PBMs made more than $7B marking up specialty generics: FTC
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FTC chair Lina Khan. Photo: Tom Williams/CQ-Roll Call, Inc via Getty Images
The three biggest pharmacy benefit managers made more than $7.3 billion over five years marking up the prices of specialty generic drugs for cancer, HIV and other conditions, the Federal Trade Commission charged on Tuesday.
Why it matters: It's the second time the FTC has singled out CVS Caremark, Express Scripts and OptumRx for driving up drug costs. The report could provide fodder if President-elect Trump opts to make good on vows to crack down on pharmacy middlemen.
- FTC chair Lina Khan, a Biden appointee, said the findings justify continued scrutiny of practices that may inflate drug costs, squeeze independent pharmacies and deprive Americans of affordable health care.
What they found: The PBMs marked up prices for specialty generic drugs by hundreds and sometimes thousands of percent over their estimated acquisition costs from 2017 and 2022, per the FTC report.
- Most of the highly marked-up drugs were dispensed at pharmacies affiliated with the PBMs. The three companies almost always reimbursed their affiliated pharmacies at a higher rate for the drugs than unaffiliated pharmacies.
- This source of revenue increased at a compound annual growth rate of 42% from 2017 through 2021 for affiliated pharmacies, according to the report.
The report builds off earlier findings the FTC released in July that found that the three major PBMs garnered nearly $1.6 billion in extra revenue on just two cancer drugs in less than three years by steering business to affiliated pharmacies.
- ExpressScripts in September filed a lawsuit against the FTC, saying that report was filled with "unsupported innuendo" and demanding that it be retracted.
Zoom in: The latest report examines prices for all 51 specialty generic drugs dispensed over the five year period for which the commission had analyzable data, an FTC official told reporters Tuesday.
- In 2022, the three largest PBMs marked up four cancer drugs, two multiple sclerosis drugs and two pulmonary hypertension treatments by more than 1,000% of their acquisition price on commercial claims.
The other side: "It's clear this report again fails to consider the entirety of the prescription drug supply chain and makes sweeping assertions about the role of PBMs disconnected from a full appreciation of their critical cost-saving role for employers, unions, taxpayers, and patients," said Greg Lopes, spokesperson for the Pharmaceutical Care Management Association, a PBM trade group.
- A spokesperson for Express Scripts called the report "another set of misleading conclusions" based on medications that make up less than 2% of what its health plans spend on medications annually.
- CVS told Axios that the report draws inappropriate conclusions from "cherry-picked 'specialty generic' outliers." The FTC's analysis also ignores cost-savings Caremark provides to its clients to reduce their drug costs, the company said.
- Optum said in a statement it is working to lower the cost of specialty medicines and saved patients more than $1 billion last year.
