The Federal Trade Commission (FTC) on January 14 released its second report on pharmacy benefit managers (PBMs), this time alleging the companies marked up prices for cancer, HIV, and other medications by up to “thousands of percent.”
The findings are part of the agency’s multiyear investigation into PBMs that began in 2022. The report focuses on the three largest PBMs in the US—CVS Health’s CVS Caremark, Cigna’s Express Scripts, and UnitedHealth Group’s Optum Rx—and how they influenced the prices of specialty generic medicines.
“FTC staff have found that the big three PBMs are charging enormous markups on dozens of lifesaving drugs,” Hannah Garden-Monheit, director of the FTC’s Office of Policy Planning, said in a statement. “We also found that this problem is growing at an alarming rate, which means there is an urgent need for policymakers to address it.”
The agency’s first report, released in July 2024, claimed that PBMs have an “outsized influence” on drug prices and that the top three PBMs profited by $1.6 billion in excess revenue on two cancer drugs between 2020 and 2022.
In the report. The FTC said PBMs marked up prices on 51 specialty generic drugs and raked in more than $7.3 billion in profit from 2017 to 2022. For example, the PBMs marked up the price of tadalafil, a pulmonary hypertension medication, by 7,736% for commercial payers in 2022, according to the report.
Reimbursements that the top three PBMs gave to their affiliated pharmacies were also higher than reimbursements given to unaffiliated pharmacies for almost all the specialty generics included in the report, according to the agency.
Plus, the PBMs may be steering more profitable medications to affiliated pharmacies and away from others, the FTC alleged. Affiliated pharmacies received 68% of specialty generics dispensing revenue in 2023, an increase from 54% in 2016, the report found.
Beyond the money made by marking up prices from 2017 to 2022, the PBMs made roughly $1.4 billion on medicines through spread pricing—billing insurers more than they reimburse pharmacies for dispensing drugs—according to the agency.
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The bigger picture. The report comes amid a flurry of lawsuits between the FTC and PBMs.
After the agency released its first report last summer, Express Scripts sued the FTC, claiming it had made defamatory statements about PBMs. Then, the FTC sued the three PBMs in September, accusing them of inflating insulin prices. In November, the PBMs countersued, claiming the agency’s lawsuit was “unconstitutional.”
The response. In a statement shared with Healthcare Brew, David Whitrap, CVS Health’s VP of external affairs, said it is “inappropriate and misleading to draw broad conclusions from cherry-picked ‘specialty generic’ outliers, as the FTC has done in both of its interim reports.”
Specialty generics accounted for less than 1.5% of Caremark clients’ total drug spend from 2017 to 2022, Whitrap added.
“Also, the FTC buries…its acknowledgement that the interim analysis completely ignores the cost-saving guarantees we provide our clients across all drug categories to reduce their drug costs. How many more interim reports will it take before the FTC includes the mountain of data that refutes these few outliers?” Whitrap said.
Greg Lopes, a spokesperson for the Pharmaceutical Care Management Association, a trade group representing PBMs, told Healthcare Brew: “It’s clear this report again fails to consider the entirety of the prescription drug supply chain and makes sweeping assertions about the role of PBMs disconnected from a full appreciation of their critical cost-saving role for employers, unions, taxpayers, and patients.”
Kelly Davis, a spokesperson for Optum Rx, said the PBM helped patients save $1.3 billion in 2024 and that the median out-of-pocket payment for patients with complex or rare diseases was $5.
Justine Sessions, a spokesperson for Express Scripts said in a statement that the FTC’s report is “another set of misleading conclusions based on a subset of medications that represent less than 2% of what our health plans spend on medications in a year—much like their first interim report that the FTC itself has already said is ‘limited’ and ‘tentative’...We look forward to continuing to address the blatant inaccuracies in the Commission’s reports.”