Keystone Today

The head of a Pennsylvania health care reform group said a new Federal Trade Commission (FTC) report shows that pharmacy benefit managers (PBMS) “are charging enormous markups on life-saving specialty generic drugs.”

“The report shows that PBMs made over $7.3 billion in extra profits from dispensing specialty generic drugs during the study period,” Jennifer Riley, executive director of Patients Come First-PA, wrote in a Capital-Star op-ed. “These PBM middlemen, who should be lowering costs, are instead contributing to the financial burden on patients who rely on these vital medications.”

“For patients in Pennsylvania, these practices hit especially close to home,” Riley wrote. “With 7.7 million Pennsylvanians and counting having at least one chronic disease and a growing population of individuals requiring specialty medications, our families are among those most affected by these inflated drug costs.”

A PBM is a third-party administrator of prescription drug programs for health insurers, self-insured employers, and government agencies. PBMs negotiate with drug manufacturers to secure discounts and rebates on medications, manage pharmacy networks, and process prescription drug claims. PBMs also provide services such as medication therapy management and mail-order pharmacy services.

The Federal Trade Commission (FTC) released a report earlier this month that said the three largest PBMs have “hiked costs” for a range of prescription medications. The report is the second interim release in a study launched by the FTC in June 2022. It focuses on the role of PBMs in shaping drug pricing and access to prescription medications. 

One practice identified in the report is spread pricing, where PBMs charge health plans a higher price for a drug than they reimburse to pharmacies, keeping the difference as profit. This practice can result in increased costs for payers and patients, said the FTC report, while limiting the revenue for pharmacies. 

The report also said rebate agreements between PBMs and drug manufacturers incentivize higher list prices for medications. 

PBM fees and reimbursement rates, said the report, also threaten the financial stability of small pharmacies, reducing patient access to local providers of essential medications. Patients in these areas often face higher out-of-pocket costs and fewer options for obtaining the medications they need.

The FTC said it will use the report findings to develop policy recommendations and enforcement measures. Public comments on the report are encouraged and will inform the FTC’s ongoing efforts to evaluate the broader impact of PBM practices on drug prices and access.

“Last year, Pennsylvania lawmakers from both parties, along with Gov. Josh Shapiro, came together to pass comprehensive legislation aimed at regulating PBMs,” wrote Riley. “However, it is widely accepted that federal law preempts state law in regulating pharmacy benefit managers.”

“This, coupled with the new FTC investigation, is a stark reminder that there is still work to be done to hold PBMs accountable,” Riley wrote.