FTC withdraws advocacy for pharmacy benefit managers
The Commission rescinded earlier guidance that was opposed to increased regulatory oversight and transparency of PBMs.
Photo: William B. Thomas/Getty Images
Claiming that its old policy statements no longer reflect current market dynamics, the Federal Trade Commission has voted to rescind its prior statements of advocacy for pharmacy benefit managers, effectively ending the agency's previously stated endorsement of PBMs.
According to the FTC, the new statement pulling its advocacy is a response to PBMs' continued reliance on older FTC advocacy materials that opposed mandatory PBM transparency and disclosure requirements.
It also warns against reliance on the Commission's prior conclusions, particularly given the FTC's ongoing study of the PBM industry to update its understanding of the industry and its practices.
WHAT'S THE IMPACT?
The FTC's statement warns against relying on nine advocacy letters published or issued between 2004 and 2014 that advocated against proposals to increase regulatory oversight and transparency of PBMs. The statement also cautions against reliance on a 2004 joint report with the Department of Justice and a 2005 FTC study, as these reports "may no longer accurately reflect the current PBM industry," according to the FTC.
Until the FTC's current PBM study is complete and previously issued materials can be reevaluated, the Commission is discouraging reliance on these advocacy letters and reports.
The vote to withdraw prior PBM advocacy was 3-0.
According to the FTC, its PBM study will scrutinize the impact of vertically integrated pharmacy benefit managers on the access and affordability of prescription drugs.
Pharmacy benefit managers are the middlemen who are hired to negotiate rebates and fees with drug manufacturers, create drug formularies and surrounding policies, and reimburse pharmacies for patients' prescriptions. The largest pharmacy benefits managers are now vertically integrated with the largest health insurance companies and wholly owned mail order and specialty pharmacies.
"In these roles, pharmacy benefit managers often have enormous influence on which drugs are prescribed to patients, which pharmacies patients can use, and how much patients ultimately pay at the pharmacy counter," the FTC 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."
The inquiry is aimed at shedding light on several practices that have drawn scrutiny in recent years, including fees and clawbacks charged to unaffiliated pharmacies; methods to steer patients towards pharmacy benefit manager-owned pharmacies; potentially unfair audits of independent pharmacies; complicated and opaque methods to determine pharmacy reimbursement; the prevalence of prior authorizations and other administrative restrictions; the use of specialty drug lists and surrounding specialty drug policies; and the impact of rebates and fees from drug manufacturers on formulary design and the costs of prescription drugs to payers and patients.
As part of this inquiry, the FTC has sent compulsory orders to CVS Caremark, Express Scripts, OptumRx, Humana, Prime Therapeutics and MedImpact Healthcare Systems.
THE LARGER TREND
A year ago, after the FTC first announced its study into PBM practices, a number of pharmaceutical groups came out in favor of the inquiry.
The American Pharmacy Cooperative approved of the FTC's move, saying it had long advocated for federal oversight of PBMs.
"As an organization, APCI and its members have advocated aggressively for the federal government to investigate anti-competitive PBM practices," said APCI CEO Tim Hamrick. "APCI offered testimony to the FTC in February of this year and submitted written comments in May regarding anti-competitive PBM practices. We very much look forward to working with the FTC, Congress and other stakeholders to rein in these problematic issues that are detrimental to patients, taxpayers and small businesses."
Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com
