ALEXANDRIA, Va. (June 4, 2021) — The Federal Trade Commission recently released a report about the effects of pharmacy benefit manager “rebate wall” contracting practices on competition in prescription drug markets. Among other observations, the report notes that rebate walls “may give payers strong incentives to block patient access to lower-priced medicines, whereas absent rebates a lower-priced equally effective product would tend to take sales from the higher priced incumbent product.”
The National Community Pharmacists Association has been pushing the FTC to investigate PBM conflicts of interest and vertical integration concerns for years, including when CVS was permitted to acquire Caremark in 2007 and in 2012 when Express Scripts was allowed to buy Medco. In each case, NCPA urged the FTC to stop the transaction. In the case of CVS Caremark, NCPA was successful in lobbying Congress to urge the FTC to review the merger. In the case of ESI-Medco, NCPA and the National Association of Chain Drug Stores sued to block the merger. In both cases, the FTC saw no harm, or not enough, to stop the mergers and waved them through.
NCPA issued the following statement on behalf of CEO B. Douglas Hoey, pharmacist, MBA, reacting to the report:
“For years, the FTC has unfortunately been slow to criticize PBMs or to limit their exploitative endeavors. This agency and others looked away or, at worst, authorized such activities as massive industry consolidation, to the exasperation of small business pharmacists who are squeezed by and have loudly objected to PBM behavior. While unfortunate it has taken this long, it’s good to see the FTC slowly realizing the truth: bigger isn’t always better for consumers, an increasing lack of competition drives up costs, and PBMs won’t stop unless they’re forced to by policymakers or regulators.”
FTC Commissioner Rohit Chopra described how PBMs’ secretive rebate walls effectively function in a statement about the report, also urging the FTC and Congress to take action to address rebate conflicts of interest and investigate whether PBM practices harm patients and independent pharmacists:
“The FTC and Congress must take concrete steps to address the conflicts of interests embedded in the structure of the PBM industry. In addition to problematic rebating practices, we must also examine whether PBMs are engaged in coercive practices that harm patients, independent pharmacists, and public health. In addition to legislative efforts, it will be critical for the FTC to rethink its approach of bringing individual enforcement actions, since this strategy is unlikely to combat these problems in a timely fashion. It would be more effective for the Commission to pursue research and to conduct rulemakings that specify when certain pharmaceutical industry practices, such as PBM rebating, are unlawful under Section 5 of the Federal Trade Commission Act.”
Additionally, the Prescription Pricing for the People Act (S.1388) recently reintroduced by Sens. Chuck Grassley (R-Iowa) and Maria Cantwell (D-Wash.) and supported by NCPA would require the FTC to study the role and recent merger activity of PBMs, including possible anticompetitive behavior and how PBM actions are affecting patients and pharmacies.
Founded in 1898, the National Community Pharmacists Association is the voice for the community pharmacist, representing over 21,000 pharmacies that employ approximately 250,000 individuals nationwide. Community pharmacies are rooted in the communities where they are located and are among America’s most accessible health care providers. To learn more, visit www.ncpa.org.