Comment Letter

Neurosurgery Raises Concern with Consolidation of PBMs

  • Drugs and Devices

RE: Solicitation for Public Comments on the Business Practices of Pharmacy Benefit Managers and Their Impact on Independent Pharmacies and Consumers (FTC-2022-0015-0001)

To Whom It May Concern:

The Alliance of Specialty Medicine (the “Alliance”) represents more than 100,000 specialty physicians and is deeply committed to improving access to specialty medical care through the advancement of sound health policy. We write to share feedback in response to the Federal Trade Commission’s Request for Information (RFI) related to the pharmacy benefit manager (PBM) industry.

The questions posed by the RFI acknowledge the fact that the harms caused by horizontal and vertical consolidation in the PBM industry are not limited to the pharmacy community. Indeed, patients in need of expensive medications have not only seen community pharmacy access points disappear, but they have also become entirely commodified in the contracts between drug companies and PBMs.

The intense consolidation in the PBM industry over the last decade has helped create this situation. Three PBMs control almost 80% of U.S. prescriptions, a number that may be even greater when one accounts for the fact that smaller PBMs often contract services to “the Big Three.” In effect, PBMs have become the primary gatekeepers to commercial pharmaceutical markets: a drug company must secure formulary access or forfeit meaningful uptake of its product.

This arrangement could benefit patients if the gatekeepers were working to their benefit, but the incentives inherent in the price concession system virtually ensure the opposite. Patients’ cost-sharing is based on list prices, which rise in tandem with price concessions.1 Additionally, patients – including stable patients – are steered to the product manufactured by the company that won that year’s price concession contest. The price concessions are sufficient to reduce the list price by more than half on many medications.2 That fact alone illustrates the deep disconnect in the system, since patients never see a commensurate 50% reduction in their out-of-pocket drug costs. In fact, very few patients report any reduction and are instead faced with increasing out-of-pocket costs every year. This is why the Office of the Inspector General finalized a rule to remove the safe harbor from antikickback law for rebates from drug companies to PBMs unless these rebates are passed through to patients. The Alliance supported that proposal and is eager for its implementation.

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