FTC interim report shows top six PBMs control 94% of prescription fills and profit at the expense of patients

Top 6 PBMs control 94% of the prescription market: ©Musthrivetosurvive - stock.adobe.com

The Federal Trade Commission released an interim report highlighting the significant influence pharmacy benefit managers have on the accessibility and affordability of prescription drugs. This report is part of an ongoing inquiry initiated in 2022, focusing on how increased vertical integration and concentration within the PBM industry has enabled six major PBMs to control 94% of all U.S. prescription fills.

The report details that this market structure allows PBMs to profit at the expense of patients and independent pharmacists. "The interim report lays out how dominant PBMs can hike the cost of drugs—including overcharging patients for cancer drugs,” said FTC Chair Lina M. Khan in a statement. “It also details how PBMs can squeeze independent pharmacies that many Americans—especially those in rural communities—depend on for essential care."

According to the report, PBMs significantly influence which drugs are available and at what price, leading to severe consequences for patients. Nearly 30% of Americans surveyed reported rationing or skipping doses of prescribed medications due to high costs. The report also highlights the substantial influence PBMs hold over independent pharmacies through unfair and arbitrary contractual terms, threatening these pharmacies' ability to operate and serve their communities.

The FTC's interim report stems from special orders issued in 2022 to the six largest PBMs—Caremark Rx LLC; Express Scripts Inc.; OptumRx Inc.; Humana Pharmacy Solutions Inc.; Prime Therapeutics LLC; and MedImpact Healthcare Systems Inc. In 2023, the FTC expanded its investigation to include rebate aggregating entities such as Zinc Health Services LLC, Ascent Health Services LLC, and Emisar Pharma Services LLC.

Key findings from the report include:

Concentration and vertical integration: The market for PBM services is highly concentrated, with the top three PBMs processing nearly 80% of all U.S. prescriptions in 2023. Pharmacies affiliated with these PBMs account for nearly 70% of all specialty drug revenue.

Power and influence: The leading PBMs exercise significant control over drug availability, pricing, and pharmacy access, without public transparency or accountability.

Self-preferencing: Vertically integrated PBMs may prefer their affiliated businesses, disadvantaging independent pharmacies and increasing drug costs. Affiliated pharmacies have retained high levels of dispensing revenue, including nearly $1.6 billion in excess revenue from two cancer drugs in less than three years.

Unfair contract terms: Leading PBMs leverage their market power to enter contractual relationships that disadvantage smaller pharmacies. Contract terms often obscure total payment amounts, complicating compensation for pharmacists.

Limiting access to low-cost competitors: PBMs and brand drug manufacturers negotiate rebates that may exclude lower-cost generic and biosimilar competitors from formularies, increasing costs for patients.

The report notes that several PBMs have not fully complied with the FTC's 6(b) orders, delaying the commission’s ability to fulfill its mission, despite having two years to do so. The agency did not identify which PBMs have not complied. The FTC has demanded prompt completion of these submissions and warned of potential district court actions to compel compliance.