
Open season on PBMs but FTC votes against digging into their anti-competitive practices further
The abuses of pharmacy benefit managers were on full display Thursday but the Federal Trade Commission failed in advancing a motion (2-2) to study these pharma middlemen in more depth, which could lead to wider investigations.
FTC commissioners Noah Phillips and Christine Wilson voted against conducting an FTC study on PBMs, claiming that it was not designed to study the competitive effects of the PBMs, and it’s not clear this study would reveal anything about patients’ out-of-pocket costs, according to Phillips.
Wilson added that she does think it’s useful to look into manufacturer rebates, and she’s confident there can be a data-driven approach. But she noted that many of complaints against PBMs “are baseless,” according to the PBMs, and that the middlemen have not impacted independent pharmacy margins, and have not led to a decrease in independent pharmacies.

Members of Congress have introduced legislation to examine the PBM industry, and “to be clear, I support an FTC analysis of this industry,” Wilson said. “If there’s anti-competitive conduct, I want to know about it.” But she said it’s not the FTC’s role to pick winners and losers, and there needs to be an objective design to the study to produce a data-driven report.
Lamenting the failed vote, FTC chair Lina Khan, who voted in favor of it, added, “We have a real moral imperative to act, this inquiry is long overdue.”
FTC commissioner Rebecca Slaughter, who also voted for the study, stressed that “there isn’t one perfect PBM study, and let’s not make the perfect the enemy of the very, very important.”
“Two members of the FTC just let the worst actors in the market off the hook. After hearing hours of testimony by community pharmacists and patients, all of whom painted the same shocking picture about PBM abuse, and not a single witness there to defend the PBM industry, it is inexplicable that two members of the commission could vote against the study. Their decisions could not possibly have been based on what was heard today,” B. Douglas Hoey, CEO of the National Community Pharmacists Association, said in a statement.
A pair of House Republicans, Rep. Buddy Carter (GA), a pharmacist, and Rep. John Rose (TN) kicked off the open public hearing prior to the vote, calling on the FTC to use its powers to obtain new data from PBMs, and shine a light on their abusive practices.

While railing against the middlemen for their “take-it-or-leave-it” approaches, the congressmen also called out the PBMs’ non-transparent fee increases that have driven away community pharmacies.
Khan noted that she’s seen two major trends — patients are paying more for drugs, including the ones necessary for survival, and in some cases are forced to ration their medicines. The other trend is that small, local and family-owned pharmacies have been vanishing at a high rate, and these places can be institutional for helping their communities and proved to be more nimble in vaccinating people in some cases during the pandemic, as with West Virginia.
The FTC has received complaints that people are driven to more expensive drugs by PBMs too, especially with the rise of biologics, Khan noted.
The three largest PBMs — CVS Caremark, Express Scripts and OptumRx — dominate their competition, controlling almost 80% of the PBM market, and engage in numerous games to tilt the field to their advantage, such as by clawing back money after drugs are dispensed, incentivizing patients to switch to their own specialty pharmacies, or to manipulate prices to make more profits, those testifying claimed.

The National Community Pharmacists Association raised concerns at Thursday’s hearing around how PBMs are both “vertically integrated upstream with Aetna, Cigna, UnitedHealth and the Blues and downstream with pharmacies,” which allows them to exploit “their data platforms to engage in myriad unfair methods of competition against pharmacy competitors which result in increased costs to patients,” said NCPA General Counsel Matt Seiler.
Lee Hertz, director of analytics at Quest Analytics Group, who works closely with PBMs and pharmacies explained to Endpoints News how PBMs are also using “limited distribution” drugs that are a subset of these specialty drugs, adding:
The idea behind them is that a producer has not yet released the item to broad distribution and has ‘Selected’ specific PBM specialty pharmacies to carry them. Then non-selected PBMs have to purchase from those selected. The price of the item may be higher or lower than other specialty items in normal distribution. Because they are generally newer items, you could say they are ‘more expensive.’ In most guaranteed price deals, LDD items are exempt from price discount and rebate guarantees. This classification is often manipulated to affect the aggregate guarantees of the agreement. Rebates are the big issue. SRx [specialty prescription] rebates are getting close to [$]2,000 per brand script.
A rural New Mexico pharmacist also told the FTC that PBMs manipulate patient co-pays to make pharmacies look like “bad guys” in addition to offering reimbursements that are so low it’s “out of control.” Others testifying noted that they’re often reimbursed less than what they paid for the medication.
“PBMs at their worst take a sledgehammer to patients and drug prices,” another pharmacist said.
But the PBMs have gotten so large that it remains unknown how likely it is, or how quickly they can be reigned in.
In the meantime, pharmacists’ horror stories with PBMs flooded the hearing.
A Sacramento-based pharmacist told the FTC that contracts with PBMs are not negotiable. Pharmacies do not get any say in rates or fees, and for the prescriptions they do dispense, the clawbacks from PBMs are unpredictable.
None of the comments in the open hearing came from PBMs or those advocating on behalf of the PBMs.
The Pharmaceutical Care Management Association, which represents PBMs, did not release a PR on the FTC vote but announced a new ad campaign that “calls attention to the work pharmacy benefit managers, PBMs, do to produce a seamless experience at the pharmacy counter for patients, while also working to improve overall health outcomes.”