The Federal Trade Commission staff is having trouble getting information from the big pharmacy benefit managers, but it believes that the big PBMs may have too “outsized influence” over the U.S. pharmaceutical system and may be steering prescription revenue to their own pharmacies.
The staff made the allegations in an interim staff report that was released Monday over the objections of Melissa Holyoak, a Republican commissioner from Utah.
The new interim report is the result of a PBM investigation that the FTC announced in 2022.
The FTC asked for information from Caremark Rx, Express Scripts, OptumRx, Humana Pharmacy Solutions, Prime Therapeutics and MedImpact Healthcare Systems. A year later, the FTC asked for information from group purchasing organizations.
“Some of the PBM respondents have not yet fully complied; they have not yet completed their required submissions,” the FTC staff says in the new report.
The FTC could take the PBMs that have failed to supply data to court, and it’s releasing the preliminary report now to keep some PBMs’ delaying tactics from keeping the FTC from sharing the findings, officials said.
The FTC found that the three biggest PBMs manage 79% of U.S. prescriptions, and that a single PBM manages more than 80% of prescriptions in Alabama and South Carolina.
In the specialty pharmacy category, for example, the PBMs’ mail-order pharmacies have increased their share of revenue to 68% in 2023, from 54% in 2016.
Health insurers have been combining both with PBMs and other organizations that provide physician care, the FTC staff says.
“Increased concentration and vertical integration may have enabled PBMs to lessen competition, disadvantage rivals and inflate drug costs,” the staff adds. “While this interim report principally focuses on the impact of these changing market dynamics on the operation and vitality of the nation’s pharmacies, we also share initial evidence about PBM and brand pharmaceutical rebating practices that urgently warrant further scrutiny and potential regulation.”
The FTC staff report comes out shortly after the release of a PBM impact report that was commissioned by a Washington state independent pharmacy group and a group that represents the state’s health care providers and employer-sponsored health plans. Washington state researchers analyzed claims data and found that PBMs typically marked up prices for drugs purchased from their own mail-order pharmacies much more than other types of pharmacies marked up prices.
Andrew Ferguson, a Republican FTC commissioner who voted in favor of releasing the report, says in a concurring opinion about the release that he was disappointed that the commission has not yet taken the PBMs that have failed to provide full information to court but is also troubled by the fact that the staff relied heavily on anonymous public comments submitted in response to an FTC request for information.
Some of the other comments used came from companies that gave their names but work with PBMs, he says.
“Firms who contract with PBMs may have an incentive to instigate regulatory action against PBMs to improve their bargaining position,” he says.
Holyoak, who voted against the release of the interim report, says she has concerns about the PBMs’ role but believes the methodology in the new report is much weaker than the methodology in a PBM mail-order pharmacy report that the FTC released in 2005.
The new report “fails to meet the standards of economic rigor expected of Commission reports more generally,” she says. “The Report provides no analysis of the competitive environment in which PBMs operate or how it has changed in the intervening years since 2005. Nor does it explain how competition among PBMs — even vertically integrated ones — mitigates or exacerbates the role PBMs play in the healthcare markets.”
The new report also lacks information about how PBM practices affect what consumers pay for drugs, she says.