Lina M. Khan is Chair of the Federal Trade Commission | Official Website
The Federal Trade Commission (FTC) has released a second interim staff report scrutinizing the role of pharmacy benefit managers (PBMs) in the prescription drug industry. The report, focusing on specialty generic drugs, highlights significant price markups by PBMs for essential medications, including those for cancer and HIV.
According to the report, three major PBMs—Caremark Rx, LLC (CVS), Express Scripts, Inc. (ESI), and OptumRx, Inc. (OptumRx)—marked up numerous specialty generic drugs dispensed at their affiliated pharmacies by substantial percentages. This practice generated over $7.3 billion in revenue from 2017 to 2022 beyond the estimated acquisition costs of these drugs.
"The FTC staff’s second interim report finds that the three major pharmacy benefit managers hiked costs for a wide range of lifesaving drugs," said FTC Chair Lina M. Khan. She emphasized the need for continued investigation into practices inflating drug costs and affecting healthcare accessibility.
Hannah Garden-Monheit, Director of the FTC’s Office of Policy Planning, noted that "the Big 3 PBMs are charging enormous markups on dozens of lifesaving drugs" and stressed an urgent need for policy intervention due to this growing issue.
The report builds on findings from July 2024 which showed that pharmacies affiliated with these PBMs received a significant portion of dispensing revenue from specialty drugs. It analyzed data from 2017 to 2022 concerning commercial health plans and Medicare Part D managed by these PBMs.
Key insights include:
- Markups imposed by the Big 3 PBMs were substantial across many specialty generic drugs.
- A larger share of profitable prescriptions was dispensed by their affiliated pharmacies.
- Over $7.3 billion in dispensing revenue exceeded National Average Drug Acquisition Cost (NADAC).
- An estimated $1.4 billion income was generated via spread pricing.
- Specialty generics significantly contributed to parent healthcare conglomerates’ operating income.
- Plan sponsor and patient spending increased markedly between 2017 and 2021.
The FTC remains committed to providing updates as more information is gathered during its ongoing study.
###
