FTC’s inquiry of PBMs won’t lower prescription drug costs

I recently had the opportunity to participate in a listening forum at the Federal Trade Commission (FTC) on competition in the health care industry where I shared my thoughts on what needs to be done to make prescription drugs more affordable — a goal we firmly support. During the session, I also expressed my concern that the FTC seems to be choosing to single out the only actors in the pharmaceutical supply chain whose fundamental role is to negotiate lower drug prices for patients — pharmacy benefit managers, PBMs. I encouraged the commissioners to seek to understand the broader prescription drug marketplace with a focus on what ultimately best serves consumers. 

More than eight in 10 Americans say the cost of prescription drugs is unreasonable, according to the Kaiser Family Foundation. Yet importantly, nearly 70 percent of those same Americans say affording their prescriptions is “easy.” What explains this dissonance between significant concerns with cost and feelings that those concerns aren’t personally financially impactful? A large part of the answer is that PBMs have negotiated discounts directly with drugmakers and pharmacies to reduce drug costs significantly for patients. 

Let’s be clear: PBMs are not opposed to the FTC studying our industry. We simply believe the right course of action for the commission would be to broaden the scope of a study to look at the entire prescription drug supply and payment chain holistically. The objective should be to understand the role of every actor in our current system and the impact of each on consumers.  

I am confident that any FTC study on the prescription drug supply and payment chain will confirm that PBMs are fulfilling their primary mission to lower prescription drug costs for consumers and health plan sponsors, as prior studies by the FTC have confirmed. Unfortunately, the commission’s wording in its request for information on PBM interactions with pharmacies suggests that it may craft a study that favors and seeks to protect one industry from marketplace competition over another, instead of studying the broader economic dynamics driving drug costs higher and what it all means for consumers.  

It is often taken as a given that independent pharmacies are closing in droves. That, however, is inaccurate, and in fact, the independent pharmacy market is a stable one. According to data from the National Council for Prescription Drug Programs, over the last 10 years, the number of independent pharmacies increased by 1,719 stores or 8 percent, and during the last five years, the number of independent pharmacies has remained steady, with small fluctuations in the number of stores each year.  

There’s widespread agreement throughout the health care industry that something should be done to make prescription drugs more affordable, and similarly widespread disagreement about exactly what that something should be. When it comes to the list price of drugs, the reality is that drugmakers alone are responsible for setting and raising prices. Frequent price hikes on brand-name drugs are a common and harmful practice deployed by some of the largest and most well-known companies in America — just ask the Congressional Budget Office. PBMs, on the other hand, are the only entity in the health care system dedicated to lowering patient prescription costs, helping reduce drug costs by nearly $1,000 per patient per year.

In Medicare Part D, PBM-negotiated rebates accounted for $36 billion in savings in 2020, according to the 2021 Medicare Trustees Report. These rebates are essential for maintaining the consistently affordable premiums in the program, which create significant savings for seniors. PBM care coordination efforts are also increasing drug adherence. The percentage of patients staying on their drugs has risen over time as PBMs have incentivized pharmacies to encourage patients to seek timely refills. 

PBMs play a critical and unique role in the health care system: holding down the cost of prescription drugs, increasing patient access to timely, quality pharmacy care, and increasing medication adherence. In an age of soaring inflation and prices, blaming PBMs for high prescription drug costs is like blaming your local grocer for the rising cost of milk and meat.   

The FTC should broaden its approach beyond studying PBMs to look at the larger supply chain to achieve the shared objective of lowering drug costs for patients.  

JC Scott is the President & CEO of the Pharmaceutical Care Management Association (PCMA), the association representing America’s pharmacy benefit managers.