FTC wants to know: How are PBMs affecting drug affordability and access?
Following the Federal Trade Commission’s decision to not, at least initially, dig deeper into pharma middlemen known as PBMs, the commission is now seeking comments on ways that these massive, vertically integrated PBMs are affecting drug affordability and access.
PBMs — led by the big 3 of UnitedHealth’s OptumRx, CVS Caremark, and Cigna’s Express Scripts controlling almost 80% of the market — generally make their money by managing prescription drug benefits on behalf of private health insurers, Medicare Part D drug plans, large employers, and other payers. But the PBMs also figure out ways to tilt the market in their favor, as the FTC noted how the largest PBMs are vertically integrated with health insurance companies and specialty pharmacies, “giving them financial incentives to steer patients to use their affiliated services.”
The FTC says it’s continuing to look into a variety of PBM business practices, among them whether patients are being forced to substitute different prescription drugs to maximize PBM rebates and fees, or steered away from unaffiliated pharmacies and methods of distribution and toward PBM-affiliated specialty, mail-order, and retail pharmacies.
For example, Janssen’s metastatic prostate cancer drug Zytiga (abiraterone or Xytiga) costs $10,000 as a brand name drug, but came to market in 2019 as a $450 generic. Still, some health plans and PBMs only cover the brand name version, or in some cases, taking the generic would be significantly more expensive than taking the brand.
While noting that many independent pharmacies commented at the prior FTC hearing about how PBM contractual terms are confusing, unfair, opaque, and arbitrary, FTC staff are also looking into:
- The impact of PBM rebates and fees on net drug prices to patients, employers, and other payers, as well as formulary design and patients’ ability to access drugs.
- PBMs’ use of potentially unfair, deceptive, or anticompetitive contract terms and all related practices when calculating pharmacy reimbursements and disbursements.
- PBMs’ use of other potentially unfair, deceptive, or anticompetitive practices, including audit provisions; pharmacy network design and exclusions; use of gag clauses, confidentiality clauses, and non-disparagement clauses; and other potentially unfair provisions.
- Potential conflicts of interest and anticompetitive effects arising from horizontal and vertical consolidation of PBMs with insurance companies, specialty pharmacies, and providers.
“The Request for Information will enable agency staff to study a wide array of PBM business practices and issues and will help inform the agency’s policy and enforcement work,” the FTC said, noting that the comment period will be open until April 25.
On the Congressional end, drug pricing and PBM reforms have generally stalled outside of a single provision to add a $35 cap on co-pays for insulin.
Insulin has been one of the most problematic areas for high expenses over the years, as the list price for insulin continues to skyrocket, even if what patients are paying out of pocket with insurance has stayed slightly up. Those without insurance, however, would still pay full price. Many with insurance now pay more than $600 just for a 40-day supply of insulin.
Senate majority leader Chuck Schumer of New York said there would be a vote on the insulin cap in March.
No one should have to ration insulin & put their health at risk because they can't afford it. Capping the cost of insulin to $35/month is good for patients—and it's the right thing to do.
Glad to be working with @SenatorWarnock on this.
— Senator Patty Murray (@PattyMurray) February 22, 2022