On July 9, 2024, the Federal Trade Commission (“FTC”) voted 4-1 (with Commissioner Melissa Holyoak dissenting) to release an Interim Staff Report (the “Interim Report”) entitled: Pharmacy Benefit Managers: The Powerful Middlemen Inflating Drug Costs and Squeezing Main Street Pharmacies. The Interim Report describes what FTC staff has uncovered to date during a two-year investigation of the country’s six largest pharmacy benefit managers (“PBMs”). The agency claims that vertical integration and market consolidation have allowed a few PBMs to exert power over drugs and consumer prices as well as unaffiliated pharmacies. The Interim Report also attempts to explain some of the complexities in how PBMs operate within the healthcare industry that may lead to high drug costs, including the use of specialty prescription designations, steering mechanisms, and preferential reimbursement rates for PBM-affiliated pharmacies. While the Interim Report states that it principally focuses on PBMs’ relationships with pharmacies rather than drug manufacturers, it includes a discussion about rebate contracts between drug manufacturers and PBMs that the report suggests may impede access to generic and biosimilars.
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