of so many businesses, they have a vast patient pool, allowing them to bargain for better prices for all participants. Almost every health plan in our state uses PBM’s services for this very reason.

Small businesses make up a significant percentage of Nevada’s private employers and, according to the Nevada Office of Small Business Advocacy, employ almost half of our state’s workforce. These businesses don’t have enough personal leverage to obtain access to affordable medications on their own — and that’s why they use PBMs.

But the FTC doesn’t seem to like how big and successful these PBM companies have become. It wants big government to negotiate drug prices, not the private sector.

So, in an attempt to kill PBMs for good, the FTC just sued them, claiming without evidence that these groups are basically engaging in quid pro quos — obtaining rebates from drug companies in exchange for increased use of their products in consumers’ health plans. 

However, as one Republican FTC commissioner made clear earlier this summer, there is no evidence that the FTC’s anti-PBM claims are true. In fact, the only data we have demonstrates that they save us a ton of money.

As The Wall Street Journal editorial board put it in a Sept. 25 editorial: “The FTC says PBMs use rebates to inflate their profits, but this is contradicted by the complaint’s admission that they pass on 90% to 98% of rebate dollars to their clients — i.e., employer, union and Medicare Part D plans. A recent study by the healthcare research firm Nephron Research found that rebates accounted for only 13% of PBM profits in 2022.”

That’s why our health plan sponsors voluntarily decide to spend our own money on using PBMs’ services so often — because PBMs put significant downward pressure on drug costs. This also saves the state money when providing health services for its team members, saving all of us money as Nevada taxpayers.

It’s funny how the FTC’s lawsuit focuses on insulin prices, when, according to The Wall Street Journal, “… average insulin out-of-pocket costs fell to $21.19 from $31.52 between 2018 and 2022” and “nearly 80% of insulin prescriptions cost less than $35 a month out of pocket in 2022.” I can attest as my wife takes two types of insulin, and our out-of-pocket cost is less than $35 a month each.

PBMs are saving insulin users money. Why would the FTC take action that would cost insulin users more?

PBMs and the rebates they secure aren’t just benefiting insulin users. They’re helping every single American health care consumer.

The Congressional Budget Office found Medicare rebates save seniors significant sums in premiums every year and that outlawing rebates would cost the government $170 billion during the course of a decade.

Similarly, last year, the Department of Labor Office of the Inspector General found that the DOL overspent on prescription drugs by over $321 million between fiscal year 2015 and fiscal year 2020 because it failed to use a PBM.

Yet, in the eyes of the FTC, these PBMs are the bad guys — not the Big Pharma companies that keep raising drug list prices.

This lawsuit is ridiculous. If the FTC folks pushing this policy spent one day managing a health plan or balancing a state budget, they would clearly understand. Most, however, have never been productive in the real world and simply do not comprehend what most of us see as common sense.

They make all their decisions based on ideology that bigness always equals badness. What a flawed and dangerous mentality.

How can the groups that employers and their health plans choose to process 90 percent of their prescription drug claims through be so bad? Employers wouldn’t use their services if they were jacking up costs.

Fortunately, almost none of the FTC’s lawsuits have withstood the courts’ scrutiny during the last three-plus years, and it’s extremely unlikely that this one will fare any better.

Bottom line: The free market should determine PBMs’ fate, not government bureaucrats or the courts.

James Smack serves as the chief deputy controller for Nevada. He is a former Republican national committeeman for the state.

The Nevada Independent welcomes informed, cogent rebuttals to opinion pieces such as this. Send them to [email protected].