The Federal Trade Commission’s announcement last week of a plan to investigate the business practices of pharmacy benefit managers (PBMs) was welcome news to rheumatologists. Widespread concern about the cost of prescription drugs and an additional 24,000 comments from the public prompted the agency’s decision to examine PBMs, which act as intermediaries between insurers, manufacturers, and pharmacies.
PBMs negotiate drug prices and rebates with manufacturers, reimburse pharmacies for drug costs, and create insurers’ drug formularies. But it’s widely held that instead of managing and leveling costs, PBMs have ratcheted up prices at multiple junctures to gain more profit.
The FTC’s investigation will focus on the six largest PBMs: CVS Caremark, Express Scripts, OptumRx, Humana, Prime Therapeutics, and MedImpact Healthcare Systems. CVS Caremark is owned by CVS, Express Scripts is owned by Cigna, and OptumRx is owned by UnitedHealth. The companies will have 90 days to respond to the commission’s official request for information.
Some of the information the FTC plans to ask about includes how the companies may be pushing patients toward using PBM-owned pharmacies and how rebates affect insurers’ formularies and the cost of drugs for patients.
The purchase or establishment of PBMs by the largest insurance companies ― known as vertical integration ― makes it nearly impossible for outsiders to determine what’s really causing price increases for prescription drugs. “The black box of secretive contracts and monies changing hands between manufacturers and PBMs has grown quite large since the Department of Justice and the FTC allowed the big three PBMs to be part of the three largest health insurance companies,” Madelaine A. Feldman, MD, a rheumatologist at the Rheumatology Group in New Orleans, Louisiana, and president of the Coalition of State Rheumatology Organizations, told Medscape Medical News.
Feldman and fellow rheumatologists at the American College of Rheumatology are happy that the FTC has decided to pursue this investigation. They note that rheumatologists have been calling for action for years and are eager to see change.
This probe aims to determine not only how the PBM industry affects pharmacists but also how their practices create ripple effects across the prescription drug industry, said Feldman. “I was very happy to see that they will be investigating how rebates and other manufacturer price concessions affect formulary construction and utilization management tools, ultimately increasing drug prices and patient cost share.”
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