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FTC cautions against relying on its past PBM advocacy as industry pushes back

The FTC on Thursday cautioned pharmacy benefit managers against relying on the agency’s previous statements and studies in support of PBMs, the middlemen who negotiate prescription drug costs on behalf of health insurers — and the PBM industry is already pushing back.

During an open commission meeting Thursday, FTC commissioners voted unanimously to issue a statement warning against relying on prior FTC work in the area, arguing that it no longer is reflective of the current market. The commissioners said the statement responds to the PBM industry’s reliance on outdated materials opposing mandatory transparency and disclosure requirements.

Thursday’s vote is part of the FTC’s broader efforts to keep a closer eye on PBMs. The agency in June launched an inquiry into the role of PBMs, ordering six of the largest PBMs to disclose details on their business practices so the agency can inspect their impact on the affordability and accessibility of medications.

“In light of this ongoing work, we want to make sure that prior statements that the FTC made are not being relied on in a way that could be impeding ongoing efforts at the state level or even at the federal level, to be examining the practices of these PBMs and in some cases of requiring certain types of transparency or disclosure requirements,” FTC Commissioner Lina Khan said at the meeting.

But the PBM industry group known as the Pharmaceutical Care Management Association (PCMA) said in a statement following the meeting that while it doesn’t argue with the FTC that the market has changed, it disagrees with the agency’s conclusion.

The PCMA says the PBM market has become increasingly “dynamic” and “diverse” and that it’s become more competitive in recent years. ‘

The group said it will continue to cite past FTC “studies, statements, and enforcement actions that recognize the risks associated with proprietary pricing disclosure requirements that would limit pharmacy benefit companies’ ability to manage costs for employers and consumers and would only serve to empower drug companies to raise costs.”

On the other hand, the National Community Pharmacists Association (NCPA) applauded the FTC’s vote. The group says the vote removes a “major line of defense” for PBMs, which are often owned by insurers.

“What may have been the case years ago oftentimes no longer reflects the current marketplace,” NCPA CEO Douglas Hoey said. “Despite that, certain characters have kept touting now-obsolete statements in trying to maintain the status quo and protect PBM-insurers from reforms or calls for transparency.”

In tandem with the FTC, Congress is also increasing its scrutiny of PBMs.

The Senate Finance Committee next Wednesday will mark up a slate of proposals to reform PBMs. The Senate health committee in May advanced legislation that would prohibit spread pricing, a practice in which PBMs charge health plans more for a drug than what it reimburses to the pharmacy, among other reforms. The House is also working on its own PBM reforms.

House committee takes on PBMs as bipartisan support for wider reforms grows

David Balto, former assistant director of policy at the FTC and an antitrust attorney who testified at the meeting, said the FTC’s change in stance is long overdue.

He told Endpoints News that in his view, the FTC took an “idyllic” approach to PBMs and took at face value that their goal was to secure lower prices for consumers.

He said by preventing states from making laws to require more transparency around PBMs in how they negotiate prices, the FTC put the entities in a “regulatory free zone.”

The most blatant showcase of PBMs’ lack of transparency, Balto said, is their handling of the rebate information they share with employers.

“By hiding rebate information, PBMs basically, could pocket more and more of those rebates, and you see that in the skyrocketing profits of PBMs,” he said.

Despite the FTC’s change in stance, Balto said he doesn’t expect to see a shift in the PBM industry’s actions.

“They’re just basically going to continue to turn a deaf ear to the concerns of consumers, patient advocates and Congress,” he said.

Reporter: Lia DeGroot

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