Chapter 597 - 279: Creating a Fait Accompli

In Pittsburgh City Hall, the blinds in the Mayor’s Office were halfway drawn.

Only two people were in the room, along with a four-hundred-page document.

Ethan placed the freshly printed draft on the desk.

The paper was still warm from the printer, giving off the distinct smell of toner.

A line of bold text was printed on the cover:

The Pennsylvania Medicine Benefits Transparency and Fairness Bill

"This is our weapon."

Ethan unbuttoned his suit jacket and sat down across from Leo.

He looked exhausted, his eyes puffy, but there was a glint of excitement in his gaze.

Leo reached out and opened the cover.

"Tell me," Leo said calmly, "how we’re going to slay the giant."

Ethan leaned forward and turned to the first part of the bill.

"The first fifty pages are all sugar-coating."

Ethan’s finger slid across the articles.

"Chapter One is about price transparency. We’re requiring all pharmacy benefit managers operating in Pennsylvania to publicly disclose the rock-bottom prices they negotiate with drug manufacturers, as well as the final settlement price for pharmacies. Any form of price inversion will be prohibited."

"Chapter Two contains our anti-kickback provisions. It strictly prohibits pharmacy benefit managers from accepting hidden kickbacks from drug manufacturers under the guise of marketing fees or volume rebates. All discounts must be directly reflected in the final retail price of the drug, passing the savings on to the patient."

"Chapter Three covers the special regulation of opioids. This will be the key point for our public messaging. We’ve established an extremely stringent tracking mechanism for the distribution of addictive painkillers. Any pharmacy benefit manager that attempts to profit from over-prescribing will face criminal charges."

Leo nodded.

These articles stood on the absolute moral high ground.

No politician would dare to publicly oppose these articles.

Who would dare say, "I support kickbacks"? Who would dare say, "I support the opioid epidemic"? Who would dare say, "I oppose price transparency"?

"These provisions are perfect," Leo commented. "The insurance giants will get a headache from this, but it won’t be enough to kill them. They have plenty of ways to cook the books or use complex offshore company structures to circumvent these regulations."

"Exactly."

A cunning smile appeared on Ethan’s face.

"That’s why the real killing blow comes later."

He flipped rapidly through the pages, stopping at Article 107.

The text on this page looked unremarkable, easily overlooked amidst a sea of administrative jargon.

Article 107: Provisions Regarding Data Sovereignty and Special Audits.

"Look here."

Ethan read the arcane text aloud.

"’To ensure the security of Pennsylvania residents’ health data and the compliant use of health insurance funds, any pharmacy benefit manager conducting business within this state must store all raw operational data, pricing models, and transaction records related to its in-state business on physical servers located within the borders of Pennsylvania.’"

"’Furthermore, said servers must be connected to a public data supervision interface designated by the State Government, and be subject to real-time, invasive oversight.’"

Ethan looked up at Leo.

"That’s the first cut: data localization."

"CVS, United Health, and Express Scripts—the data centers for these three giants are all in the cloud, or hidden away in tax havens like Delaware or overseas. Their pricing models are core trade secrets. They’re the algorithmic black boxes they use to suck this industry dry."

"If they want to do business in Pennsylvania, they’ll have to move that black box right under our noses."

"And that’s not all."

Ethan pointed further down the page.

"Look at the second clause."

"’The State Government will establish an independent public oversight committee. This committee will have the authority to conduct unscheduled, unannounced special audits of pharmacy benefit managers. The scope of the audit includes, but is not limited to: upstream and downstream contracts, email correspondence, and all financial transactions.’"

"’Should a pharmacy benefit manager refuse to provide data or obstruct an audit, the State Government has the right to immediately revoke its business license in Pennsylvania and freeze all funds in its in-state accounts.’"

Ethan closed the document with a soft snap.

"The giants will never accept these terms. It’s the equivalent of making them run naked through downtown."

"If they agree to Pennsylvania’s audit, then tomorrow New York will demand the same, and California will follow. Their nationwide monopoly will collapse like a set of dominoes."

"To protect their national market, to guard their core trade secrets..."

"They only have one choice."

Ethan made a slicing motion with his hand.

"Withdraw from the Pennsylvania market."

"They’ll voluntarily cut off their business in Pennsylvania, citing a deteriorating business environment or excessive regulation. Or they’ll try to threaten us by cutting off supplies, just like they did before."

Leo leaned back in his chair, his fingers tapping lightly on the desk.

"And that’s exactly what we want."

Leo continued the thought.

"The moment they pull out, a vacuum will be created in the market."

"The medication needs of millions of people won’t just disappear. Billions of dollars in cash flow will have to find an outlet."

"And at that point, only one company will be able to perfectly comply with all the provisions of Article 107."

Leo gazed out the window, his eyes seeming to pierce through space and fix upon Chestnut Hill in Philadelphia.

"The Pennsylvania Pharmacy Benefit Management company. Penn-PBM."

"Because this company was tailor-made for this bill from the very beginning."

"Its servers are in Philadelphia. Its data interface has been connected to our regulatory system from day one. Our people are on its board of directors. And we know every single one of its accounts like the back of our hand."