The Register Citizen (Torrington, CT)
Feds to probe Cigna, other big prescription benefits firms
The Federal Trade Commission announced this week that it would investigate the impact of the six largest prescription drug benefit management companies on access and affordability, an inquiry that would include Bloomfield based Cigna’s Express Scripts.
FTC officials said in a news release that the investigation into drug “middlemen” would address their concerns about the influence of the pharmacy benefit managers, known as PBMs, given the key roles that PBMs play in negotiating rebates and fees with drug manufacturers.
PBMs also create lists of covered drugs, known as formularies, and related policies for prescribing and reimbursing. FTC asserted in its announcement that many PBM operations “depend on highly complicated, opaque contractual relationships that are difficult or impossible to understand for patients and independent businesses across the prescription drug system.”
“Although many people have never heard of pharmacy benefit managers, these powerful middlemen have enormous influence over the U.S. prescription drug system,” FTC Chairwoman Lina Khan said in a written release. “This study will shine a light on these companies’ practices and their impact on pharmacies, payers, doctors and patients.”
FTC officials also cited the power that the largest PBMs derived from being “vertically integrated” with the largest health insurance companies and wholly owned mail order and specialty pharmacies. In 2018, Express Scripts was acquired for $67 billion by Cigna, one of the world’s largest health insurance companies, which ranked No. 12 on this year’s Fortune 500 list. At the end of the first quarter of 2022, Cigna had about 107 million pharmacy customers.
“We look forward to working cooperatively with the Federal Trade Commission to share information about our mission to ensure Americans have safe and affordable access to medications they need,” Express Scripts said in a statement.
In addition to Express Scripts, the FTC said it would also send “compulsory orders” for information to CVS Caremark, OptumRx, Humana, Prime Therapeutics and MedImpact Healthcare Systems. The companies would have to respond within 90 days of receiving the orders.
Woonsocket, R.I. -headquartered CVS is the parent company of Hartford-based health insurance giant Aetna.
PBM advocates defended the companies under investigation.
“We are confident that any examination of pharmacy benefit managers, PBMs, will validate that PBMs are reducing prescription drug costs for consumers,” JC Scott, CEO and president of the Pharmaceutical Care Management Association, the national association that represents PBMs, said in a statement. “PBMs are the only member of the prescription drug supply and payment chain working to lower drug costs.”
Scott added that, “Drug manufacturer price-setting is the root cause of high drug costs. The most effective study of issues around drug costs for consumers would examine the entire supply chain. PBMs are holding drug companies accountable by negotiating the lowest possible cost on behalf of consumers and by driving and delivering local competition that consumers are demanding.”
The FTC, which approved sending the orders in a 5-0 vote, said the inquiry would focus on practices that have drawn scrutiny in recent years, including:
⏩ Fees and clawbacks charged to unaffiliated pharmacies
⏩ Steering of patients toward PBM-owned pharmacies
⏩ Potentially unfair audits of independent pharmacies
⏩ “Complicated and opaque” methods to determine pharmacy reimbursement
⏩ Requirements for prior authorizations and other restrictions
⏩ The use of specialty drug lists and related specialty drug policies
⏩ The impact of drug manufacturers’ rebates and fees on formulary design and the costs of prescription drugs to payers and patients
FTC officials also said that the inquiry would “build on the significant public record” developed in response to the request for information about PBMs that the agency launched on Feb. 24. So far, the agency has received more than 24,000 public comments.
Efforts to lower prescription drug costs have garnered bipartisan support in Congress and in many state legislatures. A number of them are included in President Joe Biden’s “Build Back Better” plan, but the voluminous legislative package has foundered as a result of opposition from Republicans and some holdout Democrats.
The Biden administration’s proposals include capping out-of-pocket medication expenditures for Medicare recipients at $2,000 per year and insulin at $35 per month. In addition, Medicare would be allowed to negotiate prices for a limited amount of prescription drugs, and drugmakers would have to pay rebates if they increase costs faster than inflation.