On January 14, the Federal Commerce Fee (“FTC”) printed its Second Interim Workers Report (“Report”) on pharmacy profit managers (“PBMs”), specializing in PBM pricing practices for specialty generic medicine. The Report described vital markups of most cancers, HIV and different persistent situation specialty medicine and excessive reimbursement charges paid by Caremark Rx, Categorical Scripts and OptumRx (the “Massive 3 PBMs”) to their affiliated pharmacies. The Report is one a part of the FTC’s longstanding investigation of PBMs and comes at a time when PBMs face vital scrutiny from each federal and state policymakers.
FTC’s Findings
To compile the Report, the FTC analyzed information for specialty generic medicine distributed from 2017 to 2022 for members of economic and Medicare Half D prescription drug plans managed by the Massive 3 PBMs. Key findings within the Report embody:
- For industrial well being plan members between 2020 and 2022, the Massive 3 PBMs’ affiliated pharmacies marked up greater than half of the specialty generic medicine studied by greater than 100% over the Nationwide Common Drug Acquisition Price (“NADAC”). Of those specialty medicine, 22% have been marked up by greater than 1,000%.
- The Massive 3 PBMs reimbursed their affiliated pharmacies at the next price than unaffiliated pharmacies on almost each specialty generic drug studied.
- PBM-affiliated pharmacies generated greater than $7.3 billion of income in extra of their estimated acquisition prices in the course of the examine interval.
- The Massive 3 PBMs additionally engaged in unfold pricing, which is PBM billing of plan sponsor purchasers at charges that exceed PBM reimbursements to pharmacies, to generate a $1.4 billion revenue. Most of this revenue was attributed to allotting industrial prescriptions by way of pharmacies not affiliated with the Massive 3 PBMs.
- Plan sponsor spending and affected person price sharing on specialty generic medicine additionally elevated considerably, with plan sponsor funds for specialty generic medicine rising at a compound annual progress price of 21% for industrial claims and 14% for Half D claims between 2017 and 2021, and affected person price sharing growing at 21% and 15%, respectively.
Because of these findings, then-acting FTC Chair Lina Khan emphasised the significance of “investigat[ing] practices which will inflate drug prices, squeeze unbiased pharmacies and deprive Individuals of reasonably priced, accessible healthcare.” The Report requires specialty generic drug pricing and PBM steering practices to obtain additional scrutiny and famous that “extra legislative reforms could also be warranted.”
FTC Enforcement Exercise and Sensible Takeaways
The Report, which is a part of the FTC’s ongoing investigation into the PBM trade, expanded on the FTC’s first interim report in July 2024, which discovered that PBMs wield vital affect over sufferers’ potential to entry and afford their prescribed drugs and unbiased pharmacies’ potential to remain in enterprise and serve their communities. The Report additionally follows a September 2024 FTC administrative criticism in opposition to the Massive 3 PBMs, alleging anticompetitive and unfair rebate practices ensuing within the synthetic inflation of insulin costs. In the meantime, there may be bipartisan curiosity on Capitol Hill to deal with PBM practices, as evidenced by a number of current bipartisan payments which have been proposed in Congress addressing PBM actions. States are additionally addressing PBM practices by way of an inflow of state laws aimed toward regulating PBMs.
All affected trade stakeholders, together with pharmacies, well being plans, PBMs and producers, ought to take discover of those developments as new laws, rules and company actions proceed to affect PBMs.
Corridor Render routinely works with pharmacies, well being plans and PBMs on a variety of PBM points and can proceed to observe state and federal developments on this space.
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