The Federal Trade Commission plans to file lawsuits against the three largest pharmacy benefit managers over allegedly steering patients away from less expensive drugs, according to The Wall Street Journal.
The U.S. Federal Trade Commission is gearing up to take the three largest pharmacy benefit managers to court over their alleged price negotiation practices for drugs including insulin, according to exclusive reporting Wednesday from The Wall Street Journal.
The Federal Trade Commission (FTC) is targeting CVS’ Caremark, UnitedHealth’s OptumRx and Cigna’s Express Scripts, which allegedly have been pushing patients away from choosing cheaper medicines. The FTC’s case will focus on these companies’ business practices related to rebate agreements with drug manufacturers.
The FTC’s legal actions come after its interim report, released last week, detailed how these pharmacy middlemen “wield enormous power” over patients and their ability to afford prescription drugs. According to the FTC, this power allows pharmacy benefit managers (PBMs) to “significantly influence what drugs are available and at what price.”
Launched in 2022, the FTC investigation found that the PBM market has become increasingly concentrated, with the largest players now also vertically integrated with dominant health insurers and pharmacies. In 2023, the three biggest PBMs processed almost 80% of the nearly 6.6 billion prescriptions in the U.S., while affiliated pharmacies accounted for close to 70% of all specialty drug revenue.
PBMs “appear to have the ability and incentive to prefer their own affiliated businesses, creating conflicts of interest that can disadvantage unaffiliated pharmacies and increase prescription drug costs” while “steering patients to their affiliated pharmacies and away from smaller, independent pharmacies,” according to the FTC.
The FTC’s investigation also revealed that vertically integrated PBMs and brand drug manufacturers negotiate prescription drug rebates “some of which are expressly conditioned on limiting access to potentially lower-cost generic and biosimilar competitors” and enter into “agreements to exclude lower-cost competitor drugs from the PBM’s formulary in exchange for increased rebates from manufacturers.”
FTC Chair Lina Khan in a statement last week said that the agency’s report detailed “how PBMs can squeeze independent pharmacies that many Americans … depend on for essential care,” adding that the business practices of PBMs “can hike the cost of drugs.”
The FTC’s probe into PBMs and legal action against them are part of its recent campaign to help lower drug prices and make treatments more affordable and accessible. In July 2023, the antitrust watchdog—alongside the Department of Justice—released new guidelines on mergers within the pharma industry.
In November 2023, the FTC also started targeting patents that it considered to be improperly listed on the FDA’s Orange Book, ultimately aiming to open up the market to competition that could lower drug prices. The FTC’s opening salvo focused on inhalers, multidose bottles and EpiPens, before expanding the scope in May 2024 to include drugs like Ozempic (semaglutide) and Victoza (liraglutide).
