The Federal Trade Commission (FTC) recently issued a second interim report concerning the mark-ups on high-cost generic specialty drugs sold at pharmacies owned by the three largest pharmacy benefit managers (PBMs). This report follows a July 2024 report in which the FTC found that the biggest PBMs paid higher drug prices to their pharmacies than other pharmacies.
The PBMs at issue include Cigna’s Express Scripts unit, the CVS Health Caremark unit, and the UnitedHealth Optum Rx unit. These pharmacies charged private health plans and Medicare prescription drug plans $10 billion for 51 specialty drugs between 2017 and 2021, which they obtained for $2.7 billion.
These pharmacies had a total revenue of $2.6 billion in 2021, which increased from $2.1 billion in 2017. However, the FTC staff report did not address the impact of the COVID-19 pandemic or other cost drivers during this timeframe. The FTC report also did not compare the operating margins of these pharmacies with those of other pharmacies.
The FTC initially balked at releasing the report but did so after receiving a letter from a bipartisan group of House members led by Sen. Elizabeth Warren, D-Mass. According to FTC Chair Lina Khan, the report shows that big PBMs use their pharmacies to increase the costs of lifesaving drugs for consumers and push out independent pharmacies. Therefore, Khan states that the FTC needs to continue its investigation into PBMs and related issues.
The PBMs counter that they have sought to negotiate lower drug prices for health plan sponsors and patients. The companies claim that the FTC has relied on their opponents for information. Express Scripts has even sued the FTC for defamation following its last report, alleging that it spent millions providing data that the FTC largely ignored.
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