The stress in opposition to pharmacy profit managers (PBMs) continues to construct.
On Tuesday, the Federal Commerce Fee (FTC) launched its second interim workers report on prescription drug middlemen. The report examines the affect of PBMs (particularly CVS Caremark, Categorical Scripts and Optum Rx) on specialty generic medication, highlighting substantial worth markups by PBMs on medicines for most cancers, HIV and different situations. The fee voted 5-0 to launch the report.
“The FTC workers’s second interim report finds that the three main pharmacy profit managers hiked prices for a variety of lifesaving medication, together with medicines to deal with coronary heart illness and most cancers,” mentioned FTC Chair Lina M. Khan in a press release. “The FTC ought to hold utilizing its instruments to analyze practices that will inflate drug prices, squeeze impartial pharmacies, and deprive People of reasonably priced, accessible healthcare—and will act swiftly to cease any unlawful conduct.”
The brand new report is the most recent growth in a battle that has been brewing between the FTC and the PBMs. The company launched its first interim workers report on PBMs in July, which detailed how concentrated the PBM market has turn out to be. As well as, the FTC sued CVS Caremark, Categorical Scripts and Optum Rx over insulin costs in September, prompting the Large Three PBMs to countersue the company in November, claiming the company’s lawsuit is unconstitutional.
Whereas a number of healthcare executives are popping out in help of the report, the PBMs named within the report are unsurprisingly decrying its findings.
What the FTC discovered
Within the second interim report, the FTC examined specialty generic medication disbursed between 2017 and 2022 for members of business well being plans and Medicare Half D prescription drug plans managed by the Large Three PBMs. This differs from the earlier report, which analyzed two specialty generic medication.
The FTC discovered that the highest three PBMs utilized markups starting from a whole lot to hundreds of p.c on varied specialty generic medication disbursed by their affiliated pharmacies, together with medicines for most cancers and HIV. The PBMs additionally reimbursed their affiliated pharmacies at larger charges than they paid to unaffiliated pharmacies for almost each specialty generic drug reviewed.
Through the examine interval, the affiliated pharmacies of the Large Three PBMs earned greater than $7.3 billion in shelling out income above their estimated acquisition value, as decided by the Nationwide Common Drug Acquisition Value (NADAC), on specialty generic medication, the FTC additionally reported.
As well as, the three PBMs earned about $1.4 billion of earnings from unfold pricing on the specialty generic medication analyzed within the report throughout the examine interval. Unfold pricing is when PBMs invoice their plan sponsor shoppers greater than what they reimburse pharmacies for prescribed drugs.
“These outcomes illustrate the growing monetary significance of specialty generic medication to the Large 3 PBMs, in addition to to plan sponsors and sufferers,” the FTC said within the report. “The outcomes additionally reveal that the 2 case examine medication analyzed in our First Interim Workers Report weren’t remoted examples. This report confirms that the Large 3 PBMs impose important markups on a big selection of specialty generic medication.”
The response
The Large Three PBMs have largely criticized the FTC report.
A spokesperson for CVS Well being argued that the FTC has drawn broad conclusions from “cherry-picked” specialty generic outliers in each of its interim stories.
“Between 2017-2022, specialty generic merchandise have represented lower than 1.5% of our shoppers’ complete drug spend and solely 51 out of hundreds of medicine,” mentioned David Whitrap, vice chairman of exterior affairs at CVS Well being, in an e-mail. “In distinction, branded specialty merchandise characterize greater than 50% of our shoppers’ complete drug spend and are totally ignored by the FTC.”
Categorical Scripts, in the meantime, declared in a press release that “nothing within the FTC’s report addresses the underlying trigger of accelerating drug costs, or helps employers, unions, and municipalities hold prescription advantages reasonably priced for his or her members.”
An Optum spokesperson informed MedCity Information that the corporate continues to be reviewing the report, however pointed to work it’s doing to lower drug costs.
“Optum is decreasing the price of specialty medicines, which includes half of all drug expenditures, and offering medical experience, packages and help for sufferers with complicated and uncommon situations,” the spokesperson mentioned. “In 2024, we helped eligible sufferers save $1.3 billion and the median out-of-pocket cost for these sufferers was $5.”
Whereas the PBMs are strongly criticizing the findings of the report, one business skilled — Antonio Ciaccia, CEO of 46booklyn — mentioned he’s glad to not be the one one working to show PBM practices. He mentioned he launched 46brooklyn in 2018 with an exposé on how Medicaid packages had been being overcharged for generic Gleevec, one of many medication talked about within the report.
“We had been informed by PBMs that our concentrate on this drug was an train in cherry choosing. Since then, we’ve got recognized a litany of different examples of those exorbitant markups on generic specialty medication and the way PBM conflicts of curiosity within the specialty pharmacy market have resulted in extreme prices to employers, Medicare, and sufferers,” he mentioned. “I’d like to say I’m shocked by the findings, however I’m not. I’m simply glad to not really feel like I’m alone in figuring out these unlucky realities.”
Ellen Rudolph, CEO of autoimmune digital well being firm WellTheory, famous that the FTC’s findings “underscore a vital situation in our healthcare system: the numerous markups on specialty medication not solely pressure sufferers but in addition create substantial monetary burdens for employers.”
One other healthcare govt referred to as on policymakers to step up primarily based on the findings of the report.
“Sufferers can be properly served if these so-called specialty medication had been capable of be disbursed by their most popular group pharmacy,” mentioned Douglas Hoey, CEO of the Nationwide Neighborhood Pharmacists Affiliation. “As a substitute, nonetheless, for the PBMs’ monetary achieve, sufferers’ alternative is oftentimes restricted to PBM-owned mail-order pharmacies and their care is sadly disrupted. That is simply the most recent apparent sign to policymakers that they have to cross PBM reform that would come with paying for prescriptions primarily based on the price of the drug plus a clear pharmacist skilled shelling out price.”
Picture: z_wei, Getty Photos