The Federal Trade Commission (FTC) is supposed to protect the public from unfair and deceptive business practices, such as “collusion.” But, what happens if the collusion is being perpetrated by government regulators themselves?
Unfortunately, this is precisely what the Biden Administration’s FTC appears to be doing, led by avowed anti-free market advocate Lina Khan.
The regulatory agency Ms. Khan heads is working to actively break up companies and industries that are operating lawfully in the marketplace, for what clearly appear to be ideological considerations rather than legitimate, honest concerns for consumer welfare.
The handwriting for this abuse actually was on the wall as early as 2021, when it became apparent that the FTC was rescinding the long-standing “consumer welfare” standard it had employed since the 1970s, according to which the Commission would not intervene in or seek to regulate businesses or sectors of the economy unless the American people’s interests were being harmed. Sadly, this is no longer the case.
Having jettisoned that standard, Khan is now using her power to attack industries disfavored by her boss, President Joe Biden. Their targets now include prescription drug prices, and consumers may soon feel the results of this new game of regulatory abuse in higher prices at the pharmacy counter.
Specifically, Khan is going after “pharmacy benefit managers” or PBMs. These groups are hired by health plan sponsors, including the federal government, insurance companies and employers to go head-to-head with drug companies at the negotiating table to secure lower drug costs for consumers.
PBMs have been demonstrably effective at lowering prescription drug costs, as noted in a July 2022 study by Casey B. Mulligan (President Trump’s former Council of Economic Advisers chief economist), which concluded they are worth at least $145 billion annually beyond their resource costs.
So what exactly is Khan doing? Rather than praising PBM’s success in lowering consumer drug costs, she recently withdrew the FTC’s previous endorsement guidance of PBMs and appears to be moving to impose stifling regulations against them. In this context, the industry interests with which Khan has aligned herself offer some disturbing but revealing clues as to her motives.
In 2022, Khan delivered the keynote address at the National Community Pharmacists Association’s (NCPA) annual convention. This is — or should be — concerning, insofar as the NCPA has endorsed and is aggressively pushing for new regulations on PBMs and, working with America’s major drug companies, is hardly an impartial actor in the healthcare industry.
The Heartland Institute’s Ashley Herzog, for example, has described the bias of the NCPA well, writing in an op-ed for the Washington Examiner:
“The NCPA’s receipt of significant annual donations from the three monopolistic drug wholesalers that handle more than 90% of the United States’s drugs should tell Congress everything it needs to know about this group’s priorities. Far from being innocent actors, these drug wholesalers are facing an investigation from 49 state attorneys general for allegedly participating in price-fixing schemes. Yet, not only does the NCPA take their money, but it has also given executives from all three companies a spot on the board of its Innovation Center.”
It is hardly coincidental when we see the FTC working hand-in-glove with the same companies that have an interest in raising consumer drug prices, but this appears to be exactly what is happening.
It is in this context that the American Accountability Foundation recently submitted a Freedom of Information Act request to the FTC, “seeking access to all communications between Khan and other agency staff related to PBMs, the National Community Pharmacists Association, and other drug manufacturers.”
The chairwoman reportedly is poised to face an ethics inquiry, and for good reason, insofar as under her watch, the FTC appears to have reversed its position on PBMs for no reason other than major drug industry interests wanted it to.
Right now would be the perfect time for House Judiciary Chairman Jim Jordan (R-OH) to launch hearings into this — and perhaps other — clear conflicts of interest and abuses of Uncle Sam’s vast regulatory powers as wielded by the FTC.
It is no secret that massive deficit spending continues to fan inflation, including prices for pharmaceuticals. That the Biden Administration is adding fuel to those inflationary fires by apparently colluding with groups in cahoots with drug manufacturers and wholesalers to jack up prices, presents a perfect opportunity for House Republicans to highlight such regulatory abuse, and to show American consumers who’s truly on their side.
Bob Barr represented Georgia’s Seventh District in the U.S. House of Representatives from 1995 to 2003. He served as the United States Attorney in Atlanta from 1986 to 1990 and was an official with the CIA in the 1970s. He now practices law in Atlanta, Georgia and serves as head of Liberty Guard.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller.
