FTC Releases Second Interim Report on Prescription Drug Middlemen

The Federal Trade Commission (FTC) published its second interim staff report on the prescription drug middlemen industry in early 2025. The report focuses on pharmacy benefits managers’ (PBMs’) influence over specialty generic drugs. The report analyzed all specialty generic drugs dispensed from 2017 to 2022 for members of commercial health plans and Medicare Part D drug plans managed by the big 3 PBMs. This includes an analysis of 51 specialty generic drugs which include the generic versions of Ampyra (used to treat multiple sclerosis), Gleevac (used to treat leukemia), Sensipar (used to treat renal disease), and Myfortic (used by transplant recipients).

Key Findings

The latest report revealed that the 3 big PBMs—Caremark, Express Scripts, and OptumRx—significantly marked up the prices of numerous specialty generic drugs by as much as hundreds or thousands of percent. These drugs are used to treat cancer, HIV, and other serious conditions. The PBMs also reimbursed their affiliate pharmacies at higher rates than they paid unaffiliated pharmacies on nearly every specialty generic drug.

Findings also revealed that dispensing patterns suggest that the big 3 PBMs may be steering highly profitable prescriptions to their own affiliated pharmacies, away from unaffiliated pharmacies.

The report uncovered that the 3 PBMs generated over $7.3 billion in dispensing revenue in excess of their estimated acquisition cost, as measured by the National Average Drug Acquisition Cost (NADAC). PBM-affiliated pharmacy dispensing revenue in excess of NADAC increased dramatically at a compound annual growth rate of 42% from 2017 to 2021. The top 10 specialty generic medications generated $6.2 billion of dispensing revenue in excess of NADAC.

Other findings showed that the PBMs had also generated an estimated $1.4 billion in income from spread pricing—billing plan sponsor clients more than they reimbursed pharmacies for the drugs.

This second interim report builds on the report issued by the FTC in July 2024, which revealed that pharmacies affiliated with the 3 big PBMs received 68% of the dispensing revenue generated by specialty drugs in 2023, up from 54% in 2016. The current report looked at a broader set of specialty generic drugs (compared with the 2 specialty generic drugs analyzed in the July 2024 report) and concluded that the big 3 PBMs imposed significant markups on a wide variety of generic specialty medications.

FTC Speaks

“FTC staff have found that the Big 3 PBMs are charging enormous markups on dozens of lifesaving drugs,” said Hannah Garden-Monheit, director of the FTC’s Office of Policy Planning in a press release. “We also found that this problem is growing at an alarming rate, which means there is an urgent need for policymakers to address it.”

“The FTC staff’s second interim report finds that the three major pharmacy benefit managers hiked costs for a wide range of lifesaving drugs, including medications to treat heart disease and cancer,” said FTC chair Lina M. Khan in a press release. “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 FTC study into PBMs is ongoing, and future reports from the Commission are expected.

Reference

FTC releases second interim staff report on prescription drug middlemen. Press release. Federal Trade Commission. Published January 14, 2025. Accessed March 27, 2025. https://www.ftc.gov/news-events/news/press-releases/2025/01/ftc-releases-second-interim-staff-report-prescription-drug-middlemen