Federal Trade Commission to sue three largest PBMs: WSJ

Federal Trade Commission to sue three largest PBMs: WSJ


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Dive Brief:

  • The Federal Trade Commission is preparing to sue the three largest pharmacy benefit managers in the U.S. — CVS’ Caremark, Cigna’s Express Scripts and UnitedHealth’s Optum Rx — over how they negotiate prices for drugs with pharmaceutical manufacturers, the Wall Street Journal reported on Wednesday.
  • The lawsuits will center on PBMs’ business practices related to discounts for drugs including insulin, the WSJ reported, citing sources familiar with the matter.
  • News of the upcoming suits comes one day after the FTC released an interim report on the status of its almost three-year investigation into the drug middlemen. The report found PBMs lean on their market power to profit off of patients and independent pharmacists.

Dive Insight:

PBMs negotiate savings called rebates with drugmakers in return for placing their drugs on a favorable tier of the PBM’s formulary, so that more people can access — and pay for — the drugs. The companies say they save people money on their medications. However, PBMs have long been criticized for opaque and confusing business practices that research suggests contribute to skyrocketing drug costs in the U.S.

Pressure has been rising on Washington to do something to curb drug prices, which caused almost one in three Americans to delay or skip doses of their medication last year, according to a survey.

The FTC is one of a handful of government entities currently investigating PBMs. That work bore fruit this week in the form of the agency’s interim report, which was quickly slammed by the PBM industry as one-sided and based on anecdotes instead of fact.

Still, the FTC report adds to a mountain of existing research raising concerns about PBMs’ market power. It’s a highly consolidated industry: Caremark, Express Scripts and Optum Rx handle almost 80% of all prescriptions in the U.S.

Each are owned by a massive health insurer and operate their own pharmacy networks, allowing them to nudge patients to their owned subsidiaries at the expense of competitors in the drug supply chain, according to the FTC’s analysis.

The FTC’s impending lawsuit will focus on insulin, according to the WSJ. When filed, it will be the latest in a series of lawsuits against Caremark, Express Scripts and Optum Rx for allegedly contributing to higher prices for the lifesaving diabetes drug.

In separate emailed statements, Caremark and Express Scripts said their work negotiating discounts saves their clients money, including for insulin.

“Any action that limits the use of these PBM negotiating tools would reward the pharmaceutical industry and return the market to a broken state,” a spokesperson for Caremark said.

Optum Rx declined to comment.



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