Provider Groups Miffed Over FTC’s Failure to Authorize Study of PBMs

WASHINGTON — Pharmacy and provider organizations are disappointed with a decision by the Federal Trade Commission (FTC) not to launch a study into the marketing and financial practices of pharmacy benefit managers (PBMs) — at least for now.

“These pharmacy middlemen siphon billions in profits intended for patients and have been allowed to operate with little oversight for far too long,” the Coalition for PBM Reform, a group composed of patients, healthcare providers, and payers, said in a statement. “Unfortunately, despite hearing these concerns, a majority of the commission felt the design of this particular study was not adequate and therefore voted against moving forward. Our coalition is disappointed by this decision today, but looks forward to continuing to educate the FTC and others on PBM practices that harm patients, pharmacies and healthcare providers alike.”

Independent Pharmacies Say They’re Harmed

The statement was referring to a meeting the FTC held on February 17, at which the commission’s four members considered whether to “study the competitive impact of contractual provisions, reimbursement adjustments, and other practices affecting drug prices, including those practices that may disadvantage independent or specialty pharmacies.”

Two members of Congress — both Republicans — testified in favor of doing a study. “For many small-town rural communities in my district, these longtime local pharmacies are often the sole provider of life-saving access to medical prescriptions and other services and consultation,” said Rep. John Rose (R-Tenn.). “Unfortunately, PBMs, like the three largest — Aetna, CIGNA, and UnitedHealth Group — collectively control 77% of the market and have made serving communities much more difficult for these family-owned pharmacies.”

“PBMs have put local of pharmacies under enormous pressure by leveraging their market power and their business relationships to drive up cost to community pharmacies, especially through the use of take-it-or-leave-it contracts,” he continued. “My constituents and I strongly support the Federal Trade Commission’s study of PBMs and any FTC efforts to ascertain PBMs individual pharmacy clawback information.”

Rep. Buddy Carter, PharmD (R-Ga.), who has run his own pharmacy for 30 years, noted that PBMs “have increased these retroactive fees by 91,500% in recent years — that’s like a gallon of milk now costing more than $3,600. They also blackmail manufacturers to increase drug list price in exchange for more rebates. The PBMs then pocket these rebates instead of passing the savings onto the customer. This practice drastically increases drug costs, even despite branded drug product list prices on average decreasing for the fourth year in a row.”

Carter said his wife got a call from her PBM saying that she could get a particular drug cheaper through their mail order service than from Carter’s own pharmacy. “This is merely a way for PBMs to move patients away from independent pharmacies and put them out of business. State Medicaid programs are also paying billions to PBMs through convoluted spread practicing contracts. This study must be authorized.”

Questions About Unfair Reimbursement

During a phone interview with a public relations person present, Matthew Seiler, general counsel of the National Community Pharmacists Association (NCPA), said that PBMs engage in anti-competitive practices in order to steer patients to pharmacies they own or are affiliated with. One way they do that is “they’ll use punitive audit practices — [performing] up to a couple of audits a month on [competing] pharmacies, and they’ll find minor infractions, and they will remove a pharmacy from the preferred network.”

Another practice of PBMs — which the NCPA thinks is probably illegal — is for the PBM to compensate its own pharmacies at a far higher rate than competitor independent pharmacies, Seiler said. For example, a study by the Arkansas Pharmacists Association found that the CVS Caremark PBM was paying CVS pharmacies $525 for a bottle of 30 30-mg tablets of aripiprazole, but it paid independent pharmacies $35 for the same medication.

Commissioners also heard from disgruntled patients. Beth Waldron of Raleigh, North Carolina, said her PBM sent her a letter informing her that the blood thinner she was taking — apixaban (Eliquis) — would no longer be covered and that she would have to switch to rivaroxaban (Xarelto). “Clinical studies show Eliquis to have superior effectiveness and safety compared to Xarelto …The removal of Eliquis from formulary was seen as so dangerously disruptive that 16 cardiovascular nonprofits asked [the PBM] to reverse [its] decision, including the American College of Cardiology and the American Society of Hematology,” to no avail, she said.

“Patients are captive PBM consumers,” Waldron added. “We do not choose a pharmacy benefit manager; our insurance plan does … We have no recourse yet PBMs have wide latitude over our lives by determining which drugs we can access, at what price, even have the power to switch our medications over the direct prescribing advice of our physicians. These are the very conditions in which federal consumer protections are needed. I encourage the FTC to please get engaged, to help protect consumers from PBM practices.”

Vote Split Along Party Lines

The committee also heard from pharmacists and healthcare providers who criticized PBM practices. All of the public speakers who spoke at the meeting were in favor of the study. But in the end, the commissioners, which include two Democrats and two Republicans, split 2-2 along party lines on a vote about whether to authorize the study; a tie vote meant that the motion didn’t pass.

Commissioner Noah Phillips, JD, a Republican, objected to the way the study was designed, saying it “was not designed to assess the competitive effects of those contractual provisions we would study, including on independent pharmacies. The study was one of trends, not outcomes. The study also would not tell us how the contractual provisions at issue might impact drug prices overall or the out-of-pocket drug costs consumers pay when they go to the pharmacy to get their prescriptions.”

“We have to [perform] a study that can inform the public about whether and how those practices might impact out-of-pocket drug costs for consumers,” he concluded. “I don’t have a basis at this point to believe that the proposed study does that, so I’m going to vote ‘no.'” He added, however, that he “remain[s] open to working with my colleagues on a study that can generate useful information about prescription drug costs and the role and impact of PBMs.”

Commission chair Lina Khan, JD, a Democrat, gave an opposing view. “Despite the agency’s limited resources, I believe it is vital to launch this study,” she said. “We have an imperative to better understand and ultimately tackle anticompetitive conduct that may be contributing to sky-high drug prices and the decline of independent pharmacies, and better grasping the role of PBMs is a key part of this work.”

Asked to comment on the FTC’s action, the Pharmaceutical Care Management Association, a trade group for PBMs, did not respond directly but said in a statement that “We look forward to working with Congress and the administration on ways to increase affordability and access to prescription drug for all patients. Drug manufacturer price-setting is the root cause of high drug costs, putting a strain on patients and forcing them to make difficult decisions about their drugs. PBMs are holding drug companies accountable by relentlessly negotiating the lowest possible cost on behalf of patients, and are driving and delivering local competition that patients are demanding.”