The Federal Trade Commission unanimously voted Thursday to advise state and federal authorities to disregard its past statements opposing policies that would require pharmacy benefit managers to reveal more about their business practices.
From 2004 to 2014, the FTC published 11 reports and letters discouraging the implementation of disclosure and transparency rules on the basis that sharing such information would hamper competition. These statements, which FTC Chair Lina Khan said dissuaded states from pursuing PBM transparency laws, are no longer operative.
The FTC commenced an investigation into the PBM industry more than a year ago and recently expanded its scope to include group purchasing organizations affiliated with pharmacy benefit managers. The agency is scrutinizing the effects of vertical integration in the industry that has led to three companies—CVS Health’s CVS Caremark, Cigna’s Express Scripts and UnitedHealth Group’s OptumRx—dominating the market. The FTC also is probing how PBMs collect pharmaceutical manufacturer rebates, design formularies, require pharmacies to return portions of the fees they collect and other matters.
“In light of this ongoing work, we want to make sure that prior statements that the FTC made are not being relied on in a way that could be impeding ongoing efforts at the state level or even at the federal level, to be examining the practices of these PBMs and, in some cases, requiring certain types of transparency or disclosure requirements,” Khan said during a public meeting Thursday.
The Pharmaceutical Care Management Association, which represents PBMs, issued a defiant statement in response.
“In the absence of any new FTC guidance and considering the FTC’s previous actions, it is critical to carefully protect data that helps maintain a competitive marketplace. Therefore, PCMA will continue to cite previous FTC studies, statements and enforcement actions that recognize the risks associated with proprietary pricing disclosure requirements that would limit pharmacy benefit companies’ ability to manage costs for employers and consumers and would only serve to empower drug companies to raise costs,” the Pharmaceutical Care Management Association said in a news release.
Representatives of the pharmacy industry and patient advocates expressed support for the commission’s vote during the meeting. In a news release, the National Community Pharmacists Association praised the FTC.
“We applaud the commissioners for taking a stand with this vote, acknowledging our request that they reconsider sometimes decades-old statements that supported the role of PBMs,” National Community Pharmacists Association CEO Douglas Hoey said in a news release. “The massive concentration of power that nowadays allows PBM-insurers to serve as gatekeepers to the marketplace of insured lives doesn’t serve patients and doesn’t function as a fair ecosystem in which independent pharmacies and others can compete.”
House Oversight and Accountability Committee Chair James Comer (R-Ky.) is conducting a separate inquiry into similar issues, and several key congressional committees have advanced legislation that would impose stronger transparency rules or even ban practices such as spread pricing. In addition, the Centers for Medicare and Medicaid Services proposed a rule in May that would require PBMs to disclose drug prices under Medicaid.