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On Thursday, the Federal Trade Commission voted 2-2 against studying how the business practices of pharmacy benefit managers effect independent pharmacies.
Commissioners Noah Phillips and Christine Wilson, who were both appointed by former President Donald Trump, voted against the study, arguing it should be more focused on consumers.
The vote came after nearly two hours of testimony from independent pharmacies and advocates who claimed that PBM business practices have hurt their businesses and led to closures across the country. No one testified on the behalf of PBMs.
“I believe it is vital to launch this study,” said FTC Chair Lina Khan, who was appointed by President Joe Biden. “We have an imperative to better understand and, ultimately, tackle anticompetitive conduct that may be contributing to sky-high drug prices and the decline of independent pharmacies.”
PBMs have faced scrutiny in recent years from Congress, state legislatures, providers and patient advocates as they look for ways to bring down drug prices.
CVS Caremark, Express Scripts and OptumRx control nearly 80% of the PBM market.
The study the FTC voted against authorizing Thursday would have focused on the competitive impact of contractual provisions, reimbursement adjustments and “other practices affecting drug prices, including those practices that may disadvantage independent or specialty pharmacies.”
The commissioners who voted ‘no’ said they might support a study of PBMs if it is focused more on consumers, with Wilson adding that it is not the job of the FTC to pick winners and losers in the market.
“I support an FTC analysis of this industry,” Wilson said. “If there’s anti-competitive conduct in the supply chain for prescription drugs, I want to know about it.”
PBMs can decide which pharmacies will be included in a payer’s network and steer patients toward affiliated chains or mail-order services, and their market power allows them to set rates, fees and contract terms that aren’t negotiable, supporters of the study argued Thursday.
“PBMs have put local pharmacies under enormous pressure by leveraging their market power in their business relationships to drive up to costs to community pharmacies,” Rep. John Rose, a Republican of Tennessee, told the commission Tuesday.
He continued, “I applaud any effort to bring desperately needed transparency to PBM practices and strongly urge the FTC to utilize every tool and resource available to aggressively collect information on PBMs and their anti-competitive behavior.”
Independent pharmacies have traditionally relied on profits from selling generic drugs as their main source of revenue, according to a Commonwealth Fund report, but PBM consolidation over the past decade has resulted in lower reimbursements.
The impact that PBMs play in rising drug prices has been an even bigger concern to policy makers though. PBMs receive rebates from drug manufacturers in exchange for giving their drug preferred formulary placement. Studies have shown rising rebates, demanded by PBMs, are associated with rising list prices.
The Trump administration proposed a rule that would have eliminated rebates, but it doesn’t take effect until next year.
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