A recent federal report confirms the alarming practices of pharmacy benefit managers.
The Federal Trade Commission’s second investigative report about the companies finds that they have been adding large markups to specialty generic medications, including those for cancer and HIV. Such price hikes have generated billions in revenue for the middleman.
The Role of PBMs
Once little known, the acronym PBM is now widely understood as the middlemen that administer drug benefits for health insurers. But not everyone understands how that role gives the companies enormous power: they set reimbursement rates for medications, and they also contract with pharmacies to dispense drugs.
The six largest PBMs control 95% of prescriptions nationwide, with the largest three – OptumRx, CVS Caremark and Express Scripts – filling around 80%.
Pharmacy Benefit Managers have been under the microscope for some time, but this latest report, released January 14, sheds even more light on their predatory practices.
Price Hikes and Policies Drive Profits
It centers on PBMs’ “enormous mark-ups” of generic specialty drugs, revealing the middlemen earned at least $7.3 billion over five years through price hikes and policies that route patients to their affiliated pharmacies. The more profitable a particular medication was, the FTC found, the more likely patients were to be steered toward an in-house pharmacy.
The prices of life-saving medications were at least doubled in most cases studied by federal officials, and some drugs were marked up more than 1000% over the cost PBMs paid to acquire them. So, even when pharmaceutical companies kept prices steady, the medications became more expensive to patients and insurers.
Patients and Pharmacies Pay the Price
Patients, meanwhile, struggle to afford their prescriptions: 55% report worry about not being able to afford their families’ medications. That concern is even more pronounced among the un- and under-insured.
But the high price of prescription drugs isn’t measured only in dollars. A third of Americans say high costs prevent them from taking their medicine as prescribed. When patients skip doses and delay treatment, they have worse health outcomes and even premature death, especially among seniors.
In addition to patients, unaffiliated pharmacies are hard hit by these practices. Independent pharmacies say they could offer generic medications at more affordable prices but lose out on the opportunity. Depriving small pharmacies of prescriptions further reduces their ability to compete and reduces options for patients.
Calls for Accountability
This latest report comes amid bipartisan Congressional calls for greater scrutiny of PBMs. Regulators agree. Lina M. Khan, FTC Chair, noted the commission “should keep using its tools to investigate practices that may inflate drug costs, squeeze independent pharmacies, and deprive Americans of affordable, accessible health care.”
Hopeful, patients and advocates await the next action.
