ALEXANDRIA, Va. (June 28, 2021) – The National Community Pharmacists Association congratulated newly-appointed Federal Trade Commission chair Lina Khan, whose public criticism of vertical mergers in technology is music to the ears of independent pharmacists who are being squeezed by a handful of companies.
“NCPA applauds your vigorous review of the antitrust implications of the behaviors of large technology companies on consumers and suggests they are not the only corporate entities exerting oversized influence and engaging in harmful behaviors which have negative impacts on consumers – or in our case – patients,” said NCPA CEO B. Douglas Hoey in a letter to Khan. “NCPA urges you to consider that one of the first things you do as Chair is to review the effects of consolidation and vertical integration for health insurance plans and pharmacy benefit managers (PBMs), and the resulting impact on independent pharmacies and patients, for anticompetitive conduct that have largely evaded scrutiny in recent years.”
Hoey pointed out that the three largest pharmacy benefit managers, all Fortune 15 companies, now control 77 percent of all prescriptions. All three corporate middlemen are owned by, or have financial affiliations with, giant pharmacy chains/mail order pharmacies, and insurance companies. The PBMs are systematically driving small local pharmacies out of business with practices such as patient steering and mandating retroactive price concessions, called pharmacy DIR fees, that have increased in recent years by an astonishing 91,500 percent.
Hoey wrote, “In your review, we are confident you will find that vertical integration endangers the community retail pharmacist, raises drug prices, and harms patients. The recent surge in vertical consolidation among PBMs, pharmacy chains, and insurance companies has essentially created an oligopoly of integrated health care companies controlling nearly all aspects of the health care sector. NCPA believes this consolidation of significant stakeholders and the resulting market power drives much of the anticompetitive behavior within the sector.”
Hoey urged Khan to scrutinize four egregious behaviors: anticompetitive practices, such as take-it-or-leave-it contracts that force small pharmacies to choose between having to accept below-cost reimbursements or keeping their patients; patient steering, where PBMs direct patients to mail order or chain pharmacies owned by their own parent companies; conflicts of interest that allow PBMs to create preferred networks that favor their own pharmacies; and pharmacy deserts, which are local markets where pharmacies have disappeared altogether because of anticompetitive practices.
Hoey made similar arguments in a separate letter submitted Friday to the Multilateral Pharmaceutical Merger Task Force initiated by the FTC and also comprised of its counterpart competition enforcement agencies, the Canadian Competition Bureau, the European Commission Directorate General for Competition, the U.K.’s Competition and Markets Authority, the U.S. Department of Justice Antitrust Division, and offices of state attorneys general. The task force is seeking to identify and explore actionable steps to update the analysis of mergers, study their effects, and address anticompetitive concerns.
“The FTC has a major role to play in restoring fairness and balance to the pharmacy industry,” said Hoey regarding NCPA’s comments. “A market dominated by a handful of monopolies will lead to higher prices, fewer health care providers, and most important, a sub-par health care experience for consumers. That’s a future we cannot risk, especially in view of the crucial health care services local pharmacies are currently providing in the fight against COVID-19. Community pharmacies have tested and vaccinated over 90 million Americans, many of whom do not have access to other health care providers.”
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.