Senator wants probe of PBM practices, prescription drug costs

The Federal Trade Commission should examine how the business practices of pharmacy benefit managers (PBMs) determine prices for prescription drugs, says Sen. Chuck Grassley.

In February, the Federal Trade Commission (FTC) split 2-2 on a vote to study the business practices of PBMs. Grassley, a Republican from Iowa, asked FTC Chair Lina Khan to find consensus and move forward with the review.

Consolidation between PBMs and insurance companies has resulted in vertical integration with a small number of companies now managing “the vast majority of prescription drug benefits,” Grassley said in a March 9 letter to the FTC.

He cited CVS/Caremark, OptumRx and Express Scripts, companies that act as “middlemen” owned by insurers Aetna, United Healthcare and Cigna, respectively, controlling about 75% of the PBM market.

“As you know, PBMs operate with little to no transparency, making it very difficult if not impossible to understand the flow of money in the prescription drug marketplace and how PBMs determine the prices for prescription drugs,” Grassley wrote.

The senator said the FTC should examine:

• Whether PBMs charge certain payers a higher price than competing pharmacies or steer patients to pharmacies in which the PBM has an ownership stake
• Whether PBMs use formulary designs to depress market share of low cost prescription drugs
• If more information about roles of intermediaries in the health care marketplace would benefit consumers.

Grassley has introduced legislation to require an FTC study on PBMs’ “potentially anticompetitive behavior” and the effects on prescription drug prices.

He cited local meetings in his home state and testimony from the Feb. 17 FTC hearing. Lawmakers, pharmacists and patients explained how PBMs have hurt their businesses and patient access to needed medicines.

Khan stated the study was vital to understand PBMs, “sky-high drug prices and the decline of independent pharmacies.”

She and FTC Commissioner Rebecca Slaughter voted for the study. FTC Commissioners Noah Phillips and Christine S. Wilson agreed rising health care costs are a concern for patients, but the study as proposed would not address consumer issues.

The PBM trade group Pharmaceutical Care Management Association has argued in recent years that public outrage over high drug prices has grown, so “brand pharmaceutical manufacturers have undertaken a massive campaign to deflect blame for their pricing decisions.”

Meanwhile, the FTC has opened a public comment period for anyone to share information about PBM business practices and issues. That will last through April 25.

Grassley also has joined lawmakers urging the Centers for Medicare & Medicaid Services to reform fees to lower prescription drug costs for Medicare Part D beneficiaries.