The Federal Trade Commission will intensify its scrutiny of pharmacy benefit manager business practices, the agency announced Tuesday.
The probe, which the commission unanimously approved, will focus on how vertical integration in the PBM sector affects access and pricing in the prescription drug market, according to a news release.
The FTC will require the six largest PBMs to provide information about their activities. The regulator plans to send compulsory orders to CVS Health's CVS Caremark, Cigna's Express Scripts, UnitedHealth Group's OptumRx, Humana, Blue Cross and Blue Shield-affiliated Prime Therapeutics, and MedImpact Healthcare Systems. CVS Caremark, Express Scripts and OptumRx collectively control about 80% of the PBM market.
"The FTC's forthcoming PBM inquiry will examine several of the most common complaints about PBMs and will seek to assist policymakers in determining whether Americans would benefit from reforms to this critical industry," commission Chair Lina Khan said in a news release.
The agency will look into matters such as the clawbacks PBMs charge to unaffiliated pharmacies, efforts to direct patients toward PBM-owned pharmacies, prior authorization policies, and the effects of manufacturer rebates and fees on formulary design.
The FTC issued a public request for information about how PBMs affect the healthcare system in February, following a failed vote to initiate a review of the industry. In response, provider groups urged the regulator to investigate the companies, alleging their practices harm quality and threaten providers' finances.
The National Community Pharmacists Association applauds the FTC's action and hopes it leads to meaningful reforms, CEO Douglas Hoey said in a news release.
"PBMs behave like monopolies. Their secretive, anticompetitive practices increase prescription drug prices, limit consumer choice and stymie competition. They've escaped serious scrutiny for far too long, but this study will bring their dirty laundry out into the open," Hoey said.
The Pharmaceutical Care Management Association, a PBM trade group, believes the FTC probe will confirm that its members reduce patient costs, President and CEO JC Scott said in a statement.
"PBMs are holding drug companies accountable by negotiating the lowest possible cost on behalf of consumers," Scott said. "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."
CVS Caremark looks forward to working cooperatively with the FTC, a spokesperson wrote in an email. Prime Therapeutics also intends to cooperate, General Counsel Mike Kolar said in statement. Humana likewise pledged to cooperate, a spokesperson wrote in an email. OptumRx referred questions to PCMA. Express Scripts and MedImpact Healthcare Systems didn't respond to requests for comment.
These companies may keep their information close to the chest, said Lucas Morgan, of the law firm Frier Levitt. "Most likely, each one of these PBMs is going to interpret these compulsory orders in the most narrow scope or fashion possible," he said. "There's going to be a big fight ahead between the FTC and the six very powerful PBMs."
The evidence regarding PBMs' effects on patients and providers is uncertain. University of Southern California researchers have linked the larger rebates that PBMs often demand to rising drug prices. But Centers for Medicare and Medicaid Services actuaries have reported contrary data that indicates rebates constrain drug spending growth.
The FTC reached consensus on the PBM inquiry following a deadlock in February in part because Alvaro Bedoya, nominated by President Joe Biden, joined the panel last month. Bedoya advocated for a more aggressive investigation, and noted that Delaware and Ohio audits uncovered evidence of deceptive conduct, in a news release Tuesday.
Commissioners Noah Joshua Phillips and Christine Wilson, whom President Donald Trump nominated to the panel, dissented in February but joined the others in supporting the study announced Tuesday.
The previous plan was "hastily prepared" and modified shortly before the vote four months ago, the two commissioners said in a joint news release Tuesday.
"We are hopeful that this study will generate useful information about prescription drug costs and the role and impact of PBMs. We also hope that agency leadership will commit to devoting the necessary resources to the project moving forward," Phillips and Wilson said.