The Federal Trade Commission (FTC) has published an interim report shedding light on the role of pharmacy benefit managers (PBMs) and their significant influence on drug prices and accessibility. The report, titled “Pharmacy Benefit Managers: The Powerful Middlemen Inflating Drug Costs and Squeezing Main Street Pharmacies,” highlights these middlemen’s complex and often opaque practices and their impact on patients and independent pharmacies.
PBMs are pivotal players in the pharmaceutical distribution chain, negotiating the terms for access to prescription drugs for millions of Americans. Due to years of mergers and acquisitions, the three largest pharmacy benefit managers now control nearly 80% of all prescriptions filled in the United States. This consolidation has led to a vertically integrated system where these PBMs act as health plans and pharmacies, giving them unprecedented power over drug pricing and patient access.
FTC Report Highlights Drug Cost Burdens and Rural Pharmacy Closures Amid PBM Practices
The report reveals alarming consequences for Americans, with nearly three in ten surveyed reporting that they ration or skip doses of their prescribed medications due to high costs. This issue is compounded for independent pharmacies, particularly those in rural areas, which face challenging and often unfair contractual terms imposed by pharmacy benefit managers. Between 2013 and 2022, about 10% of independent retail pharmacies in rural America closed, affecting not only business owners but also patients who rely on these local pharmacies for essential healthcare services.
One of the most concerning aspects highlighted in the report is the lack of transparency and accountability in PBM practices. The FTC issued orders in 2022 to the six largest pharmacy benefit managers, including Caremark Rx, Express Scripts, and OptumRx, to obtain data and documents about their business practices. However, some PBMs have not yet fully complied, delaying the FTC’s ability to conduct a comprehensive review.
FTC Report Flags PBM Pharmacy Bias and Limited Access to Affordable Medications
The interim report also points out that vertically integrated PBMs may prefer their affiliated businesses, disadvantaging unaffiliated pharmacies and potentially increasing prescription drug costs. Initial analyses suggest that pharmacy benefit managers may steer patients towards their pharmacies and reimburse them at higher rates than unaffiliated ones, resulting in substantial additional revenue for these PBM-affiliated pharmacies.
Moreover, the report raises concerns about the negotiation of rebates between PBMs and brand drug manufacturers that exclude lower-cost generic alternatives, limiting patient access to more affordable medications. This practice of exclusionary rebates highlights the need for further scrutiny by the FTC and policymakers.
Despite these challenges, the FTC remains committed to investigating and addressing the practices of pharmacy benefit managers. The Commission emphasizes the urgency of this issue, given that federal and state governments are the largest purchasers of healthcare. As more information becomes available, the FTC aims to keep the public and policymakers informed about the impact of PBMs on drug costs and access to medications.
Resource: Federal Trade Commission, July 09, 2024
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