Presidential Viewpoint

BY MICHAEL JACKSON, RPH DANIEL E. BUFFINGTON, PHARMD, MBA, FAPHA

The United States Federal Trade Commission (FTC): Preparing to Study PBM Anticompetitive Practices and Its Impact on Healthcare Practice and Patient Outcomes

The connection between patients, pharmacists, and health insurance companies is often clouded and negatively impacted by companies and software platforms referred to as Pharmacy Benefit Managers (PBM). These unregulated companies apply contractual mechanisms that regulate the cost and access to medications, and many even create unsupportable chargebacks or penalties as part of more global profiteering across healthcare entities.

Many of their unscrupulous practices include withholding future payments, even after medications have been dispensed and payment claims have been adjudicated. This practice is built into their contracts, and it financially hurts healthcare providers and patients. These fees are modeled after a program implemented by the Centers for Medicare and Medicaid Services (CMS) called “Direct” and “Indirect” Remuneration (DIR) fees. However, even CMS has called out commercial PBMs for misapplication and overutilization of these fees as unsupported late chargebacks.

States across the country are studying the inappropriate business practices and negative fiscal impact of PBMs and increasing the level of regulatory oversight to apply controls focused on their predatory behaviors. Unregulated and allowed to continue, these PBM practices will continue to increase healthcare costs and create fewer points of access for patients and pharmacists. In many cases, PBMs strive to commandeer prescriptions away from local pharmacists and drive patients to utilize their corporately owned mail-order centers instead.

This produces a break in the pharmacist-patient relationship and increases the risk for adverse outcomes and failure to identify critical medication-related problems that can be identified at the point of care in a pharmacy practice setting.

In 2003, the U.S. Congress urged the

Daniel E. Buffington, PharmD, MBA, FAPhA

Federal Trade Commission (FTC) to investigate and study the trends in PBM practices with the “Medicare Prescription Drug, Improvement, and Modernization Act.” Based on the proliferation of PBM profiteering and predatory

contracting models, there have been further regulatory efforts, through the Prescription Pricing for the People Act of 2021, ” which requires the FTC to study PBMs and evaluate their impact on pharmacy practice and patient care outcomes. In addition, healthcare stakeholders and patient advocates have generated multiple public protests that are helping to drive a sense of urgency for the auditing of dangerous PBM practices.

On February 17, 2022, the FTC held an open commission meeting to review the design and objectives of a proposed PBM study. Unfortunately, the proposed study summary was submitted late on the day prior to the meeting, which did not allow sufficient time to assess the study outline and gauge healthcare stakeholder concerns.

The commission is designed to be comprised of five members but currently operates with four members while awaiting the appointment of the fifth commissioner by the U.S. president. During this meeting, there was compelling testimony from many national healthcare organizations, including American Pharmacists Association (APhA), Community Oncology Alliance (COA), and the American Pharmacy Cooperative (APC). Scott Knoer, EVP/CEO of APhA testified, “While we support a new study, we already have mountains of data from Medicaid and commercial plans on PBMs’ uncompetitive and deceptive trade practices that target patients with chronic conditions and force them to use PBM-owned specialty, mail order, and network pharmacies. The FTC should take action now, follow-the data, and break them up!”

The commission vote was 2-2, expressing the need to ensure that the study is designed properly to aid in making future decisions regarding ways to enhance future PBM regulations. A stalemate at this point should not be interpreted as a setback toward future PBM regulations. Instead, it should be viewed as an opportunity to ensure that the upcoming audit is designed to reveal the diverse ways that PBMs can manipulate and disproportionally divert prescription funding toward their excessive personal gain as opposed to improving healthcare quality and outcomes.

The FTC Chair stated, “I have to say I’m really disappointed by this outcome. I think we’ve now for months been building a record with testimony from both patients and pharmacies alike, underscoring the real urgency and lifeand-death stakes in some instances, of this work. I see this as an area where we have a real moral imperative as an agency to act given the authority that Congress has given us. I think this inquiry is long overdue and just one of the many actions that I hope this agency will undertake in this sector.”

The commissioners who voted “no” on the proposed study also articulated significant support for pursuing a study into PBM practices but were concerned about the short amount of time to prepare for the meeting and want to ensure the proper scope and design of any proposed audit or study. During the closing statements, Commissioner Christine Wilson outlined additional questions that should be answered.

“I certainly have questions I would like answered. How do patient experiences including price, quality, convenience, and access vary depending on whether their prescriptions are dispensed at independent pharmacies or PBM affiliated pharmacies? What factors drive formulary design? What mechanisms do manufacturers use to disincentivize PBMs from placing their rivals on formularies?”

Independent pharmacies are much smaller entities compared to their larger chain pharmacy counterparts. In addition, some PBMs now own larger pharmacies and the fairness of their fee schedules comes into question when discussing how smaller pharmacies are reimbursed in comparison to PBMowned pharmacies. Many independent pharmacy owners are stating that it is becoming increasingly difficult to maintain a competitive business model.

Independent pharmacies are also being selectively disadvantaged by the use of direct and indirect remuneration fees (DIR) or penalties. PBMs have been found setting disparate pricing models for their competitors, typically smaller pharmacies, favoring their own economic advantage. In addition, PBMs often restrict patient access to critical medications and supplies, by limiting their choices of pharmacists and pharmacies. These anti-competitive and monopolistic practices are leading to decreased access to care for patients and economic disadvantages for many pharmacies and pharmacists.

While it seems like a setback for the timely need for a government study into PBM practices, it’s important to note that even the two commission members who voted no at this meeting expressed their support to see a future study designed and completed properly to fully understand the impact of these companies on the patient care outcomes and their potential negative impact on the future viability of pharmacy practice in the United States.

It is imperative for healthcare entities and practitioners to track and support the FTC’s ongoing commitment to implementing a comprehensive study of PBM practices that can reform and remedy the hemorrhaging of essential healthcare funding. It’s time to educate the public and the media about the importance and clinical value of pharmacist-patient relationships and to ensure a fair and equitable healthcare marketplace for providers and patients alike. n