The
pressure
against
pharmacy
benefit
managers
(PBMs)
continues
to
build.
On
Tuesday,
the
Federal
Trade
Commission
(FTC)
released
its
second
interim
staff
report
on
prescription
drug
middlemen.
The
report
examines
the
impact
of
PBMs
(specifically
CVS
Caremark,
Express
Scripts
and
Optum
Rx)
on
specialty
generic
drugs,
highlighting
substantial
price
markups
by
PBMs
on
medications
for
cancer,
HIV
and
other
conditions.
The
commission
voted
5-0
to
release
the
report.
“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,”
said
FTC
Chair
Lina
M.
Khan
in
a
statement.
“The
FTC
should
keep
using
its
tools
to
investigate
practices
that
may
inflate
drug
costs,
squeeze
independent
pharmacies,
and
deprive
Americans
of
affordable,
accessible
healthcare
—
and
should
act
swiftly
to
stop
any
illegal
conduct.”
The
new
report
is
the
latest
development
in
a
battle
that
has
been
brewing
between
the
FTC
and
the
PBMs.
The
agency
released
its
first
interim
staff
report
on
PBMs
in
July,
which
detailed
how
concentrated
the
PBM
market
has
become.
In
addition,
the
FTC
sued
CVS
Caremark,
Express
Scripts
and
Optum
Rx
over
insulin
prices
in
September,
prompting
the
Big
Three
PBMs
to
countersue
the
agency
in
November,
claiming
the
agency’s
lawsuit
is
unconstitutional.
While
several
healthcare
executives
are
coming
out
in
support
of
the
report,
the
PBMs
named
in
the
report
are
unsurprisingly
decrying
its
findings.
What
the
FTC
found
In
the
second
interim
report,
the
FTC
examined
specialty
generic
drugs
dispensed
between
2017
and
2022
for
members
of
commercial
health
plans
and
Medicare
Part
D
prescription
drug
plans
managed
by
the
Big
Three
PBMs.
This
differs
from
the
previous
report,
which
analyzed
two
specialty
generic
drugs.
The
FTC
found
that
the
top
three
PBMs
applied
markups
ranging
from
hundreds
to
thousands
of
percent
on
various
specialty
generic
drugs
dispensed
through
their
affiliated
pharmacies,
including
medications
for
cancer
and
HIV.
The
PBMs
also
reimbursed
their
affiliated
pharmacies
at
higher
rates
than
they
paid
to
unaffiliated
pharmacies
for
nearly
every
specialty
generic
drug
reviewed.
During
the
study
period,
the
affiliated
pharmacies
of
the
Big
Three
PBMs
earned
more
than
$7.3
billion
in
dispensing
revenue
above
their
estimated
acquisition
cost,
as
determined
by
the
National
Average
Drug
Acquisition
Cost
(NADAC),
on
specialty
generic
drugs,
the
FTC
also
reported.
In
addition,
the
three
PBMs
earned
about
$1.4
billion
of
income
from
spread
pricing
on
the
specialty
generic
drugs
analyzed
in
the
report
during
the
study
period.
Spread
pricing
is
when
PBMs
bill
their
plan
sponsor
clients
more
than
what
they
reimburse
pharmacies
for
prescription
drugs.
“These
results
illustrate
the
increasing
financial
importance
of
specialty
generic
drugs
to
the
Big
3
PBMs,
as
well
as
to
plan
sponsors
and
patients,”
the
FTC
stated
in
the
report.
“The
results
also
reveal
that
the
two
case
study
drugs
analyzed
in
our
First
Interim
Staff
Report
were
not
isolated
examples.
This
report
confirms
that
the
Big
3
PBMs
impose
significant
markups
on
a
wide
array
of
specialty
generic
drugs.”
The
response
The
Big
Three
PBMs
have
largely
criticized
the
FTC
report.
A
spokesperson
for
CVS
Health
argued
that
the
FTC
has
drawn
broad
conclusions
from
“cherry-picked”
specialty
generic
outliers
in
both
of
its
interim
reports.
“Between
2017-2022,
specialty
generic
products
have
represented
less
than
1.5%
of
our
clients’
total
drug
spend
and
only
51
out
of
thousands
of
drugs,”
said
David
Whitrap,
vice
president
of
external
affairs
at
CVS
Health,
in
an
email.
“In
contrast,
branded
specialty
products
represent
more
than
50%
of
our
clients’
total
drug
spend
and
are
entirely
ignored
by
the
FTC.”
Express
Scripts,
meanwhile,
declared
in
a
statement
that
“nothing
in
the
FTC’s
report
addresses
the
underlying
cause
of
increasing
drug
prices,
or
helps
employers,
unions,
and
municipalities
keep
prescription
benefits
affordable
for
their
members.”
An
Optum
spokesperson
told
MedCity
News
that
the
company
is
still
reviewing
the
report,
but
pointed
to
work
it
is
doing
to
decrease
drug
prices.
“Optum
is
lowering
the
cost
of
specialty
medications,
which
comprises
half
of
all
drug
expenditures,
and
providing
clinical
expertise,
programs
and
support
for
patients
with
complex
and
rare
conditions,”
the
spokesperson
said.
“In
2024,
we
helped
eligible
patients
save
$1.3
billion
and
the
median
out-of-pocket
payment
for
these
patients
was
$5.”
While
the
PBMs
are
strongly
criticizing
the
findings
of
the
report,
one
industry
expert
—
Antonio
Ciaccia,
CEO
of
46booklyn
—
said
he’s
glad
not
to
be
the
only
one
working
to
expose
PBM
practices.
He
said
he
launched
46brooklyn
in
2018
with
an
exposé
on
how
Medicaid
programs
were
being
overcharged
for
generic
Gleevec,
one
of
the
drugs
mentioned
in
the
report.
“We
were
told
by
PBMs
that
our
focus
on
this
drug
was
an
exercise
in
cherry
picking.
Since
then,
we
have
identified
a
litany
of
other
examples
of
these
exorbitant
markups
on
generic
specialty
drugs
and
how
PBM
conflicts
of
interest
in
the
specialty
pharmacy
market
have
resulted
in
excessive
charges
to
employers,
Medicare,
and
patients,”
he
said.
“I’d
love
to
say
I’m
surprised
by
the
findings,
but
I’m
not.
I’m
just
happy
to
no
longer
feel
like
I’m
alone
in
identifying
these
unfortunate
realities.”
Ellen
Rudolph,
CEO
of
autoimmune
digital
health
company
WellTheory,
noted
that
the
FTC’s
findings
“underscore
a
critical
issue
in
our
healthcare
system:
the
significant
markups
on
specialty
drugs
not
only
strain
patients
but
also
create
substantial
financial
burdens
for
employers.”
Another
healthcare
executive
called
on
policymakers
to
step
up
based
on
the
findings
of
the
report.
“Patients
would
be
well
served
if
these
so-called
specialty
drugs
were
able
to
be
dispensed
by
their
preferred
community
pharmacy,”
said
Douglas
Hoey,
CEO
of
the
National
Community
Pharmacists
Association.
“Instead,
however,
for
the
PBMs’
financial
gain,
patients’
choice
is
oftentimes
limited
to
PBM-owned
mail-order
pharmacies
and
their
care
is
unfortunately
disrupted.
This
is
just
the
latest
obvious
signal
to
policymakers
that
they
must
pass
PBM
reform
that
would
include
paying
for
prescriptions
based
on
the
cost
of
the
drug
plus
a
transparent
pharmacist
professional
dispensing
fee.”
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z_wei,
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