PSG Position: FTC Inquiry into the Prescription Drug Middlemen Industry

June 16, 2022

At the heart of the investigation: access, pricing, and fair market competition from the six largest vertically integrated pharmacy benefit managers



What it is:  The influence of pharmacy benefit managers (PBMs) is central to the U.S. pharmaceutical system. They negotiate fees and rebates, establish formularies, determine consumer access to pharmacies, and manage pharmacy reimbursements for prescriptions along with the prices patients pay at the counter.

Just six PBMs manage 96% of all prescriptions sold nationally, and nearly all of them are vertically integrated with the largest health insurance companies and wholly owned mail order and specialty pharmacies. They are:

  • CVS Caremark
  • Express Scripts, Inc.
  • OptumRx, Inc.
  • Humana Inc.
  • Prime Therapeutics LLC
  • MedImpact Healthcare Systems, Inc.



The challenges:  It’s important to note that the FTC has authority under Section 6(b) to conduct studies without a specific law enforcement purpose, and that no specific wrongdoings are alleged. Rather, the inquiry focuses on the business practices of these PBMs, including but not limited to:

  • 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



Our take:  The six PBMs involved in the inquiry have 90 days from receipt of the order to respond to the FTC. A final report from the federal agency will likely take months to complete, with a range of potential enforcement provisions ranging from no action to antitrust actions to monetary penalties to new PBM-focused legislation.

PSG will monitor the FTC inquiry, subsequent actions, and potential impacts to our clients as part of our client advocacy services. Our hope is that this investigation will represent a step toward improving industry transparency and reducing prescription drug costs for providers, payers, and patients.