FTC To Probe Prescription Drug Middlemen Industry

ftc jun08 lt

The Federal Trade Commission or FTC said it will inquire into the prescription drug middlemen industry. The inquiry will scrutinize the impact of vertically integrated pharmacy benefit managers on the access and affordability of prescription drugs.

The probe will examine pharmacy benefit managers' role at the center of the U.S. pharmaceutical system.

The FTC is requiring the six largest pharmacy benefit managers to provide information and records regarding their business practices. Compulsory orders will be send to CVS Caremark, Express Scripts, Inc., OptumRx, Inc., Humana Inc., Prime Therapeutics LLC, and MedImpact Healthcare Systems, Inc.

Pharmacy benefit managers are the middlemen who are hired to negotiate rebates and fees with drug manufacturers, create drug formularies and surrounding policies, and reimburse pharmacies for patients' prescriptions.

They often have enormous influence on the drugs prescribed to patients, the pharmacies patients can use, and how much patients ultimately pay at the pharmacy counter. According to the agency, patients and independent businesses across the prescription drug system are unable to understand many of these functions that depend on highly complicated, opaque contractual relationships.

The agency noted that the largest pharmacy benefits managers are now vertically integrated with the largest health insurance companies and wholly owned mail order and specialty pharmacies.

The inquiry is aimed at various practices including fees and clawbacks charged to unaffiliated pharmacies; methods to steer patients towards pharmacy benefit manager-owned pharmacies; potentially unfair audits of independent pharmacies; and complicated and opaque methods to determine pharmacy reimbursement.

These also include the prevalence of prior authorizations and other administrative restrictions; the use of specialty drug lists and surrounding specialty drug policies; as well as the impact of rebates and fees from drug manufacturers on formulary design and the costs of prescription drugs to payers and patients.

The FTC's inquiry follows a request it made to public in February for information about pharmacy benefits managers. The agency has received more than 24,000 public comments to date.

The six pharmacy benefit managers will have 90 days from the date they receive the order to respond.

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