Bloomberg Law
June 7, 2022, 9:36 PM

FTC to Probe Pharmacy Benefit Managers’ Role in Drug Costs (2)

John Tozzi
John Tozzi
Bloomberg News

The US Federal Trade Commission will probe pharmacy benefit managers including units of CVS Health Corp., Cigna Corp. and UnitedHealth Group Inc. that oversee prescription drug plans, the agency said in a news release Tuesday.

The move signals more aggressive scrutiny for the drug market, widely considered one of health-care’s most opaque sectors, under the regulatory body’s new Democratic majority. A third Democratic commissioner was confirmed for the five-person panel last month.

“Although many people have never heard of pharmacy benefit managers, these powerful middlemen have enormous influence over the US prescription drug system,” FTC Chair Lina Khan said in the release.

The drug-plan middlemen have come under increasing scrutiny in recent years, as formerly independent PBMs have been folded into larger enterprises that also operate health insurers, pharmacies and care delivery companies. The FTC said its inquiry will examine that vertical integration. Critics say the PBMs operate in obscure ways, making money from health plan clients, rebates and fees collected from drugmakers.

The FTC will also seek documents from Humana Inc., Prime Therapeutics LLC and MedImpact Healthcare Systems, Inc., the agency said.

“We look forward to working cooperatively with the Federal Trade Commission,” Phil Blando, a spokesman for CVS Health, said in an email. Prime Therapeutics intends to cooperate with the inquiry, Mike Kolar, the company’s general counsel, said in an email. The other companies named didn’t immediately comment.

For more: New Drug Prices Soar to $180,000 a Year on 20% Annual Inflation

The trade group representing the PBM industry said they lower drug prices and blamed drugmakers for the “root cause” of prescription drug costs. “We are confident that any examination of pharmacy benefit managers, PBMs, will validate that PBMs are reducing prescription drug costs for consumers,” JC Scott, chief executive officer of the Pharmaceutical Care Management Association, said in an emailed statement.

The commission voted 5-0 to approve the probe. That’s a reversal from a 2-2 deadlock earlier this year on a similar proposal, which the agency’s Republican members blocked from moving forward. Those commissioners said the new inquiry included their requests to look at how PBM industry practices have contributed to rising out-of-pocket drug costs for consumers.

The study also raises specific questions about PBM coverage of insulin, an issue on which Congress is considering legislation. The House in March passed a bill to cap the cost of insulin at $35 per month, though the Senate has yet to vote on its version of the legislation.

The FTC probe will look at fees to pharmacies, how PBMs steer patients to affiliated pharmacies, reimbursement methods and the role of rebates and fees from drugmakers, according to the FTC.

(Updates with Prime Pharmaceutical comment in sixth paragraph)

--With assistance from Leah Nylen.

To contact the reporter on this story:
John Tozzi in New York at

To contact the editors responsible for this story:
Cynthia Koons at

John Lauerman, Sara Forden

© 2023 Bloomberg L.P. All rights reserved. Used with permission.

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