While applauding the Federal Trade Commission’s (FTC) actions and simultaneously urging further investigation, US Senators Ron Wyden (D, Oregon) and Sherrod Brown (D, Ohio) addressed the agency on Monday in a letter discussing the recently discovered, anti-competitive PBM practice known as “co-manufacturing.”1
“Since the FTC announced its study of [pharmacy benefit manager (PBM)] industry practices, PBMs have continued to evolve their business practices. Specifically, 2 of the largest PBMs, CVS/Caremark and Cigna/Express Scripts (ESI), each recently announced the creation of wholly owned subsidiary ‘manufacturers’ that purport to co-manufacture certain biosimilars of Humira® (adalimumab). CVS’ subsidiary, Cordavis, claims to co-manufacturer Sandoz’s Hyrimoz® (adalimumab-adaz) while ESI’s subsidiary, Quallent Pharmaceuticals (Evernorth), claims to co-manufacturer Boehringer Ingelheim’s Cyltezo® (adilimubab-adbm),” wrote Wyden and Brown.1
Key Takeaways
- With the most recent development in the battle between the FTC and the "Big 3" PBMs, US Senators are now calling on the FTC to investigate a PBM tactic known as "co-manufacturing."
- Co-manufacturing allows PBMs to work with various drug manufacturers to make biosimilar medications more available.
- However, Senators Wyden and Brown are concerned about this new tactics' potential to boost PBM profits while driving up out-of-pocket costs and creating less access to life-saving drugs for US patients.
Directly linked to the ability of PBMs and their corporations to vertically integrate, co-manufacturing has allowed companies to source their own biosimilars; in this case, they are biosimilar versions of the drug adalimumab, commonly used to treat arthritis. While vertical and horizontal integration in the pharmaceutical industry usually involve larger corporations acquiring other health care entities to add to their portfolios, CVS and Cigna’s pivot to co-manufacturing is not necessarily an example of market integration.
For CVS, the company announced its newest business unit named Cordavis in August 2023. “At Cordavis,” according to the company’s website, “we're committed to bringing FDA-approved, high-quality biosimilars to patients across the US.” Wholly owned by CVS, Cordavis’ first partnership was with the manufacturer Sandoz to start making Hyrimoz, the biosimilar for Humira.
The senators’ letter also addressed Cigna’s Quallent Pharmaceuticals, the company’s co-manufacturing business unit that nearly mirrors that of CVS’ Cordavis model. Founded in 2021, Quallent is also wholly owned by Cigna and specializes in manufacturing biosimilars, among other types of medications. But while these recent co-manufacturing agreements are framed to create more access to life-saving drugs for US patients, the senators and other parties supporting PBM reform did not see it that way.
READ MORE: FTC Files Lawsuit Against ‘Big 3’ PBMs for Drug Price Inflation
“A recent white paper by CVS’ Chief Medical Officer describing the CVS/Cordavis arrangement suggests that Cordavis does not undertake any actual manufacturing but instead provides consulting activity to manufacturers. The concern with these ‘co-manufacturing’ agreements is that they are a veiled attempt by PBMs to control additional parts of the supply chain which has resulted in additional harm to consumers in the form of fewer drug choices and higher drug costs,” continued the senators.1
While CVS and Cigna have not specifically worked to acquire or control drug manufacturers within the biosimilars market, PBM denouncers fear this new tactic will evolve into yet another avenue for PBMs and manufacturers to benefit from each other at the expense of high drug costs and low access to medications for patients. These denouncers believe that PBMs’ “consulting activity” within co-manufacturing can turn into something much more corrupt.
According to the FTC’s interim report, which led to a lawsuit directed at the “Big 3” PBMs—CVS Caremark, Express Scripts, and Optum Rx—this trio was responsible for 79% of all prescriptions filled by US pharmacies in 2023.2 With so much of these PBMs’ influence in the market, Senators Wyden and Brown believe co-manufacturing is simply another tool that will be used to force patients to affiliated pharmacies as their only option, whether affordable or not, to treat various chronic diseases.
From a PBM perspective, the large corporations with noticeable control of the prescription drug market will say that co-manufacturing is just another way to bring the necessary drugs to patients across the country and establish better access to medications overall. But in the eyes of the senators—and several other PBM denouncers such as community pharmacists and pharmacy advocacy groups—co-manufacturing will hurt US patients rather than help.
However, as senators and other congressmen get involved in the fight toward PBM reform, the pressure remains on major PBMs amidst ongoing turmoil, lawsuits, and more eyes on them than ever before.
“The impressive work of the FTC in examining anti-competitive practices of this massive industry is a promising step toward lowering health care costs for all Americans. It is important we keep a watchful eye on the evolving tactics of PBM megafirms as they proceed with owning more and more of the prescription drug supply chain. We will continue to push Congress to act in alignment with the FTC lawsuit and pass bipartisan legislation to curb PBM attempts to take control of the prescription drug supply chain and create undue harm to consumers,” concluded Senators Wyden and Brown.1
READ MORE: Keeping the Focus on Community Pharmacy Advocacy at the State Level
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