In a unanimous and bipartisan decision, the Federal Trade Commission (FTC) will investigate the secretive practices of six of the largest Pharmacy Benefit Managers (PBMs) in the country. Diverse stakeholders are hopeful this action will unravel years of corruption and reduce prescription drug prices.
The FTC demanded records detailing the business practices of CVS Caremark, Express Scripts, Optum Rx, Humana, Prime Therapeutics, and MedImpact Healthcare Systems. The action has been praised by plan sponsors, pharmacy industry groups, and community pharmacy owners who are subject to clawbacks and additional fees that limit competition and consumer choice.
Of particular concern is the growing trend toward vertical integration… a closed loop in which PBMs are owned by or affiliated with large national health plans. They are also integrated with mail order and specialty pharmacies, significantly expanding their profits and reach in the pharmacy supply chain.
Lina M. Khan, Chair of the Federal Trade Commission, summarizes the situation in this recent quote. “Although many people have never heard of pharmacy benefit managers, these powerful middlemen have enormous influence over the U.S. prescription drug system. This study will shine a light on these companies’ practices and their impact on pharmacies, payers, doctors, and patients.”
Practices to Implement Now
While the FTC conducts its long overdue investigation of the self-serving predation of legacy PBMs, employers and plan sponsors can seek out pharmacy benefit plans that take a more equitable and contemporary approach.
Plans should incorporate these key management features:
- A plan design driven by lowest net cost + medically-appropriate drug procurement and transparent administration
- Rx pricing technology that departs from discounts off fictitious prices created by PBMs under investigation
- A formulary based on comparative effectiveness, not one filled with high-cost drugs that are essentially bribed by rebates
- Rigorous clinical management with manual, evidence-based prior authorization controls vs. the auto-authorization used by the troubled legacy PBMs
- Built-in advocacy for securing manufacturer financial assistance and alternative drug sourcing channels for high-cost and specialty medicines
The FTC confirms that PBM operations have been “difficult or impossible to understand for patients and independent businesses across the prescription drug system.” Employers should be encouraged by the Rx management options currently available and the industry-wide changes that are likely to result from the FTC’s probe.
While there is an imperative for immediate accountability, the immortal words of Reverend Dr. Martin Luther King, Jr. remind us that “the arc of the moral universe is long, but it bends toward justice.”
