FTC to Increase Scrutiny of Pharmacy Benefit Managers Over Rebates, Fees

In a renewed effort to combat soaring healthcare costs and drug prices, the Federal Trade Commission (FTC) voted unanimously Thursday to increase scrutiny of pharmacy benefit managers, who act as middlemen between drug companies and consumers.

Source: Reuters | Published on June 17, 2022

Pills pour out of a prescription medication bottle onto a kitchen counter. Several other pill bottles stand out of focus in the background.

The five-member commission, which includes two Republicans, voted to increase scrutiny of the discounts that pharmaceutical middlemen seek from drug companies in order to ensure that their products are covered by the pharmacy benefit manager (PBM).

In an open meeting, FTC Chair Lina Khan stated that the FTC would investigate whether rebates sought by middlemen reduced competition, resulting in higher drug prices.

"The FTC has also determined that commercial bribery practices, also known as kickbacks," she added, "constitute an unfair method of competition."

UnitedHealth Group Inc's Optum unit, CVS Health Corp's CVS Caremark, and Cigna Corp's Express Scripts are the three largest PBMs. PBMs determine which drugs are covered by health insurance plans and negotiate pricing with manufacturers.

According to a PBM industry official, the companies' goal is to "control and lower costs," and they blame drug companies for sometimes spectacular price increases for insulin and other medications.

The FTC expressed particular concern about insulin, which was first synthesized in the 1970s and is used by approximately 8 million American diabetics. In the last two decades, the price of insulin has increased by 300 percent, with a one-year supply now costing nearly $6,000 on the market.