FOIA Requests Target FTC’s PBM Investigation

FOIAengine Reveals Inquiries About FTC’s Inner Workings

With the Federal Trade Commission reportedly preparing to sue the three largest pharmacy benefit managers, or PBMs, over their approach to negotiating the availability and prices for drugs, we’re taking a look this week at Freedom of Information Act requests that help to tell the backstory of the investigation.  

A review of PoliScio Analytics’ competitive-intelligence database FOIAengine, which tracks FOIA requests in as close to real-time as their availability allows, reveals how research organizations and investors have been seeking information about the FTC’s inner workings in the investigation. FOIAengine identified six FOIA requests to the FTC during the first six months of 2024 that sought studies, reports, correspondence, transcripts, and other documents related to the PBM investigation.  

We’ll break it all down below.  First, here’s a look at what’s been made public so far about the FTC’s two-year investigation.  

PBMs “play a crucial but often hidden role in deciding which drugs you can get and how much you will have to pay,” according to The New York Times. They are middlemen in the complex U.S. health care system, acting on behalf of employers or government insurance programs like Medicare, which cover most of the costs of prescription drugs. The amount of fees collected by PBMs rose from $3.8 billion in 2018 to $7.6 billion in 2022.

The FTC released on July 9 its “Interim Staff Report on Prescription Drug Middlemen,” saying that the study “underscores the impact pharmacy benefit managers have on the accessibility and affordability of prescription drugs.”

The interim report is part of an ongoing inquiry launched by the FTC in 2022. The Commission voted 4-1 to allow staff to issue the report, with Chair Lina M. Khan saying that the agency’s scrutiny of PBMs is aimed at making healthcare more affordable.

The report highlights several key insights gathered from documents and data obtained by the FTC.

• The market for PBM services has become highly concentrated, with the top three PBMs processing 80 percent of the 6.6 billion prescriptions dispensed by U.S. pharmacies in 2023, and the top six PBMs processing 90 percent of prescriptions. 
• The market is vertically integrated after two major mergers in 2018, with the three largest PBMs being owned by large health insurers. UnitedHealth Group owns PBM OptumRX; Cigna Group owns PBM Express Scripts; and CVS Health owns PBM Caremark.
• The largest PBMs “exercise significant control over what drugs are available and at what price.” 
• PBMs “may be steering patients to their affiliated pharmacies and away from small, independent pharmacies.” The industry’s concentration “gives the leading PBMs leverage to enter contractual relationships that disadvantage smaller, unaffiliated pharmacies.”
• PBMs and brand-drug manufacturers “negotiate prescription drug rebates, some of which are expressly conditioned on limiting access to potentially lower-cost generic and biosimilar competitors.”

Executives at the three largest pharmacy benefit managers told The New York Times that they were not to blame for high drug prices. They argue that the PBMs save substantial money for patients and clients, and that their size and scale are essential to counter the drug makers, who they point to as the main cause of high drug prices.

The New York Times conducted its own study of PBMs, interviewing more than 300 patients, pharmacists, doctors, and other experts, and found that “the three biggest PBMs are often making you pay more than you should” for drugs. For example, PBMs sometimes require patients to take a brand-name drug even though a cheaper generic version is available. 

PBMs also have been the subject of congressional scrutiny. Sen. Bernie Sanders (D-Vt.) last year accused PBMs of striking secret deals to favor insulin products that gave PBMs the biggest rebates, rather than those that cost patients the least. Rep. Buddy Carter (R-Ga.), a pharmacist, has pushed the FTC to act against PBMs. “It’s time to bust up the PBM monopoly” he said earlier this month.

Spurred by the controversy, FOIA requesters got busy.

Jarod Facundo of The Capitol Forum, an investigative news organization based in Washington, DC, submitted to the FTC on February 15 two FOIA requests seeking:

• All “correspondences between Federal Trade Commission staff and the offices of [several] U.S. Senators … regarding the Commission’s ongoing Pharmacy Benefit Manager 6(b) inquiry, from January 21, 2022, to February 15, 2024.” 
• “Full copies of all memos, updates, and internal correspondences between Federal Trade Commission staff regarding the ongoing Pharmacy Benefit Manger 6(b) inquiry, from June 1, 2022, to February 15, 2024 (include all attachments, emails, recordings, and photos, if applicable).”

Josh Shear of History Associates, Incorporated, an organization of professional researchers, submitted three FOIA requests to the FTC on May 31 for:

• “All studies, reports, assessments, statements, and other evidence upon which the FTC relied from January 1, 2021, to July 20, 2023, to conclude that “prior PBM-related advocacy statements and reports … no longer reflect current market realities as noted in the FTC’s July 20, 2023, press release.”
• “The identification of all current or former consultants or experts (paid or unpaid) the FTC has used, consulted with, considered, or disclosed materials to in conjunction with its Section 6(b) inquiry into pharmacy benefit managers; dates of employment, usage, or consideration; payment or other consideration made or considered; scope of work; and any agreements or understandings concerning the receipt or disclosure of confidential information from February 17, 2022 through the date of this request’s submission.”
• “All transcripts, interview reports, records, studies, reports, publications, and other evidence the FTC considered or relied on in preparing each of the following Statements, Studies, Letters, and Reports,” which included: (1) The FTC’s 2005 study entitled “Pharmacy Benefit Managers: Ownership of Mail-Order Pharmacies.” 5 FTC File No. P042111. (2) March 4, 2014, letter to Centers for Medicare & Medicaid Services (CMS) regarding Contract Year 2015 Policy and Technical Changes to Medicare Advantage and Medicare Prescription Drug Benefit Programs. 10 FTC. File No. V140006. (3) August 19, 2014, letter to the U.S. Department of Labor’s ERISA Advisory Council regarding PBM compensation and fee disclosures. 11 FTC. File No. V140011.

Mara Der Hovanesian of Vontobel Asset Management Inc., a global investment firm with Swiss roots, submitted a request on March 8 for “any documents, letters, reports that the FTC has exchanged with UnitedHealth Group on its vertical integration model, drug pricing and ownership of PBMs and concerns regarding regulatory loopholes. The date range is January 2022 to January 2024.”

In its July 9 statement on the investigation, the agency sounded tough.  It chastised “several” unnamed PBMs for failing to fully cooperate with its investigative demands, and threatened court action against the those engaging in “further delay tactics.”

What’s next?  “The FTC remains committed to providing timely updates as the Commission receives and reviews additional information.”

FOIAengine access now is available for all professional members of Investigative Reporters and Editors, a non-profit organization dedicated to improving the quality of journalism.  IRE is the world’s oldest and largest association of investigative journalists.  Following the federal government’s shutdown of FOIAonline.gov last year, FOIAengine is the only source for the most comprehensive, fully searchable archive of FOIA requests across dozens of federal departments and agencies.   FOIAengine has more robust functionality and searching capabilities, and standardizes data from different agencies to make it easier to work with.  PoliScio Analytics is proud to be partnering with IRE to provide this valuable content to investigative reporters worldwide.    

To see all the requests mentioned in this story, log in or sign up to become a FOIAengine trial user.  

Next from FOIAengine: Criminal referrals from the Federal Trade Commission.

Randy E. Miller, co-creator of FOIAengine, is a Washington lawyer, publisher, and former government official. He has developed several online information products and was a partner at Hogan Lovells, where he founded the firm’s Brussels office and represented clients on international regulatory matters. Miller also has served as a White House trade lawyer, Senior Legal Adviser to the U.S. Mission to the World Trade Organization, policy director to Senator Bob Dole, and adjunct professor at Georgetown University. He is a graduate of Yale and Georgetown Law.  FOIAengine is a product of PoliScio Analytics (PoliScio.com), a venture specializing in U.S. political and governmental research, co-founded by Miller and Washington journalist John A. Jenkins.  Learn more about FOIAengine here.  Sign up here to become a trial user of FOIAengine.

Write to Randy E. Miller at randy@poliscio.com.