ph
Recent developments suggest that significant efforts to curb abuses and harmful practices of Pharmacy Benefit Managers (PBMs) may be on the horizon. Both the Federal Trade Commission (FTC) and major media outlets have increased scrutiny on PBM practices, highlighting the urgent need for reform.
On July 9, 2024, the FTC issued an interim report on PBMs, revealing significant market concentration and vertical integration among these middlemen, who now manage nearly 95% of prescriptions in the U.S. The report details how PBMs inflate drug costs, restrict access to lower-cost drugs, and impose unfair contract terms on independent pharmacies. These practices result in higher prices for patients and financial strain on independent pharmacies, especially in rural areas. The FTC emphasizes the need for greater transparency and accountability in the PBM industry.
In conjunction with the FTC’s report, the media has also been shedding light on these issues. On June 21, 2024, The New York Times published an article titled “The Middlemen: The Opaque Industry Secretly Inflating Prices for Prescription Drugs.” The article outlines numerous examples of PBM practices that negatively impact consumers, pharmacies, and other healthcare stakeholders. It discusses how PBMs push expensive drugs, impose hidden fees and rebates, overcharge employers and governments, and delay or prevent access to medications, all of which contribute to inflated insurance premiums and taxes. The article also highlights how PBMs drive independent pharmacies out of business and the conflicts of interest within the system, making it difficult to untangle their secretive web of actions.
Other news outlets, including Forbes and Politico, have also reported on the FTC’s interim report and PBM practices, indicating a growing awareness and concern over these issues.
Despite bipartisan support, finding the right federal legislative path to effectively regulate PBMs and curb their abuses has been challenging. There is wide disagreement on what reforms to undertake and their potential effects. Industry groups representing PBMs argue that reforms would have minimal impact on drug prices and patient access. However, there is widespread consensus that certain PBM practices harm consumers, pharmacies, employers, and governments. PBMs are highly resourceful and adept at circumventing state and federal regulatory efforts, backed by impressive lobbying operations. For example, it is widely believed that relentless lobbying efforts led to the ex-governor’s veto of PBM laws and the Department of Financial Services’ withdrawal of proposed sweeping regulations of PBMs.
It appears, however, that decisive action at the federal level may be imminent, with media coverage and the FTC report serving as indicators of what’s to come. Earlier, House Committee on Oversight and Accountability Chairman James Comer (R-Ky.) launched an investigation into PBMs’ role in rising healthcare costs. The hearing, titled “The Role of Pharmacy Benefit Managers in Prescription Drug Markets Part III: Transparency and Accountability,” will take place on July 23, 2024. The hearing will be open to the public and press and will be livestreamed online at https://oversight.house.gov/.
Whether Congress will enact sweeping reforms or merely cosmetic changes against PBMs remains to be seen. However, it is likely that federal legislative actions against PBMs will occur regardless of the outcome of the 2024 election, given the persistent and bipartisan focus on lowering drug costs.
Attorneys at Sauchik & Giyaur, P.C. are hardened veterans of legal battles with PBMs, having represented hundreds of pharmacies in numerous proceedings involving payment suspensions, withholdings, terminations, and other adverse actions by PBMs against independent pharmacies. We have used innovative strategies and approaches to challenge PBMs and, over the many years of fighting PBMs, advanced new legal theories and adopted new approaches that have since earned us the reputation as trailblazers and experts in this specialized area of law and practice. For legal guidance on PBM practices, or for assistance in dealing with PBMs, contact our healthcare attorneys at 212.668.0200 or info@mdrxlaw.com.