Dive Brief:
- The Federal Trade Commission will not launch a study into pharmacy benefit managers' pricing and contractual practices after a 2-2 vote at a Thursday meeting. The measure needed a simple majority to commence the investigation, which would have compelled large PBMs to turn over information and documents to the agency.
- The two commissioners appointed by former President Donald Trump, Noah Phillips and Christine Wilson, voted against the study after raising concerns about its design and whether the current draft asks the proper questions for the answers the agency is seeking. Phillips also complained about receiving a "substantially revised" draft from staff "just hours" before the meeting.
- FTC Chair Lina Khan said she was disappointed with Thursday's vote, and said this is an area the agency has "a real moral imperative" to act upon.
Dive Insight:
Numerous independent pharmacists implored the agency that polices anticompetitive conduct to use its authority to investigate PBM's business practices that they say threaten their livelihoods.
During the FTC's public meeting Thursday, pharmacists made impassioned speeches about how they're being harmed by the complex and opaque practices of PBMs, the middlemen between drugmakers, health plans and pharmacies.
The nation's largest PBMs serve as the gatekeepers for prescription drugs for millions of Americans, as they dictate which drugs they will cover each year. The biggest PBMs are owned by the nation's largest health insurance companies, and the top three insurers' PBMs control nearly 80% of the prescription drug market.
Due to this sheer size, independent pharmacists say they lack negotiating power and are forced to accept contract terms from PBMs that many described as "take-it-or-leave-it" deals.
Many independent pharmacists also complained about the money that can be clawed back days or months after the pharmacy fills a prescription for a patient, referred to as direct and indirect remuneration fees. Pharmacies are also often reimbursed less than what it cost them to acquire the drug in the first place, making it hard to stay in business, some said.
Steve Hoffart, a pharmacist and owner of Magnolia Pharmacy in Texas, said that due to these types of fees, $2,500 was "sucked out of our bank account" 11 days after his pharmacy dispensed an arthritis medication to a patient. It caused him to lose money on the transaction — one of many instances where that's happened, Hoffart said.
If these practices are allowed to continue, "independent pharmacies aren't going to last," Henry Ranger, a West Virginia pharmacist and pharmacy owner, told commissioners Thursday.
Pharmacists also called out spread pricing practices that have come under fire in recent years as PBMs reimburse pharmacies one price while collecting a different price from health plans, allowing PBMs to drive up profits.
Many PBMs also own their own pharmacies. David Balto, an antitrust expert and former policy director at the FTC, suggested a good starting point for a study may be to examine whether PBMs impose the same fee schemes on their own pharmacies as they do on community pharmacies.
Pharmacists also urged the agency to study ways in which PBMs steer patients to their own mail-order pharmacies which ship drugs directly to patients, circumventing community and standalone pharmacies.
Despite the overwhelming public comments in support of launching a study, the FTC failed to achieve enough votes to do so.
"I'm really disappointed by this outcome," Chair Khan said. For months, the agency has been building a record with testimony, including from patients, "underscoring the real urgency and life and death stakes in some instances."