After a two-year investigation into pharmacy benefit managers, the Federal Trade Commission has released an interim report, which argues that these “powerful middlemen” are inflating costs and “squeezing Main Street pharmacies.” 

As plan sponsors are required to attest that the fees they pay for health care plans are fair and reasonable for the services provided under the Consolidated Appropriations Act of 2021, it is important that plan sponsors apply a fiduciary process to evaluating their health plans, as well as being aware of pending litigation. 

The FTC is poised to file a lawsuit against the three largest PBMs—OptumRx (UnitedHealth Group), Caremark (CVS Health) and Express Scripts (Cigna Group), alleging they pushed patients to more expensive brand-name drugs, including insulin, four people familiar with the case discussions told media outlets this week. 

Plan sponsors often work with PBMs to administer health care benefits to their enrolled participants, and sponsors typically issue requests for proposals detailing their pharmacy benefits needs, to which PBMs respond and compete on quality, cost effectiveness and accountability, according to the Pharmaceutical Care Management Association.  

Once a plan sponsor selects a PBM, the plan sponsor and PBM negotiate contract terms and conditions. Plan sponsors “have every opportunity to choose a pricing model that best suits their needs,” according to the PCMA.  

In its report, the FTC argued that the three largest PBMs now manage nearly 80% of all prescriptions filled in the U.S. They are also vertically integrated, according to the FTC, serving as health plans and pharmacists, and play other roles in the drug supply chain as well.  

“As a result, they wield enormous power and influence over patients’ access to drugs and the prices they pay,” the report stated. “This can have dire consequences for Americans, with nearly three in ten surveyed Americans reporting rationing or even skipping doses of their prescribed medicines due to high costs.” 

The FTC further argued that PBM business practices and their effects “remain extraordinarily opaque.” The PBM-pharmacy contracts the FTC has reviewed lack transparency and are complex and conditional, according to the report, making it challenging to understand what pharmacies will ultimately be paid for any given drug.  

The prescription reimbursement system is equally complicated. For example, when a health-plan beneficiary purchases prescription medicine at a retail pharmacy, the payment flows through several entities—including the patient, pharmacy, PBM, health plan, insurer and plan sponsor, the FTC explained. 

Additionally, the FTC found that PBMs and manufacturers of branded medications sometimes negotiate prescription drug rebates that are conditioned on limiting access to potentially lower-cost generic alternatives.  

“These exclusionary rebates may cut off patient access to lower-cost medicines and warrant further scrutiny by the Commission, policymakers and industry stakeholders,” the report stated.  

In 2022, the FTC issued special orders pursuant to Section 6(b) of the FTC Act to the six largest PBMs—Caremark Rx LLC; Express Scripts Inc.; Optum Rx Inc.; Humana Pharmacy Solutions Inc.; Prime Therapeutics LLC; and MedImpact Health Care Systems Inc.  

The orders requested data and documents regarding these PBMs’ businesses and business practices, but according to the FTC, some of the PBM respondents have not yet fully complied or have not yet completed their required submissions.  

According to the recent report, if any of the companies fail to comply with the orders or engage in further delay tactics, the FTC can take them to court to compel compliance.  

The FTC emphasized that scrutinizing the role of PBMs is especially important since the federal government and state governments are the largest purchasers of health care in the U.S.  

“The prices of insulin and other medicines are set by their manufacturers, who have raised list prices repeatedly,” An Express Scripts spokesperson commented. “We work to combat the pharmaceutical industry’s high prices and lower the cost of thousands of medicines for patients and their health plans, and the data shows that we succeed. Our members paid less out of pocket for their medicines in 2023 than they did in 2022 despite manufacturers’ price increases. Express Scripts members pay an average of $22.78 for a 30-day supply of insulin, and we have saved individual patients an average of close to $2,500 on diabetes treatments since 2020.”

A spokesperson at the FTC declined to comment on the pending litigation. CVS and UnitedHealth did not immediately respond to requests for comment.