On this episode of the podcast, Terry and Bob explain how chronic disease patients often fall victim to high healthcare costs due to supply chain ‘middlemen’ driving up prices via kickbacks. The two biggest and most inflationary middlemen are known as group purchasing organizations (GPOs) and pharmacy benefit managers (PBMs). They inflate the prices of medical supplies and prescription drugs by demanding that manufacturers pay enormous kickbacks to bring their products to market. These prices get passed along to patients in the form of higher cost supplies and medications. 

Unfortunately, Terry and Bob note, these middlemen aren’t usually on lawmakers’ radars when it comes to lowering healthcare and prescription drug costs. They highlight how PBMs have taken over insurance companies to form some of the biggest companies in the world. However, there’s a growing movement to repeal the safe harbor provision that allows these kickbacks to GPOs and PBMs to exist. 

David Balat, Executive Director at Free2Care, joins the show to discuss how eliminating kickback protections for middlemen can lower overall healthcare costs and lead to further transparency in the industry. Repeal of the safe harbor protection could also bolster innovation, increase competition, and reduce costs. 

David highlights how GPOs can control and manipulate supply and demand and raise costs for very simple medical supplies like saline in the same way that PBMs drive up the cost of basic medications like insulin. He reveals that saline costs have increased by nearly 500 percent in just a few years. GPOs have a perverse incentive to raise costs because they receive a share of what hospitals purchase. Repeal would bring down the cost of goods in hospitals, lowering healthcare prices for patients. 

More of the conversation with David is included in the Patients Rising newsletter, which you can subscribe to.

Field correspondent Kate Pecora speaks with Erin Galyean, the author of BadAss Advocate, on how to become a fierce champion for the person you care for. She highlights how her sister’s medical experience helped spur her to become a patient advocate. She shares her tips for other caregivers and advocates following the routine: 1) reflect, 2) review, 3) reexamine, 4) reevaluate, and 5) recharge. 

Listen to Meet the Healthcare Mafia episode.