An investigation by the Federal Trade Commission into pharmacy benefit managers revealed PBM favoritism toward their own pharmacies and vast market control, which affects both medication access and affordability, according to the agency's initial July report.
The three largest PBMs — CVS Caremark, Cigna's Express Scripts, and UnitedHealth's OptumRx— handle 79% of U.S. medical prescriptions for approximately 270 million people. Integrating further with health insurers allows even more control over medication prices and access, according to the FTC's report. On top of that, PBMs also contributed to a 10% closure rate of independent pharmacies in rural locations between 2013 and 2022.
PBMs are "vertically integrated, serving as health plans and pharmacists, and playing other roles in the drug supply chain as well," the report states. "As a result, they wield enormous power and influence over patients’ access to drugs and the prices they pay. This can have dire consequences for Americans, with nearly three in ten surveyed Americans reporting rationing or even skipping doses of their prescribed medicines due to high costs."
"The FTC’s interim report lays out how dominant pharmacy benefit managers can hike the cost of drugs — including overcharging patients for cancer drugs," Lina Khan, FTC chair, said in a news release. "The report also details how PBMs can squeeze independent pharmacies that many Americans — especially those in rural communities — depend on for essential care. The FTC will continue to use all our tools and authorities to scrutinize dominant players across healthcare markets and ensure that Americans can access affordable healthcare."
Complexities within PBM contracts can often be confusing for independent pharmacies, according to the report. PBMs also tend to favor their own pharmacies, which can increase prices and disadvantage other, smaller pharmacies.
The report calls into question PBM's "outsized influence," which it states "comes not only from the expansion of their traditional, middlemen administrative services in processing patients’ pharmacy prescription claims, but also from decades of consolidation and vertical integration across the healthcare delivery system."
The FTC's analysis highlights that the largest PBMs are under common ownership with the largest, most dominant health insurers in the U.S. and as such, for any pharmacy they operate they also operate large retail, mail order, and specialty pharmacies, which compete with local independent ones.
"Given these relationships, PBMs and their affiliated entities may have the incentive and ability to engage in steering a growing share of prescription revenues to their own pharmacies through specialty drug classification, self-preferential pricing, and pharmacy contracting procedures to target and control the business operations of pharmacies," the report concludes.
The FTC will continue to evaluate the practices of PBMs and noted that there is an urgent need for further scrutiny of PBM and brand pharmaceutical rebating practices.