Drug middlemen known as pharmacy benefit managers (PBMs) appear to be hiking the price of drugs at the expense of everyday Americans suffering from life-threatening conditions, the Federal Trade Commission said in a report released Tuesday.
The FTC said in its interim report that “increasing vertical integration and concentration has enabled the six largest PBMs to manage nearly 95 percent of all prescriptions filled in the United States.” Those six are Caremark Rx, LLC; Express Scripts, Inc.; OptumRx, Inc.; Humana Pharmacy Solutions, Inc.; Prime Therapeutics LLC; and MedImpact Healthcare Systems, Inc.
The result is that the PBMs “profit at the expense of patients and independent pharmacists.”
FTC Chair Lina M. Khan said the findings show that the middlemen are “overcharging patients for cancer drugs,” bringing them additional revenue of more than $1 billion.
In theory, PBMs are meant to be third-party companies that are middlemen between drugmakers and insurance providers. But the FTC said this proves problematic because “the largest PBMs are now also vertically integrated with the nation’s largest health insurers and specialty and retail pharmacies.”
The results are troubling. “The leading PBMs now exercise significant power over Americans’ ability to access and afford their prescription drugs,” the FTC said. It also creates a system in which “vertically integrated PBMs appear to have the ability and incentive to prefer their own affiliated businesses, creating conflicts of interest that can disadvantage unaffiliated pharmacies and increase prescription drug costs.”
Take, for example, the cancer drug Imatinib. The FTC found that it might cost $100 through an unaffiliated pharmacy. But PBM-affiliated pharmacies are sometimes charging more than $25,000 for both the drug and its home delivery. In turn, the PBM makes higher profits at the expense of employer health care plans or government-funded insurance, the FTC said.
The report cited an email from a PBM executive who acknowledged just how outrageous the pricing models were. “We’ve created plan designs to aggressively steer customers to home delivery where the drug cost is ~200 higher,” the unnamed executive said in the message. “The optics are not good and must be addressed.”
“Thousands of cancer patients depend on these medicines to survive,” Khan said. “The PBMs marking up those drugs by up to 4,000 percent the average acquisition cost is enormously significant.”