WSJ: FTC to sue PBMs over drug pricing tactics

Just one day after issuing a report blasting pharmacy benefit managers for their business practices and focus on consolidation and vertical integration, the Federal Trade Commission (FTC) is reportedly suing CVS Caremark, Express Scripts and OptumRx for directing patients toward more expensive drugs.

Each PBM is integrated with a national health insurer. Collectively, they handle around 80% of the country’s prescriptions and negotiate discounts with drug manufacturers.

Lawsuits will be filed against the PBMs for its prescription rebate tactics for drugs including insulin, The Wall Street Journal reported.

“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,” the FTC said in a news release July 9. “PBMs may be steering patients to their affiliated pharmacies and away from smaller, independent pharmacies.”

These actions have helped the three largest PBMs make more than $1.6 billion in excess revenue on two cancer drugs in less than three years, the agency added.

Additionally, the FTC suspects PBMs purposely exclude rival drugs from formularies if promised increased rebates from manufacturers.

The FTC warned in the report it could take legal action or recommend regulation. The agency said some PBMs mentioned in the report did not comply with all requests for information. The FTC also sought information from group purchasing organizations.

Not everyone on the commission agrees with the report’s narrative. Commissioner Melissa Holyoak was the lone vote against issuing the report, saying it fails to meet a “rigorous standard.”

“In fact, the politicized nature of the process appears to have led to the departure of at least one senior leader at the Commission,” she said. “The concerns over process and substance turned out to be warranted. Rather than generate public engagement and fruitful policy discussion, the report will only exacerbate ideological schisms and further degrade the legitimacy of the commission.”

Brookings Institute Senior Fellow Marta Wosinska, Ph.D., left the commission in February 2022, one day before the commission voted on a study into PBMs, Politico reported. She had served as the FTC’s top economist.

CVS Caremark and Express Scripts defended their business practices in statements provided to the WSJ. OptumRx did not comment.

The FTC declined a request for comment from Fierce Healthcare.