Input Stories

Input Stories

FTC: PBMs Profit Big from Markups


Pharmacy benefit managers make millions from marking up the prices of specialty generic drugs, the Federal Trade Commission said in its second interim report on PBMs, out this week (The Hill). 
 
What’s going on: “The FTC staff’s second interim report finds that the three major pharmacy benefit managers hiked costs for a wide range of lifesaving drugs, including medications to treat heart disease and cancer,” FTC Chair Lina Khan said in a Tuesday statement.  

  • The report examined the practices of the three largest PBMs: CVS Health’s Caremark Rx, Express Scripts and OptumRx, as well as Sigma and UnitedHealth Group. Together, they control about 60% of the market. 
  • The release comes a little more than six months after the FTC’s first report, which found that instead of helping keep health care costs down—as they were meant to do—PBMs steer patients toward more expensive drugs and overcharge for cancer treatments.
  • The NAM has long been beating the drum to Congress about the need to reform PBMs, which contribute directly to the rising cost of health care by making it more costly for manufacturers to offer their employees insurance.  

The details: “According to the report, the ‘Big 3’ PBMs marked up the prices of many specialty generic drugs by hundreds or thousands of percent. Significantly marking up the prices of 51 such drugs helped PBM-affiliated pharmacies generate $7.3 billion in revenue between 2017 and 2022. The commission noted these prices were in excess of the National Average Drug Acquisition Cost (NADAC) for these drugs.”  

  • Some 22% of the specialty drugs sold by PBM-affiliated pharmacies were marked up by more than 1,000%, according to the report. Among those, half were marked up by more than 2,000%. 
  • In 2023, the “Big 3” sold 68% of all specialty drugs in the U.S.—that’s up from 54% in 2016. 

What’s next: The NAM continues to work with lawmakers to push for the passage of legislation that requires:  

  • Greater transparency in PBMs’ business models;
  • Full rebate pass-through, to ensure that savings are passed on to manufacturers and their employees rather than staying in PBMs’ pockets; and  
  • Delinking PBM compensation from medications’ list prices, so PBMs no longer have incentive to exert upward pressure on medication list prices. 

Our view: “The rising cost of health care is the top challenge facing manufacturers today, according to the NAM’s most recent Manufacturers’ Outlook Survey,” said NAM Vice President of Domestic Policy Charles Crain. “Congress must act urgently to rein in PBMs, underregulated middlemen that make health care more expensive for both manufacturers and manufacturing workers.” 
 

View More