Key Takeaways:
– Three major pharmacy benefit managers marked up generic drug prices by up to several thousand percent.
– The significant markups led to more than $7.3 billion in revenue over the span of five years.
– The U.S. Federal Trade Commission has urged urgent action by policymakers against such practices.
– U.S. Senators Maria Cantwell and Chuck Grassley responded with the Pharmacy Benefit Manager Transparency Act of 2023 aimed at increasing oversight.
Disturbing Markups in Specialty Generic Drug Prices
In a shocking revelation, the U.S. Federal Trade Commission (FTC) disclosed the second part of an investigation into prescription drug pricing. The report unveiled that eminent pharmacy benefit managers (PBMs) substantially upped the prices of specialty generic drugs distributed via their associated pharmacies. The markups varied from hundreds to thousands of percent, underscoring the immediate need for intervention by policymakers.
The Unsettling Findings of The FTC Report
The FTC’s second-phase report scrutinized preeminent consolidated PBMs—CVS Health’s Caremark Rx, Cigna Group’s Express Scripts, and UnitedHealth Group’s OptumRx. Researchers found that these giants excessively marked up two specialty generic cancer drugs, resulting in substantial dispensing revenue bestowed onto their interconnected pharmacies.
Out of all analyzed specialty generic drugs handed out by the ‘Big Three’ PBMs’ affiliated pharmacies, an alarming 63% saw prices inflated by over 100% of their expected procurement cost. Astonishingly, 22% of these drugs saw price hikes of over 1,000%.
A case in point is the pulmonary hypertension drug, tadalafil. In 2022, pharmacies procured this drug at an average price of $27. However, the Big Three PBMs escalated the price by $2,079, meaning their connected pharmacies were receiving an average of $2,106 for a month’s supply of the medication. It corresponds to a mind-boggling markup of 7,736%.
A Call to Action Begins
The FTC is ardently advocating for immediate policy changes to counter such exorbitant markups by PBM giants. The excessive pricing reportedly led PBMs and their linked specialty pharmacies to amass over $7.3 billion in the five years from 2017 to 2022 by dispensing drugs at costs far beyond procurement rates. As these revenues soared, patients, employers, and healthcare plan sponsors faced mounting expenses for medication annually.
The FTC chair, Lina Khan, added weight to this argument. He confirmed that the commission should not only continue to monitor practices that elevate drug costs and exploit independent pharmacies but should also play an active role in swiftly preventing any illegal activities.
What’s in Store for the Future?
As we move forward, the leadership of the FTC is about to change. Andrew Ferguson, as appointed by the incoming Republican U.S. President, will take over the chairmanship without any requirement for Senate confirmation.
Responding to the FTC findings, advocacy groups have added their voice, revealing the blatant profit-motivated tactics by PBM giants. They have highlighted the pressing need for instigative policies that discourage exploitative schemes and promote transparency in the industry. It has prompted U.S. Senators Maria Cantwell and Chuck Grassley to introduce the Pharmacy Benefit Manager Transparency Act of 2023. Aimed at increasing accountability and transparency, the bill seeks to pull back the curtain on deceptive practices that inflate prescription drug costs, concurrently pushing independent pharmacies to the brink of closure.
In conclusion, the FTC report has illuminated an urgent need for a significant policy change within the U.S. healthcare system. It remains to be seen how successful the new Pharmacy Benefit Manager Transparency Act of 2023 will be in fostering transparency, tackling unfair practices and restoring fairness and affordability to healthcare.