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Big Pharma’s “delinking” scheme: A dangerous money grab that will hurt seniors’ wallets and America’s future

By willowt // 2024-12-17

• The proposed policy aims to disconnect pharmacy benefit managers (PBMs) from rebate negotiations, enriching Big Pharma at the expense of Americans, with a potential $32 billion windfall for drug companies.
• University of Chicago economist Casey Mulligan estimates that "delinking" would increase Medicare Part D premiums by $13 billion annually and raise federal spending 10 billion, while Big Pharma profits rise by $10 billion.
• Prominent figures like Donald Trump Jr., Charlie Kirk, and Larry Elder have criticized "delinking" as a "massive money grab" that undermines free market forces and increases premiums for seniors.
• The Paragon Health Institute argues that eliminating rebates would weaken PBMs' incentives to negotiate lower drug prices, handing Big Pharma a $32 billion windfall while harming consumers and taxpayers.
• The policy could lead to higher health care costs, undermine competition, and pave the way for more government control, with conservatives urging Congress to reject the proposal to protect seniors and taxpayers.

In the shadowy corners of Washington’s lame-duck session, a sinister plot is unfolding — one that threatens to line the pockets of Big Pharma while emptying the bank accounts of America’s seniors, taxpayers, and employers. The scheme, known as “delinking,” is being peddled as a solution to rising drug costs, but its true purpose is far more insidious: to dismantle market-based incentives and funnel billions into the coffers of pharmaceutical giants. At its core, “delinking” would sever the connection between pharmacy benefit managers (PBMs) and the rebates they negotiate on behalf of insurers. These rebates, which currently reduce both total drug spending and premiums, are a critical incentive for PBMs to secure the best possible prices for consumers. By eliminating this link, Big Pharma aims to undermine the very mechanism that keeps drug prices in check, all while reaping a staggering $32 billion windfall. The numbers tell a damning story. According to University of Chicago Professor of Economics Casey Mulligan, this policy would hike Medicare Part D premiums by a jaw-dropping $13 billion annually. Federal spending would skyrocket by $10 billion every year, while Big Pharma cashes in on an additional $10 billion in profits. This is not a solution — it’s a heist, plain and simple. Conservatives have been quick to sound the alarm. Former Trump administration officials, prominent commentators, and leading think tanks have all condemned the scheme as a brazen attempt to enrich drug companies at the expense of American taxpayers. Donald Trump Jr. and Dan Scavino have exposed the plan as a “massive money grab,” while Charlie Kirk has warned of its potential to “eliminate free market forces in health care.” Even Larry Elder has joined the chorus, urging Congress to reject the scheme and protect seniors from higher premiums. The Paragon Health Institute, a preeminent conservative think tank, has issued a stark warning against “delinking.” In their policy recommendations, they argue that eliminating the practice would undermine the incentive for PBMs to negotiate the best prices on drugs. “Delinking PBM revenue from rebates,” they write, “is key to ensuring PBMs negotiate the best price on drugs possible.” By severing this link, Congress would effectively hand Big Pharma a blank check, while saddling patients and taxpayers with the bill.

Conservatives sounding the alarm

This is not the first time such policies have been proposed. In 2019, similar measures were floated but ultimately scuttled thanks to President Trump’s leadership. Now, with the Biden administration in power and a divided Congress in its final days, Big Pharma is once again pushing for “delinking” — this time with renewed urgency. The implications of this scheme are far-reaching. Not only would it lead to higher premiums for seniors, but it would also undermine competition in the health care market, paving the way for a more government-controlled system. Hugh Hewitt, a conservative political commentator, has described the plan as a “dead of night” effort to “cripple the pharmacy benefit managers” and deliver a $32 billion windfall to drug companies. Who pays? “You and I pay,” he warns. The economic consequences are equally dire. Mulligan’s analysis reveals that federal spending would surge by $10 billion annually, while health care premiums for seniors would rise by $13 billion. These costs would inevitably trickle down to employers and taxpayers, further straining an already fragile economy. In a time of economic uncertainty, the last thing America needs is a policy that enriches corporate giants while punishing the most vulnerable members of society. Yet, that is exactly what “delinking” promises to deliver. It is a scheme designed not to lower drug prices, but to consolidate power and profit in the hands of a few. Congress must reject this dangerous proposal. Lawmakers must stand up to Big Pharma, protect seniors from higher premiums, and preserve the market-based incentives that have kept drug prices in check. The stakes are too high to do otherwise. America’s seniors, taxpayers, and employers deserve better than a $32 billion bailout for Big Pharma. It’s time to sound the alarm and demand that Congress reject this disastrous scheme before it’s too late. Sources include: ConservativesforLowerHealthCareCosts.com NationalBureauofEconomicResearch.org ParagonInstitute.org

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