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FTC Walks Back Years of Support for Pharmacy Benefits Middlemen

  • Vote withdraws 11 letters, reports supporting PBMs

  • Industry group argues pharmacy benefit market is ‘dynamic’

The FTC voted unanimously Thursday to issue a statement withdrawing comments made over a 13-year period opposing state legislation that would boost transparency over the entities that manage prescription drug benefits.

The vote from the three Democrats on the Federal Trade Commission, which has two Republican seats vacant, officially pulls back 11 letters and reports the agency issued between 2004 and 2017 warning against state legislation that would have required PBMs to disclose certain information about their business practices and finances to state governments. PBMs manage drug coverage on behalf of health plans, employers, and others.

The commissioners said the vote is part of an effort to update the agency’s understanding of PBMs as it carries out a sweeping investigation into the industry to determine whether any PBM practices are anticompetitive and restrict patient access to affordable medicines. The PBM industry has cited the FTC’s previous work in criticism against the FTC’s ongoing effort to probe the entities, and in pushing back on more recent state-based efforts to mandate certain disclosures from PBMs.

“We want to make sure that prior statements are not being relied on in a way that could be impeding ongoing efforts at the state level or even at the federal level to be examining the practices of these PBMs, and in some cases, requiring certain types of transparency or disclosure requirements,” FTC Chair Lina Khan said before the vote at the commission’s open meeting.

Khan said she had “no doubt that prior commission efforts in this area were reflecting good faith efforts to be responding to what they saw as potential risks,” but added “consolidation and vertical integration and asymmetries” in the market have changed the PBM landscape.

Rapid Growth, Consolidation

Attorneys and analysts have said that prior policy against bills in states like California, New York, and Rhode Island have helped enable rapid growth and consolidation in the PBM industry.

Today, the three largest PBMs—CVS Caremark, Cigna’s Express Scripts, and UnitedHealth Group’s OptumRx—control nearly 80% of the market.

The commissioners didn’t say Thursday when they plan to complete the agency’s study of PBMs, but Commissioner Rebecca Slaughter said, “We do not need to wait for it to be completed to update the public on what we already know to be true.”

“The commission’s prior PBM statements do not reflect the contemporary market reality,” Slaughter added. “The update is necessary given the substantial cost patients may bear if policymakers, other government agencies, academics or market participants rely on outdated commission advocacy as the basis for not advancing solutions to any anticompetitive market outcomes driven by” PBMs.

Blaming Each Other

Independent pharmacies and pharmaceutical manufacturers argue that the rebates and fees PBMs collect are responsible for high prescription drug costs in the US. But PBMs have long defended their role in the prescription drug supply chain, saying they help ensure patients see discounts at the pharmacy counter. PBMs blame manufacturer list prices and use of patents that limit competition for rising drug costs.

The Pharmaceutical Care Management Association, which represents the PBM industry, said in a statement Thursday that while “market dynamics for pharmacy benefit companies have changed over the years,” it doesn’t agree with the commission’s vote.

“The market for pharmacy benefit companies is dynamic, diverse, and has only become even more competitive, with 73 full-service pharmacy benefit companies operating in the U.S.,” PCMA said.

The trade group added that despite the FTC’s withdrawal of past comments, the organization plans to continue citing “previous FTC studies, statements, and enforcement actions that recognize the risks associated with proprietary pricing disclosure requirements that would limit pharmacy benefit companies’ ability to manage costs for employers and consumers and would only serve to empower drug companies to raise costs.”

Pharmacists Support

Meanwhile, the National Community Pharmacists Association, which represents more than 19,000 pharmacies across the country, praised the FTC’s vote.

“The massive concentration of power that nowadays allows PBM-insurers to serve as gatekeepers to the marketplace of insured lives doesn’t serve patients and doesn’t function as a fair ecosystem in which independent pharmacies and others can compete,” NCPA CEO B. Douglas Hoey, said in a statement.

Hoey also pushed the FTC to move full-steam ahead on the FTC’s probe into PBMs, which is focused on areas like whether the companies steer patients away from independent pharmacies and toward affiliated chains. The investigation started off focusing on the six largest PBMs, and has since expanded to include purchasing groups launched by top PBMs to negotiate drug manufacturer rebates on their behalf.

To contact the reporter on this story: Celine Castronuovo at



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