Express Scripts, the pharmacy benefit manager that Cigna Corp. bought in 2018, is being investigated by the Federal Trade Commission for what regulators claim is influence over drug prices wielded by pharmacy benefit managers and transparent business practices.
The FTC also is targeting pharmacy benefit managers at CVS Caremark; OptumRx Inc., Humana Inc.; Prime Therapeutics LLC; and MedImpact Healthcare Systems Inc.
“Although many people have never heard of pharmacy benefit managers, these powerful middlemen have enormous influence over the U.S. prescription drug system,” FTC Chair Lina M. Khan said this week in announcing the investigation. “This study will shine a light on these companies’ practices and their impact on pharmacies, payers, doctors and patients.”
Pharmacy benefit managers often have enormous influence over which drugs are prescribed, which pharmacies patients may use and how much patients pay, she said.
“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,” Khan said.
PBMs manage private insurance clients and Medicaid and Medicare prescription plans and own retail and mail order pharmacies.
The federal inquiry will examine fees and clawbacks charged to unaffiliated pharmacies, methods to steer patients toward pharmacy benefit manager-owned pharmacies, potentially unfair audits of independent pharmacies, complicated and opaque methods to determine pharmacy reimbursement and the prevalence of prior authorizations and other administrative restrictions.
Express Scripts said it looks forward “to working cooperatively with the Federal Trade Commission to share information about our mission to ensure Americans have safe and affordable access to medications they need.” Cigna paid $67 billion for Express Scripts in 2018.
Humana said pharmacy benefit managers “play an important role in lowering the cost of prescription drugs and improving health care outcomes for patients.”
Mike Kolar, senior vice president and general counsel, said Prime Therapeutics intends to cooperate with the FTC probe.
A spokesman said CVS Caremark will “look forward to working cooperatively with the Federal Trade Commission.”
OptumRx and MedImpact Healthcare Systems did not respond to emails seeking comment.
Spencer Perlman, managing partner and director of health care research at Veda Partners in Bethesda, Md., said in a client note Thursday that pharmacy benefit managers can “win the war,” but substantive reforms to the industry are possible.
He believes the FTC will lay the groundwork for enforcement actions targeting certain business practices such as pharmacy concessions, pricing, certain formulary management activities, including manufacturer rebates, and the control of wholly owned specialty pharmacies.
Perlman said Congress could limit or prohibit certain PBM business practices or authorize the FTC to draft industry rules.
“There is bipartisan frustration with PBMs and it is possible that lawmakers could take matters into their own hands if they feel the FTC is unable to address the issue adequately on its own,” he said.
