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As is the case with the cost of education and the cost of housing, the cost of drugs is largely inflated
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because of the federal government's role in being the primary buyer or capital provider to that market. Through our
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purchases of prescription drugs, the federal government as a buyer doesn't have any incentive to keep prices low.
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If every individual had to pay for their drugs or private insurance was the only
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way to get your drugs, we would have a much more dynamic marketplace. So, the way that we negotiate drug prices is
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pretty messed up. There's also this construct in the market. These PBMs are pharmacy benefit managers. If they got
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cut out of the market, it would save a lot. There's three major PBM, CVS, Caremark, Expresscripts, and Optum RX.
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They make money in markups. The FTC has been investigating them and have several
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open cases between 2017 and 2022. The estimate that these companies generated $7.3 billion in excess profit by marking
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up prices on specialty generic drugs. So as an intermediary, they provide this role where they can coordinate between
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the health insurer, the pharmacy, which dispenses the drugs, and the drug manufacturer, but they're allowed to be
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owned by the payer, which is crazy. And now they're allowed to be owned by the payer. And there's a lot of obfuscation
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of the true cost of the drugs. There's a lot of markups, a lot of spread. And so
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if you took the PBM out of the market, that would solve one of the problems. But at the end of the day, anytime the
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federal government is involved as a payer in any market-based system, it creates a distortion and the market is
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no longer free or efficient.