Ongoing federal probes shed light on PBM and insurer practices

The Pharmacy Benefit Manager (PBM) industry continues to face pressure to put an end to the abusive practices that are driving up costs for patients and driving independent pharmacies out of business. This month, the Department of Justice (DOJ) launched a new task force to investigate health care antitrust issues, including looking at consolidation across the industry driven by PBMs, payers and providers.

The DOJ’s latest probe is another example of the increased scrutiny from federal and state regulators, Congress, and others into the anticompetitive practices of middlemen and the ways they are increasing the cost of health care.

Here are a few examples of ongoing federal probes into the PBM industry.

FTC Inquiry into the Six Largest PBMs

In June 2022, the Federal Trade Commission (FTC) launched a federal probe into the anti-competitive business practices of the largest PBMs and their role in driving up health care costs.

According to FTC Chair Lina Khan, the agency “has been flooded with stories suggesting that these middlemen engage in tactics that hike the price of drugs, deprive patients of access to certain medicines, and drive community pharmacies out of business…"

Despite pressure from lawmakers, PBMs have yet to fully comply with the probe. In the face of PBMs’ lack of cooperation with the ongoing FTC probe, the FTC, in partnership with the DOJ and HHS, continues to dig into the business practices of these large, vertically integrated entities with their most recent Request for Information (RFI).

Bipartisan State AGs Call for PBM Reform

A bipartisan group of 39 state Attorneys General (AGs) expressed concerns to Congress that PBMs profit off patients and employers and called for congressional action to “reform PBM practices to curtail their ability to unreasonably raise the price of drugs and to require greater transparency.” State AGs, such as in Ohio and Hawaii, have also filed lawsuits against PBMs and their affiliated entities regarding their anticompetitive behavior.

HHS Watchdog Investigating How PBMs Inflate Drug Prices in Medicare

The Department of Health and Human Services (HHS) Office of Inspector General (OIG) is looking at ways PBMs drive up the cost of medicines in Part D, specifically when the insurer, PBM and pharmacy are all the same company. This follows a WSJ investigation showing PBMs are marking up the price of some generic drugs dispensed at their specialty pharmacies by thousands of dollars and a bipartisan request from U.S. senators.

DOJ Antitrust Investigations

In addition to the new task force on health care monopolies, the DOJ is investigating the anticompetitive practices of UnitedHealth Group – the largest U.S. insurer and operator of the third largest PBM, OptumRX.

Congress and the White House Investigate PBMs

The U.S. Senate, House of Representatives and the White House are all looking under the hood of the PBM business model and the broader aggressive consolidation efforts from health care conglomerates that are harming patients.

Federal and state pressure to hold PBMs and their affiliated corporations accountable only continues to mount, as evidenced by the latest actions from DOJ, among others.

To fix the system and help patients, policymakers must pass reforms that take on the middlemen who are profiting off savings meant for patients, realign incentives in the market, strengthen competition and improve patients’ access to care.