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Based on the findings in the Federal Trade Commission (FTC)'s Interim Report (which we wrote about in FTC Issues Interim Report Condemning Anticompetitive PBM Practices) the FTC plans to sue the top Pharmacy Benefit Managers (PBMs) for unfair business practices, such influencing drug prices and negotiating self-interested rebates in their favor, not the government's.
FTC Report Highlights Conflicts of Interest and Rising Prescription Drug Costs Due to PBM Practices
In their July 9 report, the FTC said, “Vertically integrated PBMs appear to have the ability and incentive to prefer their own affiliated businesses, creating conflicts of interest that can disadvantage unaffiliated pharmacies and increase prescription drug costs. PBMs may be steering patients to their affiliated pharmacies and away from smaller, independent pharmacies.”
While this is hardly a ground-breaking revelation, perhaps we will see the FTC actually do something about this long-running practice.
Investigation Reveals Top 6 PBMs Control 90% of Prescriptions, Imposing Harmful Terms on Independent Pharmacies
The investigation was launched in 2022 and has revealed that the top 6 PBMs fill 90% of prescriptions, and they use this immense power to "hold substantial influence over independent pharmacies by imposing unfair, arbitrary, and harmful contractual terms that can impact independent pharmacies’ ability to stay in business and serve their communities."
Again, the fact that the FTC has now put this truism in print raises hopes that actual change will occur, not more of the same.
Major PBMs Accused of Driving Up Drug Prices for Profit, Impacting Access to Life-Saving Medications
In particular, the top 3 Pharmacy Benefit Managers (CVS Health’s Caremark, Cigna Group’s Express Scripts, and UnitedHealth Group’s OptumRx) are in the FTC's crosshairs for the lawsuit, which could also accuse them of driving up the the prices of life-saving drugs to reap billons in profit while making the drugs unaffordable to many in need.
It is baffling why the FTC would limit their complaint to "life-saving drugs" when PBMs are doing this across the board on any medications with margin.
Growing Demand for PBM Reform Amid Viral Criticism and Legislative Action to Ensure Fair Drug Pricing
PBM Reform has been a hot topic lately, as Mark Cuban's rant about PBMs gained viral status, and the Pharmacy Benefit Manager Reform Act that seeks to create a more even and transparent playing field when it comes to drug pricing, rebate programs, and reporting was introduced to the Senate on April 27, 2023.
The FTC's findings hopefully will provide further momentum to the grass-roots changed needed across industry. Stay tuned to Heath Law Alliance as we follow this and other important healthcare issues.
Health Law Alliance Advocates for PBM Reform and Supports Independent Pharmacies Against Unfair Practices
Health Law Alliance is firmly committed to PBM reform and transparency, as we have seen countless independent pharmacies shuttered by PBM overreach, resulting in pharmacy deserts across many areas of the country. The facts remains that community pharmacy is the lifeblood of the industry, and it is only through continuous struggle that meaningful change can and will occur. Here at HLA, we are committed everyday to that cause.
You may view our PBM Resource Page, sign up for our free PBM Audit Guide, and please contact us if you have any questions or need representation regarding PBMs or PBM Audits.
Frequently Asked Questions
Why is the FTC suing top Pharmacy Benefit Managers (PBMs) like CVS Health’s Caremark and OptumRx?
The FTC is suing top PBMs such as CVS Health’s Caremark and Optum Rx for anticompetitive practices, including manipulating drug prices and steering patients towards their affiliated pharmacies. These practices create conflicts of interest, disadvantage independent pharmacies, and increase prescription drug costs, as revealed in the FTC's July 9 report.
How do Pharmacy Benefit Managers (PBMs) impact independent pharmacies and drug pricing?
Pharmacy Benefit Managers (PBMs) impact independent pharmacies and drug pricing by using their substantial market power to impose unfair and arbitrary contractual terms. This influences drug prices and can make life-saving and other medications unaffordable. The FTC's investigation found that PBMs prefer their own affiliated businesses, steering patients away from smaller, independent pharmacies, thereby threatening the pharmacies' ability to stay in business.
What are the potential outcomes if the FTC files a lawsuit against the major PBMs?
The potential outcomes of the FTC's lawsuit against major PBMs include increased scrutiny of PBM practices, possible reforms in drug pricing and rebate programs, and enhanced transparency in their operations. The FTC aims to create a more equitable market for independent pharmacies and could lead to lower prescription drug costs for consumers by addressing the unfair business practices of PBMs. Although unlikely, certain companies could be forced to divest or separate their PBM operations.
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