Largest pharmacy benefit managers have amassed market power at the expense of patients and independent pharmacies, FTC says
The U.S. Federal Trade Commission on Tuesday ramped up the pressure on prescription-drug middlemen who influence the accessibility and affordability of medications.
In a new report, the FTC detailed how just a handful of large pharmacy benefit managers have amassed market power that significantly impacts patients as well as independent pharmacists.
The six largest PBMs now manage 94% of all prescriptions filled in the U.S., according to the report. The industry's increasing vertical integration and concentration "has allowed PBMs to profit at the expense of patients and independent pharmacists," the FTC said in a release.
PBMs, which manage prescription-drug benefits on behalf of insurers, large employers and other payers, have also been under scrutiny from members of Congress and state attorneys general who question whether their business practices are driving up drug prices.
The interim staff report from the FTC's policy planning office comes more than two years after the FTC first launched its inquiry into PBMs, saying it would require the industry's six largest players to turn over details on their business practices.
Some of those details have not been forthcoming, the agency said Tuesday, noting that it has demanded that the companies submit the required details promptly. If any companies fail to fully comply "or engage in further delay tactics," the agency said in the release, "the FTC can take them to district court to compel compliance."
FTC chair Lina Khan signaled in April that she would not wait long for companies to submit all their details but would look to inform the public promptly about any preliminary conclusions from the inquiry. The Commission voted 4-to-1 to allow staff to issue the interim report, the agency said.
The top three PBMs-CVS Health Corp.'s (CVS) CVS Caremark, Cigna Group's (CI) Express Scripts, and UnitedHealth Group Inc.'s (UNH) Optum Rx-processed nearly 80% of the roughly 6.6 billion prescriptions dispensed by U.S. pharmacies last year, the report said.
CVS Caremark said in a statement that its members on average pay less than $8 per 30-day supply of medication and that brand-name drug net prices have dropped several years in a row. "This is the work we do every day on behalf of the businesses who provide benefits to their employees," the company said.
Spokespeople for Express Scripts and Optum Rx did not immediately respond to requests for comment on the report. The Pharmaceutical Care Management Association, an industry trade group, has said that PBMs help health plan sponsors and consumers save money on prescriptions by creating networks of more affordable pharmacies, encouraging the use of generics, negotiating rebates from drug makers, and other services.
But the new report "lays out how dominant pharmacy benefit managers can hike the cost of drugs-including overcharging patients for cancer drugs," Khan said in a statement Tuesday.
Companies operating the country's largest PBMs also own major health insurers and specialty and retail pharmacies, the report noted. This "vertical integration" lets PBMs favor their own businesses, such as by steering patients to their affiliated pharmacies and away from smaller, independent pharmacies, the FTC said. Pharmacies affiliated with the three largest PBMs now account for more than two-thirds of all specialty drug revenue, according to the report.
Such practices have allowed the three largest PBMs' pharmacies to retain large amounts of dispensing revenue in excess of their estimated drug acquisition costs, the FTC said, including nearly $1.6 billion in excess revenue from just two cancer drugs in less than three years. The analysis suggests "a misalignment of incentives where PBMs are not lowering prices for drugs used by patients to treat severe diseases like prostate cancer and leukemia," the report said.
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