A report published Tuesday by the Federal Trade Commission (FTC) revealed that pharmacy benefit managers (PBMs) hiked the costs of many important prescription drugs by over 1,000%.
The three largest PBMs — which are owned by CVS Health, Cigna, and UnitedHealth Group — generated over “$7.3 billion in revenue from dispensing drugs in excess of the drugs’ estimated acquisition costs from 2017-2022,” according to the FTC. The report found that more than one in five “specialty drugs” dispensed by pharmacies affiliated with PBMs were marked up by over 1,000%. Another 41% of drugs were marked up between 100-1,000%. The “Big 3” PBMs control between 60-80% of the prescriptions in the U.S.
“The FTC staff’s second interim report finds that the three major pharmacy benefit managers hiked costs for a wide range of lifesaving drugs, including medications to treat heart disease and cancer,” said FTC Chair Lina M. Khan. “The FTC should keep using its tools to investigate practices that may inflate drug costs, squeeze independent pharmacies, and deprive Americans of affordable, accessible healthcare—and should act swiftly to stop any illegal conduct.”
PBMs act as the middlemen between drug manufacturers, insurance companies, pharmacies, and patients and were originally designed to maintain affordable drug prices for patients while helping drug manufacturers keep their profits. According to the FTC report, however, PBMs have turned into money-making machines while “squeeze[ing[ independent pharmacies, and depriv[ing] Americans of affordable, accessible healthcare.”
Austin Ownbey — who represents the Pharmaceutical Care Management Association, which in turn represents PBMs — spoke during the open commission meeting Tuesday. Ownbey argued, “PCMA has significant concerns that a second interim report regarding specialty drugs is unlikely to be anything other than a piece of advocacy without substantiating evidence.”
“Specialty drugs offer the most effective and, in some cases, the only treatment for illness and conditions that historically had few treatment options, including multiple sclerosis, cystic fibrosis, cancer and autoimmune disorders,” he added, according to The Hill.
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Along with hiking prices for vital prescription drugs, the FTC found that the “Big 3 PBMs also reimbursed their affiliated pharmacies at a higher rate than they paid unaffiliated pharmacies on nearly every specialty generic drug examined.” As The Daily Wire reported last July, independent pharmacies across the country are subject to the dictates of PBMs, which give an unfair advantage to large pharmacy corporations such as CVS, Cigna, and UnitedHealth Group. Independent pharmacists such as Brent Talley, Blake Lamm, and April Lamm Blackford in North Carolina have been sounding the alarm on the rise of PBMs.
“We have lost customers either because the PBM is requiring them to use another store or financially incentivizing them to do so,” Talley told The Daily Wire in July. “But at the same time, the quality of care we’re able to provide has far exceeded Walgreens’ and CVS’.”
Often, local pharmacies will lose money on prescription drugs because the reimbursements they get from a PBM are less than what it costs them to fill a prescription.
“We have to buy bottles to put the medicine in, the caps, the labels, the machines, the printers, all that kind of stuff that are the cost of business, but when I say I’m losing money on prescriptions, I’m losing money on what it cost to get the drug on the shelf,” Blake Lamm said. “That doesn’t even factor in filling the prescription.”
The second interim report was released with bipartisan support in Congress, including from Sens. Josh Hawley (R-MO) and Elizabeth Warren (D-MA), along with Reps. Jake Auchincloss (D-MA) and Diana Harshbarger (R-TN).
