FTC Interim Report Highlights PBM Practices: A Call to Action for Independent Pharmacies

On July 9, 2024, the Federal Trade Commission (FTC) released an interim staff report titled “Pharmacy Benefit Managers: The Powerful Middlemen Inflating Drug Costs and Squeezing Main Street Pharmacies.” This report, a result of a two-year investigation, sheds light on the practices of Pharmacy Benefit Managers (PBMs) and their impact on drug costs and independent pharmacies.

The FTC’s interim report reveals several concerning practices by PBMs:

1. Favoritism Towards Affiliated Pharmacies: PBMs favor their own pharmacies, which can drive up drug costs for patients. This practice often results in higher payments to PBM-affiliated pharmacies compared to unaffiliated ones.
2. Exclusion of Cheaper Generics: PBMs and drug manufacturers sometimes exclude cheaper generic drugs in favor of higher rebates from brand-name drugs1. This not only increases costs for patients but also limits the options available to them.
3. Opaque Payment Structures: The report highlights that rates in PBM contracts with independent pharmacies often do not clearly reflect the amount the pharmacy will ultimately be paid. This lack of transparency can make it difficult for independent pharmacies to manage their finances effectively.
4. Steering Patients Away from Independent Pharmacies: PBMs may be steering patients to their affiliated pharmacies and away from smaller, independent pharmacies. This practice undermines the sustainability of independent pharmacies and limits patient choice.

The timing of the FTC report is significant as the US House Oversight and Accountability Committee held a hearing on July 23, 2024, to further investigate PBM practices. Executives from CVS Caremark, Express Scripts, and OptumRx are expected to testify.

During the hearing, several key points were discussed:

• Testimonies from PBM Executives: Executives from major PBMs were questioned about their business practices and the impact on drug prices and independent pharmacies.
• Calls for Greater Transparency: Lawmakers emphasized the need for more transparent PBM practices to ensure fair competition and protect consumers.
• Potential Legislative Actions: The committee discussed possible legislative measures to regulate PBM practices and ensure fair treatment of independent pharmacies.
  To view highlights of the House Oversight meeting checkout the hearing wrap up here for key takeaways and member highlights.

For independent pharmacies, the FTC’s interim report and the House Oversight Committee hearing underscore the urgent need for greater transparency and fairness in PBM practices. As a member of the Independent Pharmacy Cooperative (IPC), it is crucial to stay informed about these developments and advocate for policies that support the sustainability of independent pharmacies.

The findings highlight several key implications:

• Financial Impact: Muddy payment structures and favoritism towards PBM-affiliated pharmacies can significantly impact the financial health of independent pharmacies.
• Patient Relationships: Steering patients away from independent pharmacies can erode the trust and relationships built with local communities.
• Advocacy and Action: Independent pharmacies must actively engage in advocacy efforts to push for fairer PBM practices and protect their businesses.

While the FTC’s interim report shines a light on the practices of PBMs and their effects on independent pharmacies, we must not overlook the deep impact these practices have on patients. When PBMs favor their own affiliated pharmacies, patients may face limited choices and higher costs for essential medications. The exclusion of cheaper generic drugs in favor of brand-name drugs further exacerbates the financial burden on patients.

Imagine a patient who relies on a local independent pharmacy for personalized care, suddenly directed elsewhere due to PBM steering. These practices not only compromise patient trust but also jeopardize their well-being. As community pharmacy professionals, we must advocate for fairer PBM practices to ensure that patients receive the quality care they deserve. Join us in the “Finish the Fight” campaign, and let your voice be heard—because patients’ health should never be compromised by opaque middlemen.

IPC, is participating with the National Community Pharmacists Association (NCPA), is participating in the “Finish the Fight” campaign. This campaign seeks to rally community pharmacy professionals and their patients to make their voices heard with their federal legislative officials.

We urge all IPC members and affiliates to participate in this campaign by:

• Contacting Your Representatives: Reach out to your federal legislative officials and express your support for PBM reform.
• Engaging Your Patients: Encourage your patients to join the campaign and share their experiences with PBM practices.
• Spreading the Word: Use the campaign resources provided by IPC and NCPA to raise awareness and drive action within your community.

Together, we can make a difference and ensure that independent pharmacies remain a vital part of our healthcare system. Let’s finish the fight for fair PBM practices and protect the future of independent pharmacies.