PBMs ‘Wield Enormous Power’ Over Patient Access to Affordable Drugs: FTC

Entrance of the FTC in Washington, DC

Entrance to the Federal Trade Commission in Washington, DC

iStock, hapabapa

The Federal Trade Commission on Tuesday issued an interim report on the top pharmacy benefit managers, showing that they are generating massive profit at the expense of patients by inflating prescription drug costs.

he Federal Trade Commission released an interim report on Tuesday showing the power that pharmacy benefit managers exert over patients and their ability to afford and access prescription drugs.

The report, part of an inquiry launched by the FTC in 2022, details how increasing vertical integration and concentration has allowed six of the largest pharmacy benefit managers (PBMs) to manage around 95% of all prescription drugs filled in the U.S.

According to the report, the six most significant PBMs—Caremark Rx, Express Scripts, OptumRx, Humana Pharmacy Solutions, Prime Therapeutics and MedImpact Healthcare Systems—have achieved their dominance by becoming vertically integrated with upstream suppliers of goods and services, such as private drug labels and provider groups. PBMs are also linked to retail, mail-order and specialty pharmacies, according to the report.

Last year, the top three PBMs processed nearly 80% of the 6.6 billion prescriptions dispensed by U.S. pharmacies, while the top six combined processed more than 90%, the report found.

“The FTC’s interim report lays out how dominant pharmacy benefit managers can hike the cost of drugs—including overcharging patients for cancer drugs,” FTC Chair Lina Khan said in a statement. “The report also details how PBMs can squeeze independent pharmacies that many Americans—especially those in rural communities—depend on for essential care.”

The report contends that PBMs have “substantial influence” over independent pharmacies by levying unfair, arbitrary or harmful contractual terms that can impact their ability to stay in business. This includes PBM contracts not reflecting the total payment amounts, making it difficult for pharmacies to determine how much they will get in compensation.

The FTC claims that PBMs and brand pharmaceutical manufacturers are entering into agreements to exclude lower-cost competitor drugs from the PBMs’ formulary in exchange for increased rebates from the manufacturers.

Kahn noted in her statement that FTC will continue to use all of its tools and authority to “scrutinize dominant players across healthcare markets and ensure that Americans can access affordable healthcare.”

After launching its probe in 2022, the FTC widened its investigation into prescription middlemen last year and requested more information from group purchasing organizations to determine their effect in the broader industry.

The FTC has also been clamping down on the broader pharma industry. Last year, along with the Department of Justice, it issued draft guidelines to toughen its approach to anti-competitive practices and change its approach to examining mergers in the industry.

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