FTC to host public discussion of pharmacy benefit manager report

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The hot seat in Washington, D.C., could get hotter for pharmacy benefit managers (PBMs) when the Federal Trade Commission (FTC) meets next week to discuss its recent report on the drug price middle men.

Meanwhile, a consortium of pharmacy groups is demanding federal lawmakers pass reforms they say are needed to regain control of the pharmaceutical market. A PBM trade group countered that legislators need a balanced and accurate discussion, not just repetition of claims of Big Pharma, which stands to benefit if PBMs lose their price bargaining power.

As public discourse about PBMs at times rises to a clamor, the FTC announced its Aug. 1 open meeting will include a presentation on the Commission’s Interim Report on Pharmacy Benefit Managers (PBMs). The report was published as part of the FTC’s “ongoing study of PBMs and explores their potential impact on access and affordability of medicines and examines how increasing vertical integration and concentration may have enabled PBMs to inflate drug costs and squeeze Main Street pharmacies.” Since the report was published July 9, multiple news sources, led by The Wall Street Journal and Politico.com, have reported the FTC is preparing to sue the three largest PBMs for their role in driving up prices of medicines, including insulin.

Pharmacists demand action

Action in Washington can’t come soon enough for a coalition of organizations that said it is past time for regulations to rein in PBMs.

The National Community Pharmacists Association (NCPA) this week published a letter co-signed with other organizations demanding lawmakers take action on a number of policies.

NCPA referred to the running PBM investigation of the House of Representatives’ Committee on Oversight and Accountability, launched in March 2023 by Chair Rep. James Comer (R-Kentucky). During that probe, “our organizations and individual members have provided examples and insights about concerning PBM practices and their harms,” the letter said.

“Pharmacies and pharmacists have experienced and warned about these tactics for upwards of 15 years,” the letter said. “Unabated and unchecked by federal action, these tactics and their devastating effects have escalated consistently and severely – and they have reached even new extremes in 2024.

“As is now widely known, every day that passes without reform means more dollars flowing to PBMs instead of reducing Americans’ prescription drug costs and safeguarding access to trusted and convenient pharmacies,” said the group. The coalition includes National Association of Chain Drug Stores, the American Pharmacists Association, the National Association of Specialty Pharmacy, FMI – The Food Industry Association, the National Grocers Association, the National Alliance of State Pharmacy Associations, and Independent Pharmacy Cooperative.

PBMs plead their case

The Pharmaceutical Care Management Association (PCMA), a trade group for PBMs, this week publicized research by former U.S. Sen. Pat Toomey and Joel Zinberg, MD, who criticized the FTC report.

Toomey, an adviser to PCMA, said the FTC and the administration of President Joe Biden are adopting “the slogans and talking points used by the pharmaceutical industry – disregarding the pharmaceutical industry’s strong financial incentive to encourage restrictions on PBMs.”

“After all, the price concessions (savings) PBMs secure from drug manufacturers come directly out of pharmaceutical companies’ bottom lines,” Toomey wrote in a column published by Townhall.com.

PBMs operate by aggregating the negotiating power and purchasing power of health insurance plans, then save them money by obtaining rebates when pharmaceutical companies compete to have their drugs listed in health plan formularies, Toomey said. He also cited 2022 research by the National Bureau of Economic Research that found PBMs secure $148 billion in overall savings every year for consumers and health plan sponsors, such as employers and government agencies.

“The FTC repeats the common refrain from the pharmaceutical industry that drug prices are higher due to PBM-secured rebates. Expert analyses show the opposite,” Toomey wrote. Zinberg’s column appeared in The Wall Street Journal.

‘One-sided view’

PCMA President and CEO JC Scott issued a statement calling for a balanced and accurate discussion about how PBMs reduce costs for health plan sponsors, taxpayers, employers and patients.

“Too many recent conversations around PBMs reflect a one-sided view informed directly by the pharmaceutical industry’s blame game designed to vilify PBMs to keep prescription drug prices high and increase drug company profits,” Scott said. “The critical role of PBMs in our healthcare system is undeniable. PBMs create access to affordable prescription drugs, saving patients and health plans $1,040 per person per year on drug costs.”

His statement was published this week as a response to the House Committee on Oversight and Accountability hearing, “The Role of Pharmacy Benefit Managers in Prescription Drug Markets Part III: Transparency and Accountability.”

Witnesses were David Joyner, executive vice president of CVS Health and president of CVS Caremark; Adam Kautzner, PharmD, president of Evernorth Care Management & Express Scripts; and Patrick Conway, MD, chief executive officer of OptumRx. Those three PBMS now control 80% of the market, according to a Committee analysis published the same day.

The hearing at times included passionate and sometimes harsh comments from representatives pressing the PBM leaders about their companies’ revenues, and business practices that are hurting patients and independent pharmacies.

The Committee earlier this year approved the Delinking Revenue from Unfair Gouging (DRUG) Act, with measures to end abusive practices by PBMs in the Federal Employees Health Benefits program.