Monday, July 15, 2024

Pharmacy Faces Scrutiny: FTC Report Highlights ‘Dire Consequences’ of PBM Power

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Pharma supply chain middlemen face significant concerns as a long-awaited report from the US Federal Trade Commission (FTC) on pharmacy benefit managers (PBMs) has been released. The report highlights that the six largest PBMs in the US manage nearly 95% of all prescriptions, creating a concentrated market structure that allows them to profit at the expense of patients and independent pharmacists.

FTC Chair Lina Khan emphasized the central message of the report, stating, “The FTC’s interim report lays out how dominant pharmacy benefit managers can hike the cost of drugs – including overcharging patients for cancer drugs.” The report illustrates how pharmacy benefit managers have enormous control over drug prices and patient access, leading to “dire consequences” for many Americans. The report links PBMs to the troubling situation in the US where nearly a third of patients report rationing medicines and skipping doses due to high costs.

FTC Finds PBMs Harm Independent Pharmacy, Worsening Healthcare Access

The FTC also concluded that pharmacy benefit managers negatively impact independent pharmacies, which often struggle with confusing, unfair, and harmful contractual terms. Between 2013 and 2022, about 10% of independent retail pharmacies in rural America closed, exacerbating unequal access to healthcare. Conversely, pharmacies affiliated with the three largest PBMs now account for nearly 70% of all specialty drug revenue, highlighting the significant market influence these entities wield.

The report underscores the conflicts of interest arising from vertically integrated PBMs, who appear to prefer their own affiliated businesses, disadvantaging unaffiliated pharmacies and increasing prescription drug costs. Additionally, evidence suggests that some pharmacy benefit managers negotiate prescription drug rebates based on limiting access to lower-cost generic and biosimilar competitors, further driving up prices.

The FTC’s investigation into the sector, initiated in 2022, required the top six PBMs – CVS Caremark, Express Scripts, OptumRx, Humana, Prime Therapeutics, and MedImpact Healthcare – to provide detailed records of their business practices over the past five years. However, the FTC is still waiting for submissions from several pharmacy benefit managers, hampering the investigation’s progress. The commission has now threatened legal action to compel compliance and held a vote to release the interim report, with four of the five commissioners in favor.

Pharmacy

FTC Highlights Blame Game Between Drugmakers and PBMs Over High Medicine Prices

The report fuels the ongoing debate about the factors behind high medicine prices in the US, with pharmaceutical manufacturers and pharmacy benefit managers blaming each other. Drugmakers accuse PBMs of pocketing discounts instead of passing them on to patients, while PBMs argue that high list prices, pay-for-delay deals, and evergreening tactics to extend patent life are the real issues.

In response to the FTC report, the Pharmaceutical Care Management Association (PCMA), representing pharmacy benefit managers, expressed disagreement with both the content and the decision to release it. PCMA president and chief executive JC Scott claimed, “This report is based on anecdotes and comments from anonymous sources and self-interested parties, and supported only by two cherry-picked case studies that are implied to be representative of the entire market.” He asserted that the report overlooks data demonstrating the value PBMs provide by reducing prescription drug costs and increasing access.

Rep. Earl L. “Buddy” Carter (R-GA), a lawmaker and pharmacist critical of the pharmacy benefit managers sector, welcomed the report. He stated, “Since day one in Congress, I’ve been calling on the FTC to investigate PBMs, which use deceptive and anti-competitive practices to line their own pockets while reducing patients’ access to affordable, quality healthcare.” Carter praised the bipartisan investigation, stating, “Its preliminary findings prove yet again that it’s time to bust up the PBM monopoly.”

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Overall, the FTC’s report sheds light on the significant influence PBMs have over the pharmaceutical market and the adverse effects on patients and independent pharmacies. The findings call for urgent reforms to address the anti-competitive practices of PBMs and ensure fair access to affordable medications for all Americans. The ongoing investigation and potential legal actions aim to hold PBMs accountable and pave the way for a more equitable healthcare system.

 

Resource: Pharmaphorum, July 09, 2024

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