The Federal Commerce Fee (FTC) on Tuesday launched its second interim report on pharmacy profit managers (PBM), saying the foremost business middlemen generate billions in income by way of vertical integration, business dominance and marking up the costs of speciality medication.
The report particularly appeared on the enterprise practices of the Caremark Rx, Specific Scripts and OptumRx, that are in flip owned by CVS Well being, Cigna and UnitedHealth Group, respectively. These corporations are thought-about the “Big 3” within the PBM business, controlling roughly 60 p.c of the market.
“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 stated in a press release.
Khan stated throughout an FTC open fee assembly to debate the findings on Tuesday that the five-person fee had voted unanimously in favor of issuing the report.
In keeping with the report, the “Big 3” PBMs marked up the costs of many speciality generic medication by lots of or 1000’s of p.c.
Considerably marking up the costs 51 such medication helped PBM-affiliated pharmacies generate $7.3 billion in income between 2017 and 2022. The fee famous these costs have been in extra of the Nationwide Common Drug Acquisition Value (NADAC) for these medication.
As is famous within the report, there is no such thing as a set definition for what specialty medication are. The Workplace of Inspector Normal for the Division of Well being and Human Companies has beforehand stated a product will be thought-about a speciality drug as a result of it might be “expensive; be difficult to handle, monitor or administer; or treat rare, complex or chronic conditions.”
The FTC discovered that 22 p.c of speciality medication distributed by PBM-affiliated pharmacies have been marked up by greater than 1,000 p.c whereas 41 p.c have been marked up between 100 and 1,000 p.c. Amongst these medication marked up by greater than 1,000 p.c, half of them have been marked up by greater than 2,000 p.c.
In 2023, the highest three PBMs distributed nearly all of specialty medication within the U.S. at 68 p.c, a double-digit hike from when it distributed 54 p.c of specialty medication in 2016.
“Specialty generic drugs represented a growing profit center for the Big 3 PBMs and their affiliated pharmacies during our study period from 2017 through part of 2022,” the report discovered.
“Given the combination of high reimbursement rates and large dispensing volumes, the Big 3 PBMs’ affiliated pharmacies generated significant and growing levels of revenue in excess of estimated acquisition cost (NADAC) on the most highly marked up specialty generic drugs during the study period, while the Big 3 PBMs also appeared to take in significant income from spread pricing on these drugs, in aggregate,” the report continued, whereas noting plans sponsors and sufferers paid “substantially” extra in that very same timeframe.
Antitrust legal professional Austin Ownbey spoke on behalf of the Pharmaceutical Care Administration Affiliation (PCMA), a commerce group that represents PBMs, through the open fee assembly Tuesday.
“PCMA has significant concerns that a second interim report regarding specialty drugs is unlikely to be anything other than a piece of advocacy without substantiating evidence,” stated Ownbey. “Specialty drugs offer the most effective and, in some cases, the only treatment for illness and conditions that historically had few treatment options, including multiple sclerosis, cystic fibrosis, cancer and autoimmune disorders.”
PBM practices have incurred vital bipartisan scrutiny in Congress. Sens. Elizabeth Warren (D-Mass.) and Josh Hawley (R-Mo.) in addition to Reps. Jake Auchincloss (D-Mass.) and Diana Harshbarger (R-Tenn.) known as on the FTC to difficulty its second interim employees report. The lawmakers stated they anticipated the report would inform future laws on PBMs.
