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Pharmacy groups laud FTC probe into pharmacy benefit managers’ practices

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Photo: Jeff Lagasse/Healthcare Finance News

A number of pharmaceutical groups have come out in favor of the Federal Trade Commission’s decision to launch an inquiry into the business practices of the nation’s six largest pharmacy benefit managers, in order to scrutinize their impact on the access and affordability of prescription drugs.

The FTC announced this week that it’s sending compulsory orders to CVS Caremark, Express Scripts, OptumRx, Humana, Prime Therapeutics and MedImpact Healthcare Systems, which have 90 days from the date they receive the order to respond. Most of these large PBMs are owned or connected with insurers for vertical integration.

The FTC will examine pharmacy benefit managers’ role in which drugs are prescribed, the pharmacies patients can use and what consumers pay at the pharmacy counter. As middlemen, pharmacy benefit managers negotiate rebates and fees with drug manufacturers, create drug formularies and policies, and reimburse pharmacies for patients’ prescriptions.

This garnered positive reaction from several organizations, including the National Community Pharmacists Association (NCPA), which said PBMs “behave like monopolies.”

“Their secretive, anti-competitive practices increase prescription drug prices, limit consumer choice and stymie competition,” said NCPA CEO B. Douglas Hoey. “They’ve escaped serious scrutiny for far too long.”

Hoey added that the NCPA has repeatedly called on the FTC to scrutinize PBM practices and that he hopes the results of the probe translate into meaningful reforms.

The American Pharmacy Cooperative Inc. (ACPI) also approved of the FTC’s move, saying it had long advocated for federal oversight of PBMs.

“As an organization, APCI and its members have advocated aggressively for the federal government to investigate anti-competitive PBM practices,” said APCI CEO Tim Hamrick. “APCI offered testimony to the FTC in February of this year and submitted written comments in May regarding anti-competitive PBM practices. We very much look forward to working with the FTC, Congress and other stakeholders to rein in these problematic issues that are detrimental to patients, taxpayers and small businesses.”

The FTC’s order requests a wide range of information from the PBMs and should provide the commission with a wealth of data, said Greg Reybold, APCI’s director of healthcare policy and general counsel.

“We are extremely pleased with the depth and scope of the information the FTC is requesting from these middlemen,” Reybold said. “For years, PBMs have operated in a black box, and FTC scrutiny of PBM practices that restrict patient access to care and raise prescription drug costs falls squarely within the commission’s twin missions of protecting consumers and competition.”

Another group joining the chorus of praise was the American Pharmacists Association (APhA), saying it was pleased that the FTC acted in response to public comments.

“APhA welcomes the section 6(b) study on vertically merged PBMs and their uncompetitive and deceptive trade practices that force patients to use PBM-owned specialty, mail order and network pharmacies,” said Ilisa BG Bernstein, interim executive vice president and CEO of APhA. “APhA stands ready to help FTC as they collect this information and urges FTC to not only examine these anti-competitive practices, but to take the necessary actions to end them.”

“PBMs are putting independent pharmacies out of business and creating ‘pharmacy deserts’ in minority and underserved communities, where the neighborhood pharmacy may be the only healthcare provider for miles,” said APhA President Theresa Tolle. “I am pleased FTC has taken this important step to lift the curtain on PBMs’ harmful business practices. Now, we urge them to act to end these practices that are hurting our patients and denying equitable access to pharmacist-provided patient care services.”

WHAT’S THE IMPACT?

The FTC’s decision to launch the study comes after the commission deadlocked on an earlier vote in February to investigate PBMs. Following that vote, the FTC issued a Request for Information about PBM practices and received a high number of public comments on the issue – more than 24,000 to date.

Most of the PBMs in the probe are connected to insurers. CVS Caremark is owned by CVS Health, which also owns Aetna. Express Scripts is owned by Cigna. OptumRx is part of UnitedHealth Group, which also owns UnitedHealthcare. Humana Pharmacy Solutions is owned by Humana, and Prime Therapeutics is collectively owned by 19 Blue Cross and Blue Shield plans. MedImpact does not have ties to a major insurer. Its 7% market share is less than the double-digit market shares of CVS Caremark, Express Scripts and OptumRx.

The FTC said its inquiry will review practices that have drawn scrutiny, including fees and clawbacks charged to unaffiliated pharmacies; methods to steer patients toward pharmacy benefit manager-owned pharmacies; potentially unfair audits of independent pharmacies; complicated and opaque methods to determine pharmacy reimbursement; the prevalence of prior authorizations and other administrative restrictions; the use of specialty drug lists and surrounding specialty drug policies; and the impact of rebates and fees from drug manufacturers on formulary design and on the costs of prescription drugs to payers and patients.

THE LARGER TREND

In November 2020, the Department of Health and Human Services issued a final rule ending the practice of pharmacy benefit managers issuing drug rebates to insurers. The rule stipulated that drug rebates had to be passed directly to consumers at the pharmacy counter.

Opponents of the rule said insurers used the rebates to reduce premiums for all beneficiaries. But others have said there is a lack of transparency to the PBM process.

Twitter: @JELagasse
Email the writer: [email protected]



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