FTC says prescription brokers are pressuring Main Street pharmacies

Prescription drug middlemen, also known as pharmacy benefit managers, are lining their pockets by inflating drug prices, including by overcharging cancer patients, the Federal Trade Commission said Tuesday.

“The FTC's interim report explains how dominant pharmacy benefit managers can drive up drug costs, including overcharging patients for cancer drugs,” FTC Chair Lina M. Khan said in a news release. Edition. “The report also describes how PBMs could squeeze independent pharmacies that many Americans — especially those in rural communities — rely on for essential care.”

Pharmacy Benefit Managers started decades ago as administrators that validated and processed pharmacy benefits provided by individual insurance plans. After years of acquisitions, that’s no longer the case, as the FTC details in its report.

PBMs now act as vertically integrated health insurers and pharmacists, wielding enormous control over the availability and cost of medications by negotiating the terms of access to prescription drugs for hundreds of millions of Americans.

The three largest PBMs — CVS Caremark, Express Scripts and OptumRX — now manage nearly 80% of all prescriptions filled in this country, the FTC noted. If the next three largest — Humana Pharmacy Solutions, MedImpact and Prime — are included, the six would oversee 94% of prescription drug claims in the U.S.

All six of the largest PBMs operate mail-order and specialty pharmacies, and one — CVS Caremark — operates the nation’s largest retail pharmacy chain. Five of those six are now part of corporate health care conglomerates, including three of the nation’s five largest health insurers.

Bad deal for patients

The setup is a terrible one for many Americanswith about three in ten adults investigated by KFF (formerly known as the Kaiser Family Foundation) reporting on rationing or skipping doses of prescription medications due to cost.

The scenario also creates pharmacy deserts, especially in rural areas of the country. Between 2013 and 2022, 20% of independent pharmacies closed. “Some private pharmacies may be steering patients toward their affiliated pharmacies and away from unaffiliated pharmacies,” the FTC said.

Affiliated pharmacies received significantly higher reimbursement rates than those paid to non-affiliated pharmacies for two case study drugs, according to the regulator's findings. “These practices allowed pharmacies affiliated with the three largest PBMs to maintain levels of dispensing revenue that were well above their estimated drug acquisition costs, resulting in nearly $1.6 billion in additional revenue on just two cancer drugs in less than three years,” the report said.

According to the FTC, PBMs and brand-name drugmakers sometimes negotiate rebates on the condition that access to potentially cheaper generic alternatives be restricted. This can potentially leave patients without access to cheaper medications.

The interim report is part of an ongoing investigation launched by the FTC in 2022 and serves as a potential sounding board for action as U.S. lawmakers search for the culprits behind high prescription drug costs.

Georgia Rep. Buddy Carter, a Republican pharmacist and a state representative, called on the FTC to complete its investigation and take enforcement action if and when “illegal and anticompetitive” practices are found.

“I am proud that the FTC has launched a bipartisan investigation into these shady middlemen, and the preliminary findings provide further evidence that it is time to break up the PBM monopoly,” Carter said in a statement Tuesday. rack.

The Pharmaceutical Care Management Association criticized what the PBM trade organization called a biased report “based on anecdotes and comments from anonymous sources and self-interested parties” along with two “selectively selected case studies.”

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