FTC Punts Probe of PBMs but Could Take Up Issue Again

by Peter Johnson

The Federal Trade Commission (FTC) won’t investigate PBMs’ business practices, despite considering a probe in a Feb. 17 meeting. The FTC’s four commissioners deadlocked 2-2 on a party line vote authorizing an investigation, with the two Democratic commissioners voting in favor of an investigation and the two Republicans voting against it. 

FTC Chair targets clawbacks, gag clauses 

• In her remarks, FTC Chair Lina Khan cited several issues of potential interest to FTC investigators “such as the charging of after the fact direct and indirect remuneration and related fees, as well as complicated and opaque pricing terms that may allow PBMs to reimburse independent pharmacies less than the cost of acquiring medicines.” 
• “Vertically integrated PBMs may deploy pharmacy network terms that allow those PBMs to claw back patient co-pays and deductibles and implement gag clauses, audit provisions, and other terms that squeeze independent and unaffiliated chain pharmacies and result in a windfall for these PBMs,” she continued. 
• She also cited the rebate system itself as a potential area of interest: “While PBMs may a benefit from negotiating these rebates, it is maybe unclear whether patients who ultimately need to buy the medicines fully benefit from these reduced prices.” 
• Khan raised the matter at the urging of the National Community Pharmacists Association (NCPA), a trade group for independent pharmacists. 

Small pharmacists demand investigation 

• NCPA CEO B. Douglas Hoey, R.Ph., wrote in a Dec. 13 open letter to Khan that “small business independent pharmacies continue to face unconscionable and anticompetitive practices from pharmacy benefit managers (PBMs) and their vertically integrated health plans.” 
• Calling out the “vertical consolidation” of the Big Three PBMs — each is part of a larger company that includes an insurer — Hoey “request[ed] that the FTC consider taking immediate action to investigate and adopt rules to address unfair methods of competition by PBMs in these areas.” 
• In a statement issued the same day as the deadlocked vote, Hoey denounced the FTC’s inaction. 
• “Two members of the FTC just let the worst actors in the market off the hook,” Hoey said. “After hearing hours of testimony by community pharmacists and patients, all of whom painted the same shocking picture about PBM abuse, and not a single witness there to defend the PBM industry, it is inexplicable that two members of the commission could vote against the study.” 
• As Hoey’s statement implies, the vote doesn’t mean that PBMs are in the clear. The FTC is currently short one member and Khan could launch an investigation when the vacancy is filled. Indeed, Michael Carrier, an attorney and professor at the Rutgers University School of Law, tells AIS Health via email that “this certainly could be picked up again.” 

From Radar on Drug Benefits

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