With today’s Executive Order, President Trump is right to focus attention on U.S. drug prices but in reality, prescription costs won’t meaningfully change unless we confront the real powerbrokers: offshore global middlemen and PBMs owned by insurance giants.
The insurance conglomerates and their pharmacy benefit managers (PBMs) have built a shadowy pricing system fueled by secret rebates, spread pricing, and foreign-based Group Purchasing Organizations (GPOs) like Ascent (Cigna), Zinc (CVS), and Emisar (UnitedHealth).
These rebate schemes, largely operate offshore and behind “safe harbor” protections, are distorting the market, exposing patient data and inflating prices for employers alike often by nearly 30%.
America is losing on global drug prices because mega-insurance companies are rigging the system, increasingly offshore.
While drug manufacturers often take the blame, they are in fact– clients—or captives—of these conglomerates. The real culprit in the global crisis of drug pricing are mega insurers and their increasingly illegal, opaque spread-pricing model which mushrooms profits and costs, hides patient discount, and makes the U.S. the laughingstock of Western medicine.
According to publicly reported data, U.S. pharmaceutical spending hit $722 billion last year, with at least $170 billion in “rebates” flowing through opaque, networks controlled by a handful of largely offshore insurance conglomerates. (Medicare Part D plan sponsors alone received $48.6 billion in rebates, according to the Government Accountability Office, that’s out of $210.6 billion in gross drug spending—covering just 49 million beneficiaries.)
While President Trump previously aimed to eliminate this distortion, the insurance industry responded by moving rebate collection overseas and rebranding it under new legal covers.
That’s not free-market innovation—that’s evasion.
The path forward must focus on rebuilding a transparent, domestic pharmaceutical supply chain, empowering employers, and eliminating hidden markups.
Drug pricing reform starts with exposing who’s really pulling the strings and working with industry and community stakeholders truly committed to make America healthy through market innovation and transformation.