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Federal Report Condemns PBMs for Obstructing Drug Access

Pharmacy benefits managers “wield enormous power” to obstruct America’s access to prescription medications, according to a recent release from the Federal Trade Commission.

Punishingly complex and little understood, “the middleman” who manages drug benefits for health insurers use vertical integration and other tactics to steer access and keep patients paying high drug prices, even when affordable alternatives are available. By limiting access to both lower-cost drugs and to “Main Street pharmacies,” these companies unnecessarily drive up prescription drug costs.

The FTC report details other profit-squeezing tactics as well, such as withholding full reimbursements from independent pharmacies and reclaiming manufacturer rebates intended to make medications more affordable for patients. The federal agency called out these “extraordinarily opaque” practices and urged measures to increase transparency and accountability on PBMs.

Vertical Ownership and Market Concentration

Pharmacy benefit management is a highly concentrated industry.

Just six PBMs manage 95% of all prescriptions filled in the country; the largest three alone control 80%. Those three companies — OptumRx, CVS Caremark and Express Scripts — are owned by private health insurers – United Health, CVS Health/Aetna and Cigna, respectively. This creates incentives to limit patients’ access to medications to control insurer costs, not patient costs.

PBMs have been “imposing unfair, arbitrary and harmful contractual terms that can impact independent pharmacies’ ability to stay in business and serve their communities,” according to the FTC report. In fact, many neighborhood pharmacies have had their contracts terminated. Promoting the use of PBM-owned brick and mortar, mail-order and specialty pharmacies is yet another tier of vertical integration designed to retain profits within the affiliated organizations.

However, this system doesn’t work well for patients. Nearly a third of Americans report rationing or skipping medication doses or delaying care to continue affording a prescription.

Restoring Patients as the Priority

Federal officials opened an official inquiry into the pharmacy benefit managers roughly two years ago.

Since then, there have been Congressional hearings and even some state-led efforts to uncover the depth and breadth of the companies’ business practices. All the while, patients have remained mired in red tape and been dolling out extra greenbacks.

Now, with the FTC report in hand, policymakers have the evidence they need to initiate changes that can restore patient-centered care as a priority over PBM profits.


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