FTC to Study Pharmacy Benefit Managers

The FTC announced it will study the impact of vertical integration in the PBMs industry on the affordability and access of prescription drugs. The FTC also endorsed a policy statement signaling the agency will take a stronger anti-trust stance aimed at lowering the cost of prescription drugs.

July 19, 2022

On June 8, 2022, the Federal Trade Commission (FTC) announced it will conduct a study of the pharmacy benefit manager (PBM) industry’s business practices. The study will focus on the impact of vertical integration within the PBM industry on the access and affordability of prescription drugs. The FTC will require the six largest PBMs – CVS Caremark, Express Scripts, Inc.; Optum Rx, Inc.; Humana Inc.; Prime Therapeutics LLC; and MedImpact Healthcare Systems, Inc. – to submit responses to 17 pages of questions on topics such as the impact of rebates and fees from drug manufacturers on formulary designs and costs; the prevalence of prior authorization, step therapy, and other administrative restrictions, and the use of specialty pharmacies and specialty drug lists. The announcement of the study follows a now-closed FTC Request for Information (RFI) that solicited public comments on PBM business practices.

Additionally, the FTC voted unanimously during its June 16, 2022 meeting to adopt a policy statement (accompanying press release) outlining how the Commission would increase its investigation and enforcement of rebates and fees paid by prescription drug manufacturers to PBMs that result in the exclusion of lower cost drug products from formulary lists. In particular, the FTC highlighted the increasing list price of insulin as supporting evidence. The policy statement describes the FTC’s legal authorities to address what the Commission determines are anti-competitive practices related to these rebates and fees, signaling the agency will adopt a stronger anti-trust stance with the goal of reducing the cost of prescription drugs.

What's Next?

The six PBMs are required to issue their data to the FTC in response to the study no later than September 6, 2022 (90 days). It is unclear when the results of the study will be available. These PBMs are not accused of legal wrongdoing as a result of the Commission’s study, but the FTC could use information obtained from its research to produce future rules or guidance, or to open investigations into specific companies. Employer views on PBMs are mixed, according to the Business Group on Health’s 2022 Health Care Strategy and Plan Design Survey. While 43% of employers think that consolidation of the PBM industry may reduce total costs of care and support value-based care models, only 22% of employers think consolidation will improve the consumer experience, and only 18% believe consolidation will improve the quality of care.

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We provide this material for informational purposes only; it is not a substitute for legal advice.

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