Louis Tharp: Drivers of High Drug Costs

Louis Tharp, cofounder and executive director of the Global Healthy Living Foundation, discusses what drives high drug costs in the United States.
May 10, 2018


What are some factors that are driving high costs of prescription drugs? Are pharmacy benefit managers playing a role here?

It’s really a diminishing returns issue here. When [pharmacy benefit managers, PBMs] first started, they were the administrative arm. They were the folks who tracked the distribution of drugs to patients, and they typically charged 10%.

Today, and today is kind of a metaphor here, they then found out that they could make a lot more money if they became more active. They were spun off as independent companies, they were free to do that, and while no one was watching, they took over the healthcare system in the [United States]. It’s not for the good of patients. Now, it’s a multi-billion-dollar monster that needs to be fed. I think Express Scipts' profits for 2017 were over $4 billion.

That’s money that doesn’t go to patients. At [Global Healthy Living Foundation, GHLF], we wonder whether that’s money that even needs to be in circulation. If you look at Medicare, it allocates 98 cents of every dollar to patient care. It’s the most efficient healthcare program in the United States, probably in the top 10 in the world. So, we know how to do this.


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