FTC Issues Statement Withdrawing Previous Support of PBM Advocacy
The Federal Trade Commission has voted to issue a statement “cautioning against reliance on prior advocacy statements and studies related to pharmacy benefit managers (PBMs) that no longer reflect current market realities,” according to an FTC press release.
The agency noted that the statement is in response to PBM’s “continued reliance on older FTC advocacy materials that opposed mandatory PBM transparency and disclosure requirements,” as well as warns against reliance on prior conclusions drawn by the FTC—especially in light of the ongoing study the agency is conducting around PBM practices.
The statement acknowledges that these prior advocacy statements and reports are no longer relevant due to the FTC’s “recognition that substantial changes have taken place over the last 2 decades.”
“Until it is completed, reliance on the Commission’s conclusions in certain prior statements and reports may be misplaced,” the statement continued.”
The 11 identified reports were published between 2004 and 2014, a time where the FTC felt that proposals on both the state and federal level to increase PBM transparency might undermine competitive processes. However, the FTC now recognizes that the PBM transparency has undergone significant changes over the last 2 decades, including increased vertical integration and horizontal concentration, the growth of rebates, list prices, and DIR fees, and the expiration of previous FTC Consent Orders. Many of the largest PBMs are fully vertically integrated both up and downstream, with the largest health insurance companies and with retail, mail order, and specialty pharmacies, respectively.
In addition, the statement cautions against reliance on a joint report with the Department of Justice, issued in 2004, and a FTC study from 2005, which they feel “no longer accurately reflect the current PBM industry.”
FTC Chair Lina M. Kahn and Commissioner Rebecca Kelly Slaughter also each issued statements about the FTC vote.
“In the past, the FTC was concerned that mandated disclosure requirements between PBMs and payors (such as large employers) and healthcare plans—as proposed in state legislative initiatives—could encourage price coordination and collusion,” Khan noted. “However, given the trends toward extensive consolidation by PBMs and extensive vertical integration by these PBMs into the entire drug supply and payment chain, employers and other payers in this marketplace appear to have been placed at a severe information disadvantage.”
“I this situation, it may be appropriate for policymakers to require that PBMs provide accurate and timely information for buyers,” Khan continued.
“Principles of transparency and good government make it incumbent on the Commission to notify the public of business practices we identify as potentially unlawful, and to update our notice and guidance as our understanding of markets evolves,” added Slaughter. “Consistent with that obligation, the Commission should inform the public when our policy guidance may no longer reflect our current learning and experience. That is the case here.”
The FTC launched their inquiry into the 6 largest PBMs—CVS Caremark, Express Scripts, OptumRx, Humana, Prime Therapeutics, and MedImpact Healthcare Systems—on June 7, 2022, with the goal of evaluating and “scrutinize[ing] the impact of vertically integrated pharmacy benefit managers on the access and affordability of prescription drugs,” according to a news release. The ongoing investigation is evaluating PBM practices such as fees and clawbacks levied on unaffiliated pharmacies, methods used to steer patients towards PBM-owned pharmacies, potentially unfair audits of independent pharmacies, “complicated and opaque methods” to determine pharmacy reimbursement, prior authorization prevalence and other administrative restrictions, policies around specialty drugs, and the impact of fees and rebates on formulary design and prescription drug costs.
The 11 statements the FTC has highlighted as no longer accurate can be viewed here.
References
FTC votes to issue statement withdrawing prior pharmacy benefit manager advocacy. News release. Federal Trade Commission. July 20, 2023. Accessed July 21, 2023. https://www.ftc.gov/news-events/news/press-releases/2023/07/ftc-votes-issue-statement-withdrawing-prior-pharmacy-benefit-manager-advocacy
Federal Trade Commission statement concerning reliance on prior PBM-related advocacy statements and reports that no longer reflect current market realities. Federal Trade Commission. July 20, 2023. Accessed July 21, 2023. https://www.ftc.gov/system/files/ftc_gov/pdf/CLEANPBMStatement7182023%28OPPFinalRevisionsnoon%29.pdf
Khan L. Statement of Chair Lina M. Khan regarding the policy statement concerning reliance on prior PBM-related advocacy statemetns and reports. Commission file No. P230100. Federal Trade Commission. July 20, 2023. Accessed July 21, 2023. https://www.ftc.gov/system/files/ftc_gov/pdf/StatementofChairLinaMKhanrePBMLetterWithdrawal.pdf
Slaughter RK. Statement of commissioner Rebecca Kelly Slaughter. Federal Trade Commission. July 20, 2023. Accessed July 21, 2023. https://www.ftc.gov/system/files/ftc_gov/pdf/finalbksremarksonftcstatementagainstrelianceonpriorpbmadvocacy7202023.pdf
FTC launches inquiry into prescription drug middlemen industry. News release. FTC. June 7, 2022. Accessed July 21, 2023. https://www.ftc.gov/news-events/news/press-releases/2022/06/ftc-launches-inquiry-prescription-drug-middlemen-industry
