FTC to investigate CVS Caremark, Humana, other pharmacy benefit managers
Pharmacy benefit managers help decide which drugs are prescribed to patients and how much they pay for them
A new investigation by the Federal Trade Commission will take aim at the prescription drug middlemen industry and pharmacy benefit managers.
Pharmacy benefit managers are hired to negotiate rebates and fees with drug manufacturers, create drug formularies and surrounding policies and reimburse pharmacies for patients’ prescriptions.
The FTC says that certain pharmacy benefit managers have "enormous influence" over which drugs are prescribed to patients, what pharmacies patients can use and how much patients ultimately pay at the pharmacy counter.
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The agency will request records and other information from the six largest pharmacy benefit managers about their business practices. They include CVS Caremark, Cigna subsidiary Express Scripts Inc., UnitedHealth Group subsidiary OptumRx Inc., Humana Inc., Prime Therapeutics LLC and MedImpact Healthcare Systems Inc.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| CVS | CVS HEALTH CORP. | 55.09 | +0.82 | +1.51% |
| CI | THE CIGNA GROUP | 324.06 | -7.69 | -2.32% |
| UNH | UNITEDHEALTH GROUP INC. | 593.30 | -12.58 | -2.08% |
| HUM | HUMANA INC. | 282.97 | -6.88 | -2.37% |
The investigation will shed light on several practices that have been scrutinized in recent years, including:
- Fees and clawbacks charged to unaffiliated pharmacies
- Methods to steer patients towards pharmacy benefit manager-owned pharmacies
- Potentially unfair audits of independent pharmacies
- Complicated and opaque methods to determine pharmacy reimbursement
- The prevalence of prior authorizations and other administrative restrictions
- The use of specialty drug lists and surrounding specialty drug policies
- The impact of rebates and fees from drug manufacturers on formulary design and the costs of prescription drugs to payers and patients.
The FTC will issue compulsory orders under Section 6(b) of the FTC Act, which authorizes the agency to conduct studies without a specific law enforcement purpose. The companies will have 90 days from the date they receive the order to respond.
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The Pharmaceutical Care Management Association (PCMA), a trade group representing pharmacy benefit managers, tells FOX Business that "drug manufacturer price-setting is the root cause of high drug costs."
"The most effective study of issues around drug costs for consumers would examine the entire supply chain," PCMA president and CEO JC Scott said. "PBMs are holding drug companies accountable by negotiating the lowest possible cost on behalf of consumers, and by driving and delivering local competition that consumers are demanding."
Representatives for CVS Caremark, Humana and Prime Therapeutics told FOX Business that they will cooperate with the FTC's investigation. OptumRx deferred comment to the PCMA. The other companies did not return FOX Business' request for comment.