The Federal Trade Commission (FTC) has recently released its second report investigating the business practices of pharmacy benefit managers (PBMs) in the United States. This report sheds light on how PBMs like CVS’ Caremark, Cigna’s Express Scripts, and UnitedHealth’s Optum Rx are allegedly inflating the costs of life-saving drugs by significant percentages. The report also highlights how these PBMs prioritize their affiliated pharmacies over independent operators, leading to higher costs for patients and plans.
This latest report builds upon the FTC’s initial findings from last summer, which faced criticism for relying on limited data. The second report delves into a broader range of drugs, analyzing more than 50 specialty generic medications dispensed between 2017 and 2022 by the Big Three PBMs. The findings reveal that these PBMs marked up specialty generic drugs dispensed at affiliated pharmacies, generating billions in additional revenue. This excess dispensing revenue has been growing at an alarming rate, impacting both commercial and Medicare claims.
Furthermore, the report uncovers how PBMs like Caremark, Express Scripts, and Optum Rx reimburse affiliated pharmacies at higher rates than unaffiliated pharmacies for specialty generic drugs. The PBMs also engage in spread pricing, a controversial practice where they bill clients more for drugs than they pay pharmacies for dispensing them, resulting in additional income for the middlemen.
While the PBMs have pushed back against the report, claiming it focuses on a small portion of overall drug spend and overlooks cost-saving guarantees they provide to clients, the FTC stands by its findings. The release of this report comes amidst a changing political landscape, with the incoming administration expected to take a different approach to antitrust regulations.
As the FTC continues its investigation into PBMs, bipartisan support for addressing PBM business practices is growing. Lawmakers have proposed legislation to break up PBMs, signaling a potential shift in the regulatory landscape for these controversial middlemen in the drug supply chain. With ongoing scrutiny from regulators and lawmakers, the future of PBMs in the healthcare industry remains uncertain.
