A report published Tuesday shows hundreds and thousands of percent markups on HIV, hypertension and cancer drugs for Medicare and commercial claims alike.
Tuesday, the U.S. Federal Trade Commission published a report finding that the “Big 3 PBMs”, Caremark Rx, Express Scripts and OptumRx, have been marking up the prices of drugs by hundreds and thousands of percents, bringing in an additional $7.3 billion in revenue.
The 60-page report alleges the three pharmacy benefit managers (PBMs) employed a number of tactics to increase profits, from markups on specialty generic drugs at affiliated pharmacies, steering more profitable specialty drugs toward those affiliated pharmacies and away from unaffiliated ones, and billing plan sponsors more than they were reimbursing pharmacies for the cost of drugs, a practice called “spread pricing.”
“The FTC staff’s second interim report finds that the three major pharmacy benefit managers hiked costs for a wide range of lifesaving drugs, including medications to treat heart disease and cancer,” FTC Chair Lina Khan said in a statement.
The report notes that PBMs—middlemen that buy directly from drug manufacturers and reimburse pharmacies for the costs of drugs—were deriving excess profits as patient costs continued to soar.
“We also found that this problem is growing at an alarming rate, which means there is an urgent need for policymakers to address it,” Hannah Garden-Monheit, director of the FTC’s Office of Policy Planning, added in the same press release.
The report shared data showing that over the last three years, these markups have been steadily increasing. Some were on drugs like Epivir, an HIV drug marked up 276% in 2022, Tobi, an inhaled medication for cystic fibrosis marked up 339%, and Myfortic, an immunosuppressant taken by organ transplant patients marked up 693%.
The biggest moneymakers, however, were drugs for hypertension (up 7,736%), multiple sclerosis (up to 2,435%) and cancer chemotherapies. Gleevec, the landmark leukemia drug, was marked up 4,154% for Medicare plans and 5,232% for commercial ones.
The report published Tuesday follows one released last summer, which showed how vertical integration and concentration had enabled the three largest PBMs in the U.S. to manage about 80% of all prescriptions filled nationwide, and the six largest up to 95%.
In the past, both PBMs and drug makers themselves have played the blame game, accusing one another of being at fault for soaring drug prices. The FTC in September sued Caremark, Express Scripts and Optum for their roles in inflating drug prices, accusing them of anticompetitive and unfair rebating practices, ultimately reducing patient access to life-saving medications.
