On June 7, 2022, the Federal Trade Commission (FTC) announced its inquiry into the pharmacy benefit manager (PBM) industry. As part of the inquiry, the six largest PBMs – CVS Caremark; Express Scripts, Inc.; OptumRx, Inc.; Humana Inc.; Prime Therapeutics LLC; and MedImpact Healthcare Systems, Inc. – have been asked to provide information and records regarding their business practices. The FTC will “scrutinize the impact of vertically integrated pharmacy benefit managers on the access and affordability of prescription drugs.”
The inquiry will focus on PBMs’ role in the United States pharmaceutical system. The largest PBMs are now vertically integrated with the largest health insurance companies and wholly owned mail order and specialty pharmacies. Therefore, FTC states, “[i]n these roles, pharmacy benefit managers often have enormous influence on which drugs are prescribed to patients, which pharmacies patients can use, and how much patients ultimately pay at the pharmacy counter.”
Through the inquiry, the FTC will focus on practices that have drawn scrutiny in recent years, including:
- fees and claw backs charged to unaffiliated pharmacies
- methods to steer patients towards pharmacy benefit manager-owned pharmacies
- potentially unfair audits of independent pharmacies
- complicated and opaque methods to determine pharmacy reimbursement
- the prevalence of prior authorizations and other administrative restrictions
- the use of specialty drug lists and surrounding specialty drug policies
- the impact of rebates and fees from drug manufacturers on formulary design and the costs of prescription drugs to payers and patients.
The inquiry will continue to build on the request for information about pharmacy benefit managers that the FTC launched on February 24, 2022 – to which it has already received more than 24,000 public comments. The request for information covered a wide range of issues from contract terms to rebates, fees, and pricing policies to steering methods, conflicts of interest, and consolidation.
Specific Requests
The FTC has an in-depth list of 38 different documents, names, and information requested from the companies, including: specific annual pharmacy reimbursement data for each Relevant Entity reimbursed by the PBM for each of the top 100 drugs by total annual number of 30-day equivalent prescriptions; a list of all Company contracts that determine reimbursement of any Relevant Entity including specific detailed contract terms; a copy of all meeting minutes and related presentations to the Company’s Board of Directors relating to PBM Services, as well as a list of members of the board of directors or board of trustees, including each member’s name, address, occupation, and period of service; and a list of all Pharmacy Benefit Plans administered by the Company and identify every Pharmacy Network associated with each Plan.
Statements
“Although many people have never heard of pharmacy benefit managers, these powerful middlemen have enormous influence over the U.S. prescription drug system,” said Federal Trade Commission Chair Lina M. Khan. “This study will shine a light on these companies’ practices and their impact on pharmacies, payers, doctors, and patients.”
Former FTC policy director and public interest antitrust attorney David Balto said, Pharmacy benefit managers are able to inflate drug costs and deny consumers the drugs they need because they exist behind a cloak of secrecy. Hopefully, the FTC study will put a spotlight on these egregious practices and enable patients to get the vital drugs and services they need.
“It’s about time the FTC decided to formally look into the abusive practices of pharmacy benefit managers,” said George Huntley, CEO of the Diabetes Leadership Council. “PBM middlemen’s harmful business models have made insulin and other life-sustaining drugs unaffordable and inaccessible to many of the 37 million Americans with diabetes. DLC thanks the thousands of patients and patient advocates who petitioned the FTC and applauds the commission for its action today.”