NEW YORK, July 10 (Bernama-Xinhua) -- The US Federal Trade Commission (FTC) criticised pharmacy benefit managers in a 71-page report on Tuesday, stating that "these powerful middlemen may be profiting by inflating drug costs and squeezing Main Street pharmacies", reported Xinhua.
The FTC's report outlined various ways benefit managers seem to be inflating prescription drug costs. One key example highlighted is the companies' affiliated pharmacies, including warehouse-based operations that mail prescriptions to patients.
The agency examined two generic cancer drugs and found that benefit managers often paid their pharmacies much more than it would cost to buy those drugs from a wholesaler. The practice translated into nearly US$1.6 billion in revenue over less than three years for the biggest three conglomerates, according to the report.
The three largest benefit managers -- CVS Health's Caremark, Cigna's Express Scripts, and UnitedHealth Group's Optum Rx -- collectively process roughly 80 per cent of prescriptions in the US.
Hired by employers and government health insurance programmes like Medicare, US benefit managers are responsible for negotiating prices with drug makers, paying pharmacies, and helping decide which drugs are available and at what cost to patients.
"Benefit managers are supposed to save everyone money. But in recent years, the industry has grown more consolidated and has taken more control over how patients get their medicines, in a shift that critics say contributes to driving up drug costs," said The New York Times (NYT) in an article about the report.
Benefit managers defend their business practices, saying they save money for employers, governments, and patients. They say that their scale gives them crucial leverage to take on the real culprit of high drug prices, pharmaceutical companies.
They say they are simply being frugal with their clients' money when they pay outside pharmacies low rates to reimburse them for buying and dispensing medications.
In a statement on Tuesday, agency chair Lina Khan said the agency's inquiry had shown "how dominant pharmacy benefit managers can hike the cost of drugs, including overcharging patients for cancer drugs."
She went on to say that the agency found evidence of "how benefit managers can squeeze independent pharmacies that many Americans -- especially those in rural communities -- depend on for essential care."
The FTC has so far stopped short of bringing a lawsuit or other enforcement action against a benefit manager. However, the industry fears that the report could lead to a formal investigation into its practices or to a lawsuit accusing benefit managers of anticompetitive conduct. The agency's findings could also fuel legislative efforts in Congress and the states to impose limits on the industry.
--BERNAMA-XINHUA
