Trump wants to cut out ‘middleman’ as part of drug pricing order: What are pharmacy benefit managers?

FOX Business

Reporter: Daniella Genovese

President Donald Trump announced this week that the administration is going to "totally cut out the middleman" in the pharmaceutical industry as it aims to lower the costs of prescription drugs for Americans. 

Under the administration's "most-favored nation" executive order, Trump said on Tuesday that the U.S. will begin paying the "lowest price there is in the world" for medications. The president said that part of his plan to cut costs includes getting rid of pharmacy benefit managers (PBMs), who are often described as "middlemen" because they act as the intermediary between drug manufacturers, insurers and pharmacies. 

"We're going to totally cut out the famous middleman. Nobody knows who they are… I've been hearing the term for 25 years," Trump said during a Tuesday press conference at the White House. "We're going to cut out the middleman and facilitate the direct sale of drugs at the most favored national price directly to the American citizen. So we're cutting out the middleman. It's so important."

He did not disclose details about how he plans to cut out PBMs. However, some pharmaceutical giants are in agreement that their role needs to change, with Eli Lilly telling FOX Business that the only way to lower prices for U.S. consumers is if "intermediaries take less for themselves." 

More from FOX Business: TRUMP SAYS DRUG PRICES WILL BE CUT BY AS MUCH AS 90%: WHAT TO KNOW

"For Lilly, more than 60% of the cost of a medicine goes to middlemen. We look forward to working with the Administration to fix this broken system and bring lower prices directly to consumers," the company said. 

Independent pharmacists often claim that pharmacy benefit managers are to blame for their financial struggles as they reduce reimbursement rates for medications, making it difficult to cover operational costs... CONTINUE READING