The heightened scrutiny of pharmacy benefit managers by federal agencies continues to pick up steam. Late last week, the Federal Trade Commission changed course on previous statements opposing state legislation that would boost transparency over the entities that manage prescription drug benefits.
"We want to make sure that prior statements are not being relied on in a way that could be impeding ongoing efforts at the state level or even at the federal level to be examining the practices of these PBMs and in some cases, requiring certain types of transparency or disclosure requirements," FTC Chair Lina Khan said.
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During a meeting on July 20, the FTC voted to withdraw its prior advocacy statements, studies and reports in support of PBMs, as part of its ongoing investigation in the PBM market, and issued a statement.
Khan said she had "no doubt that prior commission efforts in this area were reflecting good faith efforts to be responding to what they saw as potential risks" but added that "consolidation and vertical integration and asymmetries" in the market have changed the PBM landscape.
In 11 letters and reports issued between 2004 and 2014, the FTC took the position that some state and federal proposals to increase PBM transparency could undermine competitive processes. The industry often cites those statements when making the case against more oversight.
The commissioners said the change in policy is part of an effort to update the agency's understanding of PBMs as it carries out a sweeping investigation into the industry to determine whether any practices are anticompetitive and restrict patient access to affordable medicines. Attorneys and analysts have said that the previous policy against bills in states such as California, New York and Rhode Island have helped enable rapid growth and consolidation in the PBM industry. Today, the three largest PBMs — CVS Caremark, Cigna's Express Scripts and UnitedHealth Group's OptumRx — control nearly 80% of the market. The FTC, which launched its inquiry into the six largest PBMs (the three previously mentioned, as well as Humana, Prime Therapeutics and MedImpact Healthcare Systems) on June 7, 2022.
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"The commission's prior PBM statements do not reflect the contemporary market reality," FTC Commissioner Rebecca Slaughter said. "The update is necessary given the substantial cost patients may bear if policymakers, other government agencies, academics or market participants rely on outdated commission advocacy as the basis for not advancing solutions to any anticompetitive market outcomes driven by PBMs."
The Pharmaceutical Care Management Association, which represents the PBM industry, said in a statement that although "market dynamics for pharmacy benefit companies have changed over the years," it doesn't agree with the commission's decision. "The market for pharmacy benefit companies is dynamic, diverse and has only become even more competitive, with 73 full-service pharmacy benefit companies operating in the U.S.," it said.
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Alan Goforth
Alan Goforth is a freelance writer in suburban Kansas City. In addition to freelancing for several publications, he has written a dozen books about sports and other topics.
