June 08, 2022
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Federal Trade Commission opens investigation into pharmacy benefit managers

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The Federal Trade Commission has voted unanimously to launch an inquiry into pharmacy benefit managers, requiring the six largest managers to supply records pertaining to their business practices, according to an agency press release.

The FTC will send orders to CVS Caremark, Express Scripts Inc., OptumRx Inc., Humana Inc., Prime Therapeutics LLC and MedImpact Healthcare Systems Inc. and will examine the “impact of vertically integrated pharmacy benefit managers on the affordability and accessibility of prescription drugs,” the agency said.

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

According to the release, the inquiry will aim to closely investigate the role of pharmacy benefit managers in the U.S. pharmaceutical system, which may entail financial and policy involvement with drug manufacturers, health insurance companies and pharmacies. These functions are often clouded by “complicated, opaque contractual relationships that are difficult or impossible to understand for patients and independent businesses across the prescription drug system,” the release said.

The FTC probe will investigate fees charged to unaffiliated pharmacies, methods employed to steer patients to specific pharmacies, audits of unaffiliated pharmacies, complicated methods used to determine reimbursements, prior authorizations and other administrative restrictions, specialty drug lists and policies, and the impact of rebates and fees from drug manufacturers on formulary design and prescription drug costs for patients.

The inquiry will build on a public record established by the agency in February 2022, which solicited information on pharmacy benefit managers and now consists of more than 24,000 public comments, the FTC said in the release.

In response to the FTC announcement, the American College of Rheumatology released a statement applauding the agency’s decision, stating the business practices of pharmacy benefit managers “continue to increase PBM profit margins while placing the burden of skyrocketing drug costs on America’s most vulnerable patients,” such as those living with chronic, severe rheumatic diseases.

“This welcomed news follows sustained calls from the rheumatology community for greater oversight over the insurance middlemen who drive up drug costs for our patients,” the ACR said in its statement. “The FTC investigation announced today is a critical step toward greater transparency and oversight over PBMs’ opaque business practices, as well as the enactment of meaningful drug pricing reforms that will reduce costs and expand access to important therapies for our patients.

“While PBMs were originally conceived to help manage the complexities of prescription drug benefits, they have since become massive, consolidated, profit-driven enterprises that exercise immense control over our patients’ access to needed treatments,” the ACR added. “Their business practices are detrimental to policy efforts to curb the high cost of prescription drugs.”

References:

ACR applauds FTC decision to investigate PBM business practices. Published June 7, 2022. Accessed June 8, 2022.