HomeHealth Care NewsFTC Launches Probe of Pharmacy Benefit Manager (PBMs) Practices

FTC Launches Probe of Pharmacy Benefit Manager (PBMs) Practices

The Federal Trade Commission (FTC) is investigating the practices of pharmacy benefit managers (PBMs).

The FTC voted 5-0 to conduct a study under Section 6(b) orders, which authorize special reports on the competitive impact of supply chain disruptions in consumer goods, on June 7.

 The FTC stated it will order the six largest PBMs to submit records and answer questions. The companies include CVS Caremark, Express Scripts, Inc., Humana Inc., MedImpact Healthcare Systems, Inc., OptumRx, Inc., and Prime Therapeutics LLC.

The inquiry aims to shed light on several practices that have drawn scrutiny in recent years, including fees charged to unaffiliated pharmacies, according to an FTC press release.

The FTC is also looking at how patients are steered to PBM-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; policies on the use of specialty drugs and lists; the impact of rebates from drug manufacturers on formulary design; and the cost of prescription drugs to payers and patients.

How PBMs Use Formularies

PBMs restrict access and increase costs to consumers, Allen Goldberg, vice president of communications for the Association for Accessible Medicines (AAM), which advocates for biosimilar drugs, told Health Care News.

“PBMs restrict patient access to lower-cost generic and biosimilar alternatives by requiring insurance companies deploy blatantly anti-competitive business practices which keep costs high for patients and Medicare,” said Goldberg.

They use formularies that increase the cost of drugs to patients, including seniors with drug plans, says Goldberg.

“PBMs frequently place generic drugs on non-generic formulary tiers with higher copays, meaning patients are overpaying for their prescriptions,” said Goldberg. “PBMs frequently prefer higher-cost, brand-name drugs over lower-priced alternatives. Avalere Health studied formulary placement in Medicare Part D and found that the number of generic drugs placed on the lowest tier, where seniors pay the least for their drugs, declined 53 percentage points between 2011 and 2015. This resulted in a 93 percent, or $6.2 billion, increase in patient out-of-pocket costs.”

Drug Management Concentration

Supporters of the FTC probe seek a broad range of PBM reforms, says Goldberg.

“First and foremost, we have urged the FTC to clamp down on the anti-competitive practices we’ve outlined to ensure that fair market competition can be restored to the prescription drug market,” said Goldberg. “Generic and biosimilars should be placed on the correct, lower-cost formulary tier, and insurance plans should [be able to] cover them without fear of retaliation from PBMs.”

Drug benefit management has become too concentrated, with a few dominant firms, says Goldberg.

“Consolidation and monopolization in the PBM industry have gotten out of hand, exacerbated by over 80 percent of prescriptions flowing through three, vertically integrated companies,” said Goldberg. “Currently, it is difficult for new entrants with different alternative business models to break into the PBM market. Any efforts to limit the influence of major PBMs and encourage competition will inevitably result in lower costs for patients and a sustainable, fairer marketplace.”

Black Box Operations

Scrutiny of PBM practices is long overdue, stated Greg Reybold, director of health care policy and general counsel at American Pharmacy Cooperative Inc. (APCI), a group representing independent pharmacies, in a press release on June 7.

“We are extremely pleased with the depth and scope of the information the FTC is requesting from these middlemen,” said Reybold. “For years, PBMs have operated in a black box and FTC scrutiny of PBM practices that restrict patient access to care and raise prescription drug costs falls squarely within the commission’s twin missions of protecting consumers and competition.”

ACPI supports ending these anti-competitive practices, stated CEO Greg Hamrick in the press release.

“As an organization, ACPI and its members have advocated aggressively for the federal government to investigate anticompetitive PBM practices,” said Hamrick. “We very much look forward to working with the FTC, Congress, and other stakeholders to rein in these problematic issues that are detrimental to patients, taxpayers, and small businesses.”

Kevin Stone (kevin.s.stone@gmail.com) writes from Arlington, Texas.

Kevin Stone
Kevin Stone
Kevin Stone writes from Dallas, Texas.


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