FTC: Market Consolidation Allows Middlemen to Hike Drug Prices

The Federal Trade Commission (FTC) has accused pharmacy benefit managers (PBMs) of significantly influencing prescription drug prices through market consolidation. According to the FTC, the three largest PBMs, which manage 79% of U.S. prescription drug claims, have enriched themselves at the expense of smaller pharmacies and consumers by potentially inflating drug costs. The report also highlighted the establishment of group purchasing organizations (PBM GPOs) by these PBMs to negotiate contracts and rebates with drug makers, contributing to the market's concentration.

The FTC's findings indicate that PBMs may be steering patients to their own mail-order pharmacies, sometimes paying as much as 200 times more than rival pharmacies for commonly prescribed cancer drugs. This practice reportedly generated at least $1 billion in excess revenue, leading to increased costs for patients. The agency also noted that these actions could lead to formal investigations or lawsuits accusing PBMs of anticompetitive behavior. Critics argue that PBMs operate in opaque ways, profiting from rebates and fees collected from drugmakers, while the industry defends its practices as cost-saving measures for employers, governments, and patients. The findings have sparked calls for greater regulation and could influence legislative efforts to impose limits on the industry.