It's time to take action on PBMs' anti-competitive practices, lawmakers say

Congress may give U.S. regulators greater oversight of pharmacy benefit managers amid Federal Trade Commission concern that these entities might be using anti-competitive business practices to inflate drug prices.

“When PBMs were first created, they were beneficial to the entire health care system. There was more than a dozen large PBMs across the country, all competing with each other to provide clear details about costs, fees, and rebates to pharmacies and patients,” said Rep. James Comer, R-Kentucky, and chair of the House Oversight and Accountability Committee. 

“But today they have largely outgrown this role,” he added at a committee hearing this week that examined PBMs. “Now, instead of fierce competition, three large PBMs—CVS Caremark, Express Scripts, and Optum Rx—collectively control approximately 80% of the market.” 

Bipartisan legislation has been introduced in recent months to rein in PBMs, which are widely regarded as the middle man in the pharmaceutical pipeline.

The companies influence how much patients pay for medication and hold sway over what drug insurers cover, according to critics who say PBMs are greedily exploiting their position by causing drug prices to increase.

Sens. Maria Cantwell, D-Washington, and Chuck Grassley, R-Iowa, have introduced the proposed Pharmacy Benefit Manager Transparency Act, which would require PBMs to annually report to the FTC on information about payments received from health plans and fees charged to pharmacies.

The proposed Pharmacy Benefit Manager Sunshine and Accountability Act, introduced last month by Rep. Diana Harshbarger, R-Tennessee, would require PBMs to report their rebates, administrative fees, and other revenue from drug manufacturers and healthcare entities to the U.S. Department of Health and Human Services.

Meanwhile, the FTC has launched a probe of six of the largest PBMs regarding their business practices. The agency stated the inquiry will “scrutinize the impact of vertically integrated pharmacy benefit managers on the access and affordability of prescription drugs.” 

“The FTC’s inquiry is aimed at shedding light on several PBM practices, including charging fees and clawbacks to unaffiliated pharmacies; steering patients towards PBM-owned pharmacies; potentially unfair auditing of unaffiliated pharmacies; the use of complicated and opaque pharmacy reimbursement methods; and negotiating rebates and fees with drug manufacturers that may skew the formulary incentives and impact the costs of prescription drugs to payers and patients,” the agency stated. 

In written testimony to the House committee, a PBM industry group defended its practices and said its members keep prescription drug costs down by, among other things, negotiating rebates from brand drug companies and discounts from pharmacies.

“We believe any attempt at understanding the factors driving drug costs must include our voice and perspective, as well as an examination of the entire supply chain, including drug companies, large pharmacy collectives known as pharmacy services administrative organizations (PSAOs), wholesale distributors, employer benefit consultants, pharmacies, and all others with impact on the cost of prescription drugs,” the Pharmaceutical Care Management Association wrote.

“We encourage the committee to review all these entities and any potential anti-competitive practices as it assesses how to improve the prescription drug market,” the association added.

But Frederick Isasi, executive director of Families USA, told lawmakers at the House committee hearing that Congress should increase federal agencies’ statutory oversight of PBMs.

“The Federal Trade Commission (FTC) and other regulatory bodies should have increased authority to study, oversee, and approve PBM integration in an effort to crack down on anti-trust violations, control consolidation that does not benefit the consumer, and ensure that the prescription drug market has fair competition,” Isasi stated in written testimony. 

“Congress should seize this momentum to immediately implement common-sense policies that rein in abusive drug prices and make health care more affordable for everyone,” added Isasi, whose group advocates for affordable health care solutions. 

Isasi’s comments drew support from committee members.

“This is an area where I think we have bipartisan cooperation,” said Rep. Stephen Lynch, D-Massachusetts. “I know Congress isn’t known for its speed, but we need to do something about this pretty quick.” 

Similarly, Rep. Raja Krishnamoorthi, D-Illinois, said Congress must act on PBMs’ anti-competitive practices. 

“You know what PBM really stands for? It stands for Pretty Big Markups,” he added. “We’ve got to stop this.”

Related: CMS proposes price transparency rule that targets PBMs

Krishnamoorthi cited a March poll by Morning Consult that found 85% of Americans are concerned that PBMs are overcharging for prescription drugs, with Republicans and Democrats equally distressed.

“I think we have a mandate from the American people to investigate,” he said.