The FTC to Scrutinize the 6 Largest PBMs

The Federal Trade Commission (FTC) has launched an inquiry into the six largest PBMs to scrutinize business practices and the implications they have as prescription drug costs and spending have been on the rise. According to recent research, manufacturer rebates to PBMs increased from $39.7 billion in 2012 to $89.5 billion in 2016 which has led to higher list prices for drugs.

The six companies involved in the inquiry are:

  1. CVS Caremark
  2. Express Scripts, Inc.
  3. OptumRx, Inc.
  4. Humana Inc.
  5. Prime Therapeutics LLC; and 
  6. MedImpact Healthcare Systems, Inc.

Many are not aware of pharmacy benefit managers (PBMs) and the role they play in influencing the US pharmaceutical system. PBMs develop and maintain formularies of health insurance companies which determines not only medication coverage but also out-of-pocket costs. PBMs also negotiate rebates, fees and other benefits with drug manufacturers on behalf of health insurance providers. 

Lastly, PBMs are responsible for reimbursing individual pharmacies for drugs dispensed to patients, thus giving them the power to influence which pharmacies patients should use for their medications which is muddied by the fact that the largest pharmacy benefits managers are now wholly owned mail order and specialty pharmacies vertically integrated with the largest health insurance.

The goal of the inquiry is shed light on questionable business practices of PBMs such as:

  • fees and clawbacks charged to unaffiliated pharmacies;
  • methods to steer patients towards pharmacy benefit manager-owned pharmacies;
  • potentially unfair audits of independent pharmacies;
  • complicated and opaque methods to determine pharmacy reimbursement;
  • the prevalence of prior authorizations and other administrative restrictions;
  • the use of specialty drug lists and surrounding specialty drug policies;
  • the impact of rebates and fees from drug manufacturers on formulary design and the costs of prescription drugs to payers and patients.

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