US FTC finds main pharmacy profit managers inflated drug costs for $7.3 billion acquire

By Ahmed Aboulenein and Amina Niasse

WASHINGTON (Reuters) -The nation’s three largest pharmacy profit managers have considerably marked up the costs of sure medicines, together with for coronary heart illness, most cancers and HIV, at their affiliated pharmacies, the U.S. Federal Commerce Fee stated on Tuesday.

From 2017 to 2022, the businesses — UnitedHealth Group (NYSE:UNH)’s Optum, CVS Well being (NYSE:CVS)’s CVS Caremark and Cigna (NYSE:CI)’s Specific Scripts — marked up costs at their pharmacies by tons of or 1000’s of p.c, netting them $7.3 billion in income in extra of the acquisition prices of the medication, the FTC stated in its second report on the trade.

“The $7.3 billion is the distinction between what they’re reimbursing themselves and what it’s estimated to price them to amass the drug,” an FTC spokesperson informed reporters in a press briefing, including that the determine was “most likely an underestimate.”

Pharmacy profit managers, or PBMs, act as middlemen between drug corporations and customers. They negotiate quantity reductions and charges with drug producers on behalf of employers and well being plans, create lists of medicines which can be lined by insurance coverage, and reimburse pharmacies for prescriptions.

The FTC prioritized testimony from drugmakers and pharmacies, industries that profit from weakening PBMs, stated David Whitrap, vice chairman of exterior affairs at CVS Well being.

An Optum spokesperson stated the corporate lowers the price of medication and had helped sufferers save $1.3 billion in 2024.

A spokesperson for Cigna’s Specific Scripts described the report’s findings as deceptive, saying the calculations are based mostly on a subset of medicines that characterize lower than 2% of what our well being plans spend on medicines in a 12 months.

The report stated dishing out patterns recommended the businesses have been steering extra worthwhile prescriptions, ones marked up greater than $1,000 per prescription, to pharmacies that their mother or father corporations personal.

Additionally they paid these pharmacies greater than unaffiliated pharmacies for practically each drug within the examine, the report stated.

In 2021, affected person out of pocket prices for these medication have been at $279 million, an annual compound improve of 14%-21% since 2017, the report discovered.

The businesses have been producing an extra $1.4 billion over the examine interval from unfold pricing – the follow of billing plan sponsors greater than they reimburse pharmacies for medication.

The FTC sued the three PBMs in September, accusing them of steering diabetes sufferers towards larger priced insulin merchandise with a purpose to reap hundreds of thousands of {dollars} in rebates from drugmakers.

The businesses say the go well with is baseless and defend their practices. CVS, UnitedHealth and Cigna in October requested the FTC to disqualify Chair Linda Khan from the insulin go well with, citing alleged bias towards their pricing mannequin.

“We’re assured that our actions are going to be upheld within the litigation, and we’re not going to be distracted from our obligation to tell the general public and coverage makers by the PBM scare ways,” the FTC spokesperson stated on Tuesday.

Khan’s time period as chair formally expired in September. President-elect Donald Trump shall be inaugurated Jan. 20 and has picked present Commissioner Andrew Ferguson to succeed Khan.

The FTC spokesperson stated it was assured that Ferguson and different Republican commissioners help the FTC’s work on PBMs.