FTC Investigates Major Pharmacy Benefit Managers for Effects on Prescription Drug Market

On Tuesday, the Federal Trade Commission (FTC) announced that they were launching an inquiry into six pharmacy benefit managers: CVS Caremark; Express Scripts, Inc.; OptumRx, Inc.; Humana Inc.; Prime Therapeutics LLC; and MedImpact Healthcare Systems, Inc. The FTC is looking into the effects that these vertically integrated companies have on the “access and affordability” of prescription drugs.

The press release explained that pharmacy benefit managers are “hired to negotiate rebates and fees with drug manufacturers, create drug formularies and surrounding policies, and reimburse pharmacies for patients’ prescriptions.” The six companies in question not only do this, but are vertically integrated with large healthcare companies, mail order pharmacies and specialty pharmacies causing them to have an “enormous influence” on availability and pricing, according to the agency.

The FTC briefing detailed that “many of these functions depend on highly complicated, opaque contractual relationships that are difficult or impossible to understand for patients and independent businesses across the prescription drug system.”

This FTC inquiry is aiming to shed light on numerous controversial processes: fees charged to unaffiliated pharmacies, methods of steering customers towards pharmacies owned by pharmacy benefit managers, audits of independent pharmacies, complicated methods that determine reimbursement, use of specialty drugs and how rebates and fees affect drug pricing to consumers. 

The FTC has voted unanimously to pursue this inquiry. They are hoping to investigate and end the methods in with these pharmacy benefit managers “harm consumers” and will work with lawmakers “in determining whether Americans would benefit from reforms to this critical industry.” In her statement, Chair Lina M. Khan said “Given that PBMs’ practices can have life-and-death consequences for Americans, the FTC has a moral imperative to act with urgency on this issue.”