FTC report criticizes pharmacy ‘middlemen’ for apparently raising prices and limiting access

Pharmacy benefit managers (PBMs) wield enormous power over the accessibility and cost of prescription drugs, and a new hard-hitting report of the Federal Trade Commission (FTC) concluded that “these powerful middlemen may be profiting by inflating drug costs and squeezing Main Street pharmacies.”

The report marks a significant intensification of scrutiny of the business practices of PBMs, the opaque intermediaries at the center of the pharmaceutical distribution system.

The team’s interim report, which is part of an ongoing investigation launched in 2022 by the FTC, details how increased vertical integration and concentration allowed the three largest PBMs – CVS Caremark Rx, Express Scripts, OptumRx – to manage nearly 80 per percent of the approximately 6.6 billion prescriptions filled in the United States.

Six of the largest PBMs handle nearly 95% of all prescriptions, according to the report.

PBMs negotiate the terms and conditions of access to prescription medications for hundreds of millions of Americans. They are responsible for negotiating prices with pharmaceutical companies, paying pharmacies, and determining which medications patients can access and how much they cost.

As the industry has become more consolidated, critics say PBMs have exerted greater control over patients’ access to medicines. PBMs are vertically integrated, serving as health plans and pharmaceuticals. The largest PBMs are owned by insurance companies, which own specialty, mail-order, or retail pharmacies.

The report also found that pharmacies affiliated with the three largest PBMs earned nearly $1.6 billion in excess revenue from just two cancer drugs in less than three years, reimbursing their own pharmacies at rates much higher than those unaffiliated.

PBMs “have substantial influence over independent pharmacies, imposing unfair, arbitrary and harmful contract terms that can affect independent pharmacies’ ability to stay in business and serve their communities,” the report concluded.

FTC Chair Lina Khan said in a statement that the report shows “how dominant pharmacy benefit managers can drive up the cost of drugs — including overcharging patients for cancer drugs.”

Khan added that the FTC found evidence of how “PBMs can squeeze independent pharmacies that many Americans – especially those in rural communities – depend on for essential care.”

The interim report also examined how intermediaries enter into agreements designed to block competition in favor of a manufacturer’s product.

PBMs and brand-name drug manufacturers negotiate rebates – volume-based discounts to plans and pharmacies – that the PBM then passes on to employers, in exchange for restrictions that limit access to less expensive competitors and instead push the drug from the manufacturer to patients.

“The result is that dominant PBMs can often exert significant control over which medications are available, at what price, and which pharmacies patients can use to access their prescribed medications,” the report stated.

The agency has not brought any lawsuits or enforcement actions against any individual benefits manager, but lawmakers have been highly critical of the industry’s business practices and the report could fuel congressional action as lawmakers seek to find the guilty parties. due to the high cost of prescribed medicines.

“I am proud that the FTC has launched a bipartisan investigation into these shady intermediaries, and its preliminary findings prove once again that it is time to end the PBM monopoly,” said Rep. Buddy Carter (R-Ga.), who is a pharmacist. , he said. “I call on the FTC to immediately conclude its investigation and initiate enforcement actions if – and when – it discovers illegal and anticompetitive PBM practices.”

Pharmaceutical companies and PBMs blame each other for rising drug costs. Manufacturers say they need to raise list prices because of high PBM discounts, but intermediaries argue those discounts are passed on to health plan sponsors.

In a statement, the trade group PBM Pharmaceutical Care Management Association criticized the FTC for what it said was a biased report “based on anecdotes and comments from anonymous sources and interested parties” as well as just two “cherry-picked case studies.” ”

PCMA President and CEO JC Scott said the agency’s leadership “has demonstrated that it has predetermined conclusions that it wishes to advance regardless of the facts or data, and this report demonstrates an intent to pursue its agenda regardless of the evidence.”

This story originally appeared on thehill.com read the full story