Biosimilars group commends FTC probe into business practices of prescription drug middleman

By Jane Byrne

- Last updated on GMT

© GettyImages/BryanHoward
© GettyImages/BryanHoward

Related tags Biosimilars US Federal Trade Commission drug prices

The US Federal Trade Commission (FTC) announced on June 7 that it will examine pharmacy benefit managers’ role at the center of the US pharmaceutical system.

“Although many people have never heard of pharmacy benefit managers, these powerful middlemen have enormous influence over the US prescription drug system,”​ said FTC chair, Lina M Khan. “This study will shine a light on these companies’ practices and their impact on pharmacies, payers, doctors, and patients.”

As US drug prices continue to escalate, the agency will scrutinize the impact of vertically integrated pharmacy benefit managers (PBMs) on the access and affordability of prescription drugs.

PBMs are the middlemen who are hired to negotiate rebates and fees with drug manufacturers, create drug formularies and surrounding policies, and reimburse pharmacies for patients’ prescriptions, said the US agency. “Many of these functions depend on highly complicated, opaque contractual relationships that are difficult or impossible to understand for patients and independent businesses across the prescription drug system.”

The FTC noted that PBMs often have enormous influence on which drugs are prescribed to patients, which pharmacies patients can use, and how much patients ultimately pay at the pharmacy counter. 

The biggest PBMs are now vertically integrated with the largest health insurance companies and wholly owned mail order and specialty pharmacies, it added. The probe will require the six largest to provide information and records regarding their business practices.

As part of the inquiry, the FTC will send compulsory orders to CVS Caremark; Express Scripts, Inc; OptumRx, Inc; Humana Inc; Prime Therapeutics LLC; and MedImpact Healthcare Systems, Inc.

The investigation, according to the US agency, will build on the significant public record developed in response to the request for information about pharmacy benefits managers that it launched on February 24, 2022, with it having received more than 24,000 public comments to date.

Biosimilars organization commends FTC move

The investigation has been praised by the Biosimilars Forum, with Juliana M Reed, executive director of that non-profit organization, saying PBMs must be held accountable. She claimed they have prevented access to lower cost biosimilars for far too long, driving down free market competition that lowers costs for patients.

Safe, effective, and lower-cost biosimilars must be made available to all Americans who need them, but biosimilars are often excluded from formularies because of PBM-driven rebate schemes. By requiring PBMs to provide information on their business practices, we can ensure that necessary oversight is initiated – and in turn verify that patients are given access and choice in choosing their life-saving medications.

“Biosimilars have the potential to reduce drug costs by US$133bn by 2024 with the launch of seven adalimumab biosimilars in 2023, but only if their uptake increases and PBMs provide patients and providers access to these biosimilars.

"Additionally, unfair practices from PBMs - including inflated prices and monopolistic control of formularies - could squander this huge cost-savings potential. Biosimilars are the solution to lowering drugs costs in America. A solution that will only work when biosimilars have access to the market and we promote competition,”​ alleged Reed.

Boosting transparency

The FTC said the inquiry is aimed at shedding light on several practices that have drawn scrutiny in recent years including:

  • Fees and clawbacks charged to unaffiliated pharmacies.
  • Methods to steer patients towards pharmacy benefit manager-owned pharmacies.
  • Potentially unfair audits of independent pharmacies.
  • Complicated and opaque methods to determine pharmacy reimbursement.
  • The prevalence of prior authorizations and other administrative restrictions.
  • The use of specialty drug lists and surrounding specialty drug policies.
  • The impact of rebates and fees from drug manufacturers on formulary design and the costs of prescription drugs to payers and patients.

In defense of the middlemen

Trade group, the Pharmaceutical Care Management Association (PCMA), which represents the interests of PBMs, released a statement in response to the FTC probe.

PCMA president and CEO, JC Scott, said the association was confident that any examination of PBMs will validate that they are reducing prescription drug costs for consumers. “PBMs are the only member of the prescription drug supply and payment chain working to lower drug costs.”

Drug manufacturer price-setting is the root cause of high drug costs, he continued. “The most effective study of issues around drug costs for consumers would examine the entire supply chain. PBMs are holding drug companies accountable by negotiating the lowest possible cost on behalf of consumers, and by driving and delivering local competition that consumers are demanding,”​ added Scott.

Related topics Markets & Regulations Biosimilars

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