July 9, 2024

FTC Releases Interim PBM Study

Agency Details Questionable Practices in Multiple Areas

See the Study

Today the Federal Trade Commission (FTC) released a preliminary report of its highly anticipated 6(b) study into pharmacy benefit manager (PBM) practices. The 71-page interim report presents widespread evidence of problematic PBM practices in multiple areas:

  • PBMs have gained significant power over prescription drug access and pricing through Increased concentration and vertical Integration. The FTC says this trend may enable PBMs to reduce competition, disadvantage rivals and drive up drug costs.
  • PBMs dominate specialty drug dispensing: the Big 3 PBMs -- CVS Caremark, ExpressScripts and Prime Therapeutics -- pocket about two-thirds of all specialty drug dispensing revenue, and the report presented evidence of specialty drug steering to PBM-affiliated pharmacies.
  • Self-serving reimbursement on specialty drugs: The report states that pharmacies affiliated with the Big 3 PBMs are often reimbursed 20-40 times the NADAC price on specialty drugs.
  • "Lopsided and unilateral" contracting practices.
  • Pharmacy reimbursement practices are "opaque and unpredictable," and PBMs may use their market power to set reimbursement rates at "untenablly low levels for independent pharmacies."
  • PBMs' post-sale adjustments make reimbursement unpredictable.

The FTC commissioned the study in June 2022, but has had difficulty obtaining all needed documents from the PBMs. This had led to the delay in issuing the final report, for which the FTC has provided no timetable.

In its conclusion to the interim report, the FTC states: "PBMs and their affiliated entities may have the incentive and ability to engage in steering a growing share of prescription revenues to their own pharmacies through specialty drug classification, self-preferential pricing, and pharmacy contracting procedures to target and control the business operations of pharmacies."

American Pharmacies closely follows developments at the FTC and urges that the FTC promptly commence enforcement action against PBMs as soon as it uncovers wrongdoing, even before the completion of its final report.