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Feds Poised to Take a Hard Look at Pharmacy Benefit Managers

The behind-the-scenes, yet powerful companies who control patients’ access to drugs may soon have to answer for their tactics.

The Federal Trade Commission opened an official inquiry into the controversial practices of pharmacy benefit managers. They are often accused of maximizing profits at the expense of patient-centered care.

A Little-Known But Powerful Force

PBMs are also called “middlemen” for the role they play as intermediary between drug manufacturers and health insurers. The third-party companies who manage drug benefits typically have disproportionate influence on what drugs patients will be able to access and the prices they will pay for them.

“Many people have never heard of pharmacy benefit managers,” explained Lina M. Khan, FTC Chair, but “these powerful middlemen have enormous influence over the U.S. prescription drug system.”

Focusing on Controversial Practices

Health care providers find the companies’ cost-cutting tactics, like excessive prior authorization, time consuming. Meanwhile patients are left feeling like medical decisions made by them and their doctors are being overruled by someone who doesn’t know about their health. This is but one of the many practices the FTC plans to investigate.

Independent community pharmacists are also unhappy with the outsized influence of the middlemen. PBMs determine what pharmacies patients can use and how much pharmacies will get reimbursed for dispensing drugs. The situation has forced many independent pharmacies out of business.  

Notably, the largest PBMs are now owned by insurance carriers, which also have their own mail order and specialty pharmacies – a business approach called vertical integration. It allows them to control pricing – and reap profit – at every level. The “steering of patients towards PBM-owned pharmacies” is another area the Federal Trade Commission plans to review.

Immense Interest

The federal government’s willingness to investigate pharmacy benefit managers’ practices that have “drawn scrutiny” has generated great interest. The FTC has received tens of thousands of public comments in the few months since it opened its request for information.

With the prospect of improved access and more affordable medications on the line, it’s likely many people will be watching the investigation closely.


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