Recently, the United States Federal Trade Commission (FTC) announced that it would expand its probe into pharmacy benefit managers (PBMs) by issuing compulsory orders to two group purchasing organizations that negotiate rebates on behalf of PBMs, Zinc Health Services LLC and Ascent Health Services LLC.
The largest PBMs tend to be part of vertically integrated companies and act as middlemen who negotiate fees and rebates directly with drug manufacturers, create lists of medications that are covered by health insurance policies, and reimburse pharmacies for patient prescriptions. When PBMs integrate with health insurance companies and pharmacies, they influence not only what drugs are prescribed to patients, but also which pharmacies patients can use, and how much patients pay through their copays. PBMs can also exert undue influence over independent pharmacies, as they can leverage their power to create contractual terms with independent pharmacies that are unfair and arbitrary.
These two orders follow compulsory orders sent to the six largest PBMs in the healthcare industry, CVS Caremark; Express Scripts, Inc.; OptumRx, Inc.; Humana Pharmacy Solutions, Inc.; Prime Therapeutics LLC; and MedImpact Healthcare Systems, Inc.
Zinc and Ascent are considered group purchasing organizations, and are responsible for negotiating rebates with drug manufacturers on behalf of PBMs and holding the contracts that govern those rebates. Zinc operates as the group purchasing organization for CVS Caremark while Ascent operates as a group purchasing organization for several of the top PBMs, including Express Scripts, Prime Therapeutics, and Humana Pharmacy Solutions, as well as Envolve Pharmacy Solutions.
Complicating the PBM picture is that Caremark, Express Scripts, and Optum account for more than ¾ of the PBM market and all three are integrated with large national health plans: Aetna, Cigna, and UnitedHealthcare. As noted above with respect to Zinc and Ascent, these integrated companies own GPOs and myriad data on patients throughout the country.
The FTC is focused on understanding PBM practices, including charging fees and claw backs to unaffiliated pharmacies; steering patients to PBM-owned pharmacies; using complicated and opaque reimbursement methods; and negotiating rebates and fees with drug manufacturers that may skew formulary incentives and impact the costs of prescription drugs to patients and payers.
PBMs Under the Microscope
PBMs have come under increased scrutiny as their role in the pricing of prescription drugs aims to be better understood. In recent months, executives with three of the largest PBMs have testified before Congress and other Congressional hearings have taken place about their practices.
Earlier this year, House Committee on Oversight and Accountability Chairman James Comer launched an investigation into PBM tactics. In his investigation, he asked for documents and communications from both government officials (including from the Office of Personnel Management, Centers for Medicare and Medicaid Services, and Defense Health Agency) and PBM executives (including Express Scripts, CVS Caremark, and OptumRx).