Government Agency to Investigate Cause of Higher Drug Costs

Government Agency to Investigate Cause of Higher Drug Costs

Pharmacy benefit managers, or PBMs, are companies that manage prescription drug benefits on behalf of health insurers, Medicare Part D drug plans, large employers, and other payers. By negotiating with drug manufacturers and pharmacies to control drug spending, PBMs have a significant behind-the-scenes impact in determining total drug costs for insurers, shaping patients’ access to medications, and determining how much pharmacies are paid.

PBMs have faced growing scrutiny about their role in rising prescription drug costs and spending. In fact, there is a major war going on in Washington between PMBs and the big pharmacy manufacturers about whose fault higher drug prices are.

High drug rebates that PBMs require from drug makers may violate federal competition laws if they stifle patient access, according to a policy statement adopted unanimously by the Federal Trade Commission (FTC) last week.

The FTC voted to issue a document outlining how it will use existing competition and consumer protection laws to examine rebates and fees paid by drug manufacturers to PBMs. The FTC said it plans to look at whether these payments limit patient access to insulin and other drug products.

The commissioners framed the policy statement as just one component of their broader examination into whether practices by entities involved in the US pharmaceutical distribution chain are resulting in higher drug costs for Americans, especially those with diabetes and other conditions in need of easy access to continuous, long-term treatment.

TSCL is pleased there will be another investigation about why drug prices are so high and we continue to push Congress to pass legislation this year that would result in lower drug prices.  In addition, we note that this new investigation by the FTC could result in measures that might lower drug prices by using existing laws, even if Congress can’t manage to pass needed legislation this year.