Federal Trade Commission Report Finds Pharmacy Benefit Managers Inflating Drug Prices, Urges Policy Action

The Federal Trade Commission (FTC) has released its second interim staff report detailing how pharmacy benefit managers (PBMs) have significantly marked up the prices of specialty generic drugs, including those used to treat cancer and HIV, according to a press release from the FTC.

The report specifically examines the practices of the “Big 3” PBMs: Caremark Rx LLC (CVS), Express Scripts Inc (ESI), and OptumRx Inc. Between 2017 and 2022, these markups generated more than $7.3 billion in excess revenue. During this period, patient and health plan costs for these medications grew at a compound annual rate of 21% for commercial claims and 14% to 15% for Medicare Part D claims.

FTC Chair Lina Khan emphasized the urgency of addressing these pricing practices, stating, “The FTC should keep using its tools to investigate practices that may inflate drug costs, squeeze independent pharmacies, and deprive Americans of affordable, accessible healthcare—and should act swiftly to stop any illegal conduct.”

The latest report builds on the agency’s July 2024 findings, which initially examined just 2 specialty generic drugs. This new analysis broadens the scope to 51 medications, encompassing treatments for multiple sclerosis, leukemia, and kidney disease. The report also reveals that PBMs reimbursed their own affiliated pharmacies at higher rates than independent ones for nearly every specialty generic drug analyzed.

The investigation uncovered that PBMs may be steering the most profitable prescriptions to their own pharmacies while limiting access to unaffiliated competitors. In addition, spread pricing—a practice where PBMs charge health plans more for a drug than they reimburse pharmacies—generated another $1.4 billion in estimated income for the Big 3. While PBMs argue that their role helps negotiate lower drug prices, the commission’s report suggests their business practices contribute to rising drug costs rather than reducing them.

The commission remains committed to providing updates as it continues its ongoing study of the PBM industry, with the aim of ensuring fair practices and affordable access to critical medications for all Americans.

Reference

Federal Trade Commission. FTC Releases Second Interim Staff Report on Prescription Drug Middlemen. Press release. Published January 14, 2025. Accessed February 11, 2025. https://www.ftc.gov/news-events/news/press-releases/2025/01/ftc-releases-second-interim-staff-report-prescription-drug-middlemen