FTC report confirms PBMs profit at the expense of patients

Pharmacy Benefit Managers (PBMs) are “powerful middlemen inflating drug costs and squeezing Main Street pharmacies,” according to a new report from the Federal Trade Commission (FTC).

The agency released an interim report on its two-year investigation into PBMs detailing ways these corporate middlemen are profiting at the expense of patients and community pharmacies.

Here are five key takeaways from the report:

1. A few PBMs dominate the market.  “...increasing vertical integration and concentration consolidation has enabled the six largest PBMs to manage nearly 90 percent of all prescriptions filled in the United States.”
   
   
2. PBMs and insurers are often the same company. “...five of the top six PBMs are now part of corporate healthcare conglomerates that also own and operate some of the nation’s largest health insurance companies, including three of the five largest health insurers in the country.”
   
   
3. PBMs put profits before patients. “This vertically integrated and concentrated market structure has allowed PBMs to profit at the expense of patients and independent pharmacists.”
   
   
4. PBMs have incredible power and influence. “PBMs wield enormous power over patients’ ability to access and afford their prescription drugs, allowing PBMs to significantly influence what drugs are available and at what price.”
   
   
5. PBMs engage in self-preferencing, unfair practices. “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.”

The media and policymakers quickly took note of the FTC’s findings. Here’s a look at what some are saying:

NYT: FTC Says Middlemen Appear to Be Driving Up Drug Prices

Driving up costs: “The FTC’s report detailed an array of ways that benefit managers appeared to be inflating the cost of prescription drugs.”

Calls for reform: “The agency’s findings could also fuel legislative efforts in Congress and in the states to impose limits on the industry.”

WSJ: Big Pharmacy-Benefit Managers Increase Drug Costs, FTC Says

Restricting access: “The FTC said PBMs have excluded from formularies drugs that would cost health plans less in exchange for larger rebates from drugmakers. The restrictions could also force certain patients, depending on the drug and their health plan, to pay more out-of-pocket for medicines than if their plan had preferred a generic.”

Axios: FTC Report Adds to Scrutiny of Drug Middlemen

Vertical integration: “The findings underscore the degree to which vertical integration and concentration among pharmacy benefit managers allow the companies to influence the drug supply chain, potentially driving up cost to patients.”

Reuters: Middlemen Have Outsized Influence on US Drug Prices Due to Market Consolidation, FTC Says

Control over patients: “PBMs set which drugs are covered by insurance and at what price, as well as which pharmacies patients can use to fill their prescriptions. They do this without transparency or public accountability, the report said.”

STAT: FTC Report Finds PBMs Profit at the Expense of Patients and Independent Pharmacies

Anticompetitive tactics: “[PBMs] favor their own pharmacies while excluding rivals and also adjusting formularies, sometimes by designating drugs as specialty medicines.”

Bloomberg: Drug Middlemen Pay Higher Prices To Their Own Pharmacies, FTC Says

Profits before patients: “Drug middlemen paid their own mail-order pharmacies as much as 200 times more than the price at rival pharmacies for commonly prescribed cancer drugs, allowing them to bring in at least $1 billion in excess revenue and potentially raising the costs to patients, the US Federal Trade Commission found in an interim study.”

POLITICO: FTC: Biggest PBMs Dole Out Nearly All Prescriptions in US

Consolidated power: “Six major pharmacy benefit managers filled 95 percent of all prescriptions in the U.S., a long-awaited government report finds.”

Calls for transparency: “The report comes as lawmakers on both sides of the aisle have sought to increase transparency on how PBMs conduct business."

Senator Elizabeth Warren:

I’ve long warned that the 3 big middlemen that control 80% of drug claims are padding their profits, forcing patients to pay higher drug prices & driving pharmacies out of business. @FTC's investigation confirms it. I’m glad @linakhanFTC is taking action.

Representative Buddy Carter:

BREAKING: The @FTC today confirms what pharmacists and patients have been saying all along - PBMs are bad actors that reduce access to quality, affordable health care. It’s time to bust up this monopoly.