The three largest pharmaceutical middlemen have inflated the cost of many life-saving drugs by billions of dollars in recent years, the Federal Trade Commission said in a report Tuesday.
The major pharmacy benefit managers (PBMs) – CVS Health’s Caremark Rx, Cigna’s Express Scripts and UnitedHealth Group’s OptumRx – generated about $7.3 billion from price increases over about five years starting in 2017, the FTC said.
“Excessive” price increases have affected generic drugs used to treat heart disease, HIV and cancer, among other conditions, with some increases exceeding 1,000% of the national average cost of acquiring the drugs, the commission said .
The FTC also said these three big health care companies – which it says administer 80% of all prescriptions in the United States – are inflating drug prices “at an alarming rate, meaning it is urgently for policy makers to tackle this problem. »
The commission has for years raised antitrust concerns about the market dominance and pricing practices of these companies, particularly in light of the fact that large insurers own large pharmaceutical middlemen.
Tuesday’s findings follow a PBM report released by the FTC last year, which characterized the Big Three and their next-largest rivals as “enormous health care conglomerates capable of exercising vast control over immense parts of the health sector.
Some of the highest markups on drugs were “hundreds and thousands of percent,” according to Tuesday’s report, which highlights how profitable specialty drugs have become for the three major PBMs. Cancer drugs alone accounted for nearly half of the $7.3 billion, the commission wrote, with multiple sclerosis drugs accounting for another 25%.
The distribution of highly marked-up specialty drugs represented a massive revenue source for companies in 2021, the FTC found. Out of tens of thousands of drugs dispensed, the top 10 specialty generics alone accounted for nearly 11% of the companies’ pharmaceutical operating income that year, the agency estimated. Of the 51 drugs analyzed by the agency, the Big Three’s price markup revenues fell from $522 million in 2017 to $2.1 billion in 2021, according to the report.
CVS Health said in a statement that “it is inappropriate and misleading to draw broad conclusions from hand-picked ‘generic specialty’ outliers” and that the company’s “top priority is to make healthcare more affordable health care.
OptumRx said it helped eligible patients save $1.3 billion last year and estimated that the median payment for those patients was $5. Express Scripts said the FTC report contained “misleading conclusions.”
The report marks one of the final actions taken by the commission under the Biden administration. President-elect Donald Trump named Andrew Ferguson, one of the agency’s five commissioners, to succeed Chairman Lina Khan, a move widely expected to bring much more business-friendly policies. However, the first Trump administration made several efforts to reduce the cost of prescription drugs.
Tuesday’s report, which contains the most detailed government findings to date on PBM drug markups, suggests that large PBMs “may direct these prescriptions to their own affiliated pharmacies.” Researchers and advocates have been publishing reports on specialty drug markups for years, saying pharmaceutical middlemen are a primary culprit in the high prices Americans pay for their medications.
The commission’s first investigative report on PBMs, released in July, found that the largest of them “profit at the expense of patients by inflating drug costs and putting pressure on high street pharmacies “. That report documented markups on two specialty cancer drugs exceeding 1,000%, moves that generated hundreds of millions of dollars for their affiliated pharmacies.
Express Scripts sued the commission two months after the first report, arguing that regulators made unsubstantiated, false and biased claims about the industry. Three days later, the FTC sued Express Scripts and the two other major PBMs, alleging anticompetitive practices that artificially inflated insulin prices. All three companies disputed the accusations.
The FTC filed a motion to dismiss the Express Scripts case last month, although the judge has yet to rule on it. The agency’s lawsuit against the PBMs is ongoing.