The Federal Trade Commission released a scathing 71-page report on Tuesday, criticizing pharmacy benefit managers for potentially inflating drug costs and harming local pharmacies. This marks a shift in the agency’s approach to regulating these powerful middlemen, under the leadership of Chair Lina Khan.
While the F.T.C. has not taken legal action against benefit managers yet, the industry is on edge, fearing potential investigations or lawsuits. The report’s findings could also influence legislative efforts to curb the industry’s practices at both the federal and state levels.
Major benefit managers like CVS Health’s Caremark, Cigna’s Express Scripts, and UnitedHealth Group’s Optum Rx dominate the market, processing about 80 percent of prescriptions in the U.S. Despite their intended cost-saving mission, consolidation in the industry has raised concerns about rising drug prices.
Chair Khan’s statement highlighted how benefit managers can overcharge for vital medications, particularly affecting independent pharmacies and patients in rural areas. The industry defends its practices, emphasizing cost savings for various stakeholders.
The F.T.C.’s report outlined several ways benefit managers may be driving up prescription costs, including overpaying their own pharmacies for drugs and engaging in anti-competitive deals. Historically, the agency overlooked potential issues in the benefit manager industry due to a focus on lowering drug prices.
Under Chair Khan’s leadership, the F.T.C. has intensified its scrutiny of benefit managers and other corporate entities, signaling a broader approach to anti-competitive behaviors. Critics argue that the benefit manager industry has evaded regulation effectively, leading to market dominance and potential harm to consumers.
In a speech, Chair Khan emphasized the need to scrutinize benefit managers’ influence over drug pricing, citing the industry’s complexity and lack of transparency as key concerns.
