FTC Opens Inquiry into Nation’s Largest PBMs

The Federal Trade Commission (FTC) has announced an investigation into the nation’s six largest pharmacy benefit managers (PBMs). The targeted PBMs include CVS Caremark, Express Scripts, OptumRx, Humana, Prime Therapeutics, and MedImpact Healthcare Systems. PBMs are associated with the largest health insurance companies and mail-order and specialty pharmacies. These highly influential entities in the U.S. prescription drug system negotiate rebates and fees with drug manufacturers; they also write drug formularies and applicable policies and reimburse pharmacies for prescriptions. 

The FTC’s inquiry is designed to bring transparency to PBMs and how they impact pharmacies, insurance companies, medical providers, and patients. More specifically, the FTC wants to know how PBMs affect the accessibility and affordability of prescription drugs. In particular, the FTC wants to explore the several allegedly common practices of PBMs, including:

  • Charging unaffiliated pharmacies fees and clawbacks;
  • Steering patients toward PBM-owned pharmacies;
  • Conducting potentially unfair audits of independent pharmacies;
  • Using complex and unclear methods to determine pharmacy reimbursement;
  • Broadly mandating prior authorizations and other administrative restrictions;
  • Using specialty drug lists and accompanying policies; and
  • Utilizing rebates and fees from drug manufacturers to impact formulary design and the costs of prescription drugs to payers and patients.

The six PBMs must provide the FTC with data and records concerning their business practices. The National Community Pharmacists Association and the American Pharmacy Cooperative have expressed their support for the FTC’s extensive inquiry into PBMs’ practices. 

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.

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HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.
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