The Federal Trade Commission (FTC) has published an interim report on the prescription drug middleman industry, highlighting the significant impact that pharmacy benefit managers (PBMs) have on the accessibility and affordability of prescription drugs. This report is part of an ongoing inquiry initiated by the FTC in 2022.
The report reveals that six major PBMs manage nearly 95 percent of all prescriptions filled in the United States, a result of increasing vertical integration and market concentration. This structure allows PBMs to profit at the expense of patients and independent pharmacists.
"The FTC’s interim report lays out how dominant pharmacy benefit managers can hike the cost of drugs—including overcharging patients for cancer drugs," said FTC Chair Lina M. Khan. "The report also details how PBMs can squeeze independent pharmacies that many Americans—especially those in rural communities—depend on for essential care. The FTC will continue to use all our tools and authorities to scrutinize dominant players across healthcare markets and ensure that Americans can access affordable healthcare."
According to the report, PBMs wield considerable power over patients' ability to access and afford their medications, significantly influencing drug availability and pricing. Nearly 30 percent of Americans surveyed reported rationing or skipping doses due to high costs.
The interim findings also indicate that PBMs impose unfair contractual terms on independent pharmacies, affecting their ability to operate effectively. The investigation stems from special orders issued by the FTC in 2022 under Section 6(b) of the FTC Act to six major PBMs: Caremark Rx, LLC; Express Scripts, Inc.; OptumRx, Inc.; Humana Pharmacy Solutions, Inc.; Prime Therapeutics LLC; and MedImpact Healthcare Systems, Inc. Additional orders were issued in 2023 to Zinc Health Services, LLC; Ascent Health Services, LLC; and Emisar Pharma Services LLC.
Key insights from documents and data obtained through these orders include:
- **Concentration and Vertical Integration**: The top three PBMs processed nearly 80 percent of approximately 6.6 billion prescriptions dispensed by U.S. pharmacies in 2023.
- **Significant Power and Influence**: Leading PBMs exercise substantial control over drug availability, pricing, and which pharmacies patients can use.
- **Self-preferencing**: Vertically integrated PBMs may prefer their own affiliated businesses over unaffiliated ones.
- **Unfair Contract Terms**: Increased concentration gives leading PBMs leverage over smaller pharmacies.
- **Efforts to Limit Access to Low-Cost Competitors**: Negotiations between PBMs and brand drug manufacturers sometimes exclude lower-cost competitor drugs.
Some PBMs have not been timely or forthcoming with required submissions under these orders, hindering the Commission's mission. The FTC staff demands prompt compliance with these requirements.
The Commission voted 4-1 to issue this interim report, with Commissioner Melissa Holyoak dissenting. Statements were issued by Chair Lina M. Khan along with Commissioners Rebecca Kelly Slaughter and Alvaro Bedoya; separate statements came from Commissioners Andrew N. Ferguson and Melissa Holyoak.
The Federal Trade Commission remains committed to providing updates as more information becomes available.
