FTC to examine business practices of several large PBMs

The Federal Trade Commission announced this week that is launching an inquiry into the six largest pharmacy benefit managers.

“Although many people have never heard of pharmacy benefit managers, these powerful middlemen have enormous influence over the U.S. prescription drug system,” FTC Chair Lina M. Khan said. “This study will shine a light on these companies’ practices and their impact on pharmacies, payers, doctors and patients.”

PBMs negotiate rebates and fees with drug manufacturers, create drug formularies and surrounding policies, and reimburse pharmacies for patients’ prescriptions. The largest ones now are vertically integrated with the largest health insurance companies and wholly owned mail-order and specialty pharmacies.

CVS Caremark, Express Scripts, OptumRx, Humana, Prime Therapeutics and MedImpact Healthcare Systems must provide information and records regarding their business practices. The inquiry will scrutinize the impact of vertically integrated PBMs on the access to and affordability of prescription drugs. The agency’s primary questions revolve around “potentially unfair audits of independent pharmacies” and the “complicated and opaque” business that determines pharmaceutical reimbursements, according to the FTC.

Pharmacy industry associations welcomed the news.

“Pharmacy benefit managers behave like monopolies,” B. Douglas Hoey, CEO of the National Community Pharmacists Association, said in a written statement. “Their secretive, anticompetitive practices increase prescription drug prices, limit consumer choice and stymie competition. They’ve escaped serious scrutiny for far too long, but this study will bring their dirty laundry out into the open.”

The inquiry aims at shedding light on several practices that have drawn scrutiny in recent years including:

• Fees and claw backs charged to unaffiliated pharmacies,
• Methods to steer patients toward 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,
• The use of specialty drug lists and surrounding specialty drug policies, and
• The impact of rebates and fees from drug manufacturers on formulary design and the costs of prescription drugs to payers and patients.

“We are extremely pleased with the depth and scope of the information the FTC is requesting from these middlemen,” Greg Reybold, director of health-care policy for the American Pharmacy Cooperative, said in a news release.

“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.”