• Tue. Nov 29th, 2022

FTC Launches Investigation into Prescription Drug Intermediary Industry

ByChad J. Johnson

Jun 7, 2022

The Federal Trade Commission announced today that it will launch an investigation into the prescription drug intermediary industry, requiring the six largest drug benefit managers to provide information and records regarding their business practices. The agency’s survey will examine the impact of vertically integrated pharmacy benefit managers on access and affordability of prescription drugs. As part of this investigation, the FTC will issue mandatory orders to CVS Caremark; Express Scripts, Inc.; OptumRx, Inc.; Humana Inc.; Prime Therapeutics LLC; and MedImpact Healthcare Systems, Inc.

“Although many people have never heard of pharmacy benefit managers, these powerful intermediaries have a huge influence on the American prescription drug system,” said Chairman of the Federal Trade Commission Lina M. Khan. “This study will shed light on the practices of these companies and their impact on pharmacies, payers, physicians and patients.”

The Commission’s investigation will examine the role of pharmacy benefit managers at the center of the US pharmaceutical system. Pharmacy benefit managers are the intermediaries who are hired to negotiate discounts and fees with drug manufacturers, create drug formularies and related policies, and reimburse pharmacies for patient prescriptions. The largest pharmacy benefits managers are now vertically integrated with the largest health insurance companies and 100% owned mail-order and specialty pharmacies.

In these roles, Pharmacy benefit managers often have a huge influence over what drugs patients are prescribed, which pharmacies patients can use, and how much patients ultimately pay at the pharmacy counter. Many of these functions depend on very complicated and opaque contractual relationships that are difficult or impossible for patients and independent companies in the prescription drug system to understand.

The survey aims to shed light on several practices that have come under scrutiny in recent years, including:

The FTC’s investigation will build on the extensive public filing developed in response to the agency’s request for information about drug benefit managers that the agency launched on February 24, 2022. The agency received more than 24,000 public comment to date.

The FTC issues the orders under Section 6(b) of the FTC Act, which authorizes the Commission to conduct studies without a specific law enforcement purpose. Companies will have 90 days from the date of receipt of the order to respond.

The Commission voted 5-0 to issue the Section 6(b) orders and conduct the study of the business practices of pharmacy benefit managers. Statements were made by Chair Lina M. Khan, Commissioner Rebecca Kelly Slaughter and Commissioner Alvaro Bedoya. Commissioners Noah Joshua Phillips and Christine S. Wilson released a joint statement.