DeSantis Lambasts ‘Medical Industrial Complex,’ Seeks Drug Rules

Michael Smith and John Tozzi
·2 min read
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(Bloomberg) -- Florida Governor Ron DeSantis on Thursday renewed calls to slap new regulations on the prescription drug plan industry in an effort to lower costs for consumers.

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The Republican governor wants the Florida legislature, which his party controls, to codify into law an executive order he signed last year that seeks to put new limits on so-called pharmacy benefit managers. DeSantis, who’s widely expected to run for president in 2024, slammed price hikes by the pharmaceutical industry, seizing on an issue that’s popular with voters nationwide.

“This whole medical industrial complex has all these different things that have built up, and a lot of that is imposing costs on American consumers,” the governor said at a news conference at The Villages, a sprawling retirement community north of Orlando.

DeSantis joins governors in other states, including New York, that are seeking to rein in pharmacy benefit managers, or PBMs, who operate prescription drug plans for employers and health insurers. PBMs process claims for prescriptions and oversee lists of approved drugs, negotiating with pharmaceutical companies for discounts and rebates. State lawmakers considered 135 bills to regulate PBMs last year, according to the National Academy for State Health Policy.

In recent years, PBMs have combined with other health-care companies that also control insurers and pharmacies. The three largest are units of CVS Health Corp., Cigna Corp. and UnitedHealth Group Inc.

DeSantis said this consolidation forces up prices by limiting where consumers can go to get the best deal on prescriptions. He proposed banning such limits, known as steering. “You shouldn’t have to rely on one big corporate chain,” he said.

‘First Step’

The governor said he wanted to help small, independent pharmacies compete, which would lower prices for consumers. He then called to the podium Katie Scanlon, head of the pharmacy division of supermarket chain Publix Super Markets Inc., which has 785 drugstores in Florida. “We feel this is a critical first step,” Scanlon said.

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Consolidation has drawn scrutiny from the Federal Trade Commission, which is examining PBM practices. The FTC is looking at the issues DeSantis wants to regulate: PBMs’ fees to pharmacies, how PBMs steer patients to affiliated pharmacies, and reimbursement methods.

The industry maintains that PBMs lower costs by getting discounts and rebates from pharmaceutical companies that are then passed along to employers or other health-care purchasers to lower premiums. But PBMs have faced persistent questions about how they make money and whether the discounts are fully passed on to consumers.

Politicians have criticized PBMs for a lack of transparency. For years, though, states had limited power to regulate them because they mostly operated in health benefit programs governed by federal law. A Supreme Court ruling in 2020 opened the door for additional state-level regulation.

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