FTC Signals Closer PBM Scrutiny in Policy Statement

A new Federal Trade Commission enforcement policy statement says challenging Pharmacy Benefit Manager conduct that may raise prices and stifle innovation is a top priority of the agency.

The stronger FTC enforcement initiative is coupled with a new inquiry into the competitive impact of the operations and business practices of PBMs.

FTC’s statement claims rebates and fees “may incentivize PBMs and other intermediaries to steer patients to higher-cost drugs over less expensive alternatives…[which] could lead to increased costs for both patients and payers…[and] insulate more expensive drugs from competing with less expensive alternatives.”

The statement highlights that the price of insulin nearly tripled from 2009 to 2017, increasing out-of-pocket costs for American with diabetes.

PBMs view rebates as driving competition among manufacturers and generating savings that benefit both patients and employer health plans.

The policy statement stopped short of saying all rebates and fees are problematic and noted that “negotiating good-faith rebates and fees for legitimate services that increase value to payers and patients” is acceptable.

Outlook: While the policy statement does not bind the FTC to any particular action, that the commission’s statement comes right after its announced inquiry into PBM practices signals a potentially aggressive enforcement approach to the industry. Indeed, FTC Chair Lina Khan said in a separate statement “when we see illegal rebate practices that foreclose competition and raise prescription drug costs for families, we won’t hesitate to bring our full authorities to bear.”