FTC criticizes pharmacy benefit managers for inflating drug prices

In a recent announcement, the Federal Trade Commission (FTC) revealed that prescription drug middlemen, also known as pharmacy benefit managers (PBMs), are exploiting their position to inflate drug prices, particularly targeting cancer patients. The FTC's interim report highlighted how dominant PBMs can drive up drug costs, including overcharging for cancer medications. These PBMs, now operating as vertically integrated health plans and pharmacists, wield significant control over drug availability and pricing by negotiating terms for access to prescription drugs for millions of Americans. The report indicated that the six largest PBMs, including Humana Pharmacy Solutions, MedImpact, Prime, and CVS Caremark, oversee a substantial portion of prescription drug claims in the U.S., with CVS Caremark operating the largest retail pharmacy chain. The consolidation of PBMs within corporate healthcare conglomerates has raised concerns about patient outcomes, leading to the closure of independent retail pharmacies, particularly in rural areas. The FTC also highlighted instances where PBMs may be directing patients towards affiliated pharmacies, potentially limiting access to lower-cost generic alternatives. The FTC's ongoing probe, initiated in 2022, aims to address the high cost of prescription drugs by scrutinizing PBM practices. Lawmakers, including Georgia Rep. Buddy Carter, have called for enforcement actions against any illegal or anti-competitive practices uncovered by the investigation. The report emphasized the critical role of pharmacies in rural healthcare systems and the impact of PBM practices on patient access to affordable medications. With the FTC's increased focus on benefit managers, there are concerns within the industry about potential regulatory and legislative actions that could restrict their operations and pricing strategies. The study's findings mark a significant shift in the FTC's approach to regulating benefit managers, signaling a more proactive stance under Chair Lina Khan's leadership. The industry faces the prospect of formal investigations or lawsuits alleging anticompetitive behavior based on the report's revelations. The FTC's scrutiny could also spur legislative efforts at both federal and state levels to impose constraints on PBMs to ensure fair pricing and access to prescription drugs for all Americans.