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Published on Wednesday, September 15, 2021

Break up PBM oligopolies, APhA tells FTC

WASHINGTON, DC— Vertically merged pharmacy benefit managers (PBMs) use their highly concentrated market power to dominate, deceive, and maybe even defraud, American Pharmacists Association (APhA) CEO and Executive Vice President Scott Knoer told Federal Trade Commission (FTC) leaders at a roundtable today. It’s time for the FTC to break up these massive conglomerates, he said.

Knoer told the FTC that three PBMs process 75% of prescription drug claims; they operate their own mail-service, specialty, and retail pharmacies; and increasingly, they vertically merge with insurance companies. The consolidation has created oligopolies that engage in destructive, anticompetitive conduct, he said.

FTC took a positive step forward when it approved resolutions to investigate the unlawful business practices of vertically merged PBMs, Knoer said in his remarks. He also thanked the commission for today’s vote to rescind 2020 vertical merger guidance that pharmacy groups warned did not go far enough.

Today Knoer asked the commission to act decisively to end abuses that harm pharmacies, patients, and communities. Anticompetitive PBM practices put pharmacies out of business, Knoer said, and create “pharmacy deserts” in minority and underserved communities—where the neighborhood pharmacy may be the only health care provider for miles.

Knoer said vertically merged PBMs also obscure, manipulate, and inflate the cost of drugs by using “fake list prices” to reimburse medications, even though the list prices have no basis in actual acquisition costs. That’s a deceptive trade practice that harms stakeholders, he said.

Knoer noted that PBMs also target patients with chronic conditions and force them to use PBM-owned specialty, mail-order, or retail pharmacies. Critics of PBMs have long asserted that the conglomerates’ self-dealing takes away patients’ option to continue working with pharmacists they trust and who know them and their health needs.

Knoer strongly urged FTC break up the conglomerates by requiring the three largest PBMs divest from their insurer, pharmacy, specialty pharmacy, and provider services. This will restore competition in each of these marketplaces, he stated. He also urged FTC to conduct a retrospective analysis of consolidation among PBMs to measure the effectiveness of past enforcement and the impact on downstream health care costs.

 

About the American Pharmacists Association

The American Pharmacists Association is the only organization advancing the entire pharmacy profession. Our expert staff, and strong volunteer leadership, including many experienced pharmacists, allow us to deliver vital leadership to help pharmacists, pharmaceutical scientists, student pharmacists and pharmacy technicians find success and satisfaction in their work, while advocating for changes that benefit them, their patients and their communities. For more information, please visit www.pharmacist.com.

 

CONTACT: Frank Fortin

202.223.7189; ffortin@aphanet.org

 

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