In the debate over the high cost of prescription drugs, pharmacy benefit managers are hotly contested. PBMs, the middlemen in many prescription drug transactions, say they help keep costs from being even higher.
Critics, on the other hand, claim PBMs add on unnecessary costs and make drugs even more expensive.
The Federal Trade Commission has weighed in on the issue, saying the three largest PBMs made more than $7.3 billion over the last five years by marking up the prices of generic drugs used to treat cancer, HIV and other diseases.
The FTC has singled out CVS Caremark, Express Scripts and OptumRx, accusing the companies of driving up prescription costs for consumers. Issue just a week before the end of the Biden administration, the FTC report is the strongest statement yet that holds PBMs accountable for high drug prices, an issue the incoming administration has vowed to address.
Big mark-ups
The report focuses specifically on generic “specialty” drugs that treat specific chronic diseases. The report claims that PBMs marked up prices for specialty generic drugs by hundreds and sometimes thousands of percent over their estimated acquisition costs from 2017 and 2022, noting that spending on these drugs more than doubled from $113 billion in 2016 to $237 billion in 2023. The report says there is no reason these drugs should have increased in cost by this much.
“Historically, specialty drugs were characterized by their need for special handling and administration,” the report’s authors wrote. “This is no longer necessarily the case. There is no standard definition for a specialty drug, and today specialty drugs may be characterized by a variety of factors, including their high cost.”
The report found that most of the highly marked up drugs were sold at pharmacies that were affiliated with the PBMs. The report also said that the three companies cited in the report almost always reimbursed their affiliated pharmacies at a higher rate for the drugs than unaffiliated pharmacies.
PBMS have pushed back against the FTC’s criticism. In September, ExpressScripts sued the FTC, saying a previous critical report was filled with "unsupported innuendo."