The FTC wants to lower the cost of prescription drugs by taking aim at pharmacy benefit managers (PBMs). As a refresher, PBMs are the ultimate middleman, coordinating between insurance companies, drug companies, and pharmacies/drugstores regarding the price of drugs. If you think this is as simple as looking at the cost of the drug, then figuring out what insurance covers versus the plan sponsor and plan participant… think again. PBMs negotiate pricing and discounts, rebates, and keep a list of which medications are covered and “preferred” versus those that aren’t. In other words: They have a lot of influence.
It’s precisely this influence that the FTC spent the past two years investigating. Its findings? PBMs are inflating the cost of drugs and hurting small businesses (main street pharmacies). Insiders told Plan Sponsor that the FTC will go after the three biggest PBMs alleging they pushed consumers toward higher-cost drugs, including insulin. (From 2014-2019, the price of insulin increased more than 50%.)
The FTC also claims that PBMs aren’t being transparent with the plan sponsors who hire them. Keep in mind, PBMs handle some 80% of the prescriptions in the U.S.
Regardless of outcomes, we’ll be following this lawsuit to see what it tells us about how PBMs operate and what plan sponsors are required to do about it going forward.
