Earlier this month, the Federal Trade Commission (FTC) announced that it had launched a new inquiry into business practices of pharmacy benefit managers (PBMs). Specifically, the the five-member commission said that it would “scrutinize the impact of vertically integrated pharmacy benefit managers on the access and affordability of prescription drugs.” The companies targeted by the investigation include: CVS Caremark, Express Scripts, OptumRx, Humana, Prime Therapeutics, and MedImpact Healthcare Systems. 

The new inquiry is part of a broader FTC effort to examine the entire distribution chain for prescription drugs. In February, the FTC voted not to investigate PBMs’ pricing and contracts. And, for those of us pushing to improve access and lower costs for patients, this is a welcome development. 

PBMs oversee prescription drug coverage for insurance companies, large employers, and Medicare, the world’s largest healthcare payer. They tend to operate with little to no accountability or even a clear definition of their role in the healthcare system. PBMs use their leverage to demand discounts and rebates from drug manufacturers – a practice that, according to most manufactures, significantly increases costs to patients. They also make key administrative decisions about coverage and access for patients, such as overly burdensome requirements for prior authorizations or limiting coverage for prescriptions filled by pharmacies not owned by or affiliated with the PBMs.  

In May, when a subcommittee in the U.S. Senate held a hearing to examine these issues, Terry Wilcox, Executive Director of PAAP and Patients Rising, issued the following statement:

“Each player in the drug supply chain has a well-defined and clear role, except for pharmacy benefit managers. To get to the root cause of high prices, you must pull back the curtain to expose the shady actions of the PBMs. Their practices are murky at best and leave patients in the dark and can increase the prices they pay out of pocket at the pharmacy counter. 

It’s past time to evaluate the role of the middlemen in the drug supply chain in order to create reforms that lower patient costs and improve their access to prescriptions.”

According to its announcement, the FTC will be looking into the following issues:

  • 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.

Once again, this is a welcome development, one that we’ll be watching closely. If the FTC is serious about finding the underlying causes of high prescription drug costs, this is a good place to start.