Lawmakers push DOJ to investigate PBMs over opioids

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A bipartisan group of lawmakers has sent a letter to Attorney General Merrick Garland saying that the Department of Justice should examine whether pharmacy benefit managers had a hand in the opioid epidemic.

The letter references recent reports – including confidential files and information from CVS Caremark, Express Scripts and Optum Rx – suggesting the three largest PBMs colluded and conspired to steer patients towards Oxycontin in exchange for $400 million.

Specifically, the lawmakers cited a Barron's report claiming that the three PBMs in question secured the funds via rebates and fees from Purdue Pharma during a 12-month period that ended in late 2017.

"These rebates are, in theory, supposed to be passed down to the patients at the pharmacy counter or used to cover a patient's out-of-pocket insurance costs," lawmakers wrote in the letter. "However, PBMs retained a great share of these rebates instead of passing them on to consumers, putting even more money in their pockets."

The letter was signed by Reps. Cliff Benz, R-Oregon; Buddy Carter, R-Georgia; Raja Krishnamoorthi, D-Illinois; and Deborah K. Ross, D-North Carolina.

WHAT'S THE IMPACT

Looking at contracts between Purdue Pharma and CVS Caremark, the Barron's investigation indicated that rebates increased if their health plan covered higher amounts of OxyContin. Internal documents suggest Caremark had an agreement with Purdue Pharma that gave CVS double the amount of rebates for authorizing four or more opioid pills a day instead of just two, lawmakers said.

"Furthermore, confidential files uncovered by Barron's show that in 2017 Express Scripts awarded Purdue Pharma with favorable placement on their formularies in exchange for a 40% rebate," the letter read. "This system contributed to a culture of excessive prescribing and dispensing of OxyContin."

Lawmakers claim that the original intent of PBMs was to act as the middlemen between pharmacies, drug manufacturing companies and health insurance plans to administer prescription drug benefits. But vertical integration has created conglomerates that, without competition, have outsized control over pricing, they said.

They cited data from the Federal Trade Commission showing that CVS Caremark, Express Scripts and OptumRx together control more than 80% of the market.

"Using their size, leverage, and negotiating power, PBMs play a large role in determining which prescription drugs are covered by insurance plans and how much they cost, while keeping themselves mostly hidden from the American public," the representatives wrote.

This concentrated power, they said, enables PBMs to dictate formulary placements and patient access, while in turn collecting billions in fees and rebates from pharmaceutical manufacturers. 

Lawmakers called for greater oversight and accountability.

THE LARGER TREND

Data published in September by the American Medical Association found low competition among middling players in the pharmaceutical supply chain, with numbers showing that the four largest pharmacy benefit managers in the country control roughly 70% of the national market.

Based on 2022 data on commercial and Medicare Part D prescription drug plan (PDP) enrollees, the analysis also found a high prevalence of vertical integration of PBMs with health insurance companies.

Nationally, insurers that are vertically integrated with a PBM covered 72% of people with a commercial or Medicare Part D PDP. The share of people covered by an insurer that is vertically integrated with a PBM is higher in the Medicare Part D market (77%) than the commercial PDP market (69%).

In July, the Federal Trade Commission said it was preparing to sue the largest three pharmacy benefit managers over their negotiations regarding drug prices, including those for insulin.

Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.