January 14, 2025 – A newly released interim report from the Federal Trade Commission (FTC) reveals alarming price markups by pharmacy benefit managers (PBMs) on critical specialty generic drugs, including treatments for cancer, HIV, and other severe health conditions.
The report highlights that the “Big 3” PBMs—Caremark Rx, LLC (CVS), Express Scripts, Inc. (ESI), and OptumRx, Inc.—charged markups of hundreds to thousands of percent on numerous drugs dispensed at their affiliated pharmacies. These practices allowed the companies to rake in over $7.3 billion in revenue beyond the estimated acquisition costs of the drugs between 2017 and 2022.
“The FTC staff’s second interim report finds that the three major pharmacy benefit managers hiked costs for a wide range of lifesaving drugs, including medications to treat heart disease and cancer,” said FTC Chair Lina M. Khan. “We must act swiftly to stop any illegal conduct inflating drug costs and depriving Americans of affordable healthcare.”
Key Findings:
- Significant Markups: PBMs imposed drastic price increases on specialty generics, including critical medications like Gleevec for leukemia and Ampyra for multiple sclerosis.
- Steering Profits: A disproportionate number of high-markup prescriptions were dispensed at PBM-affiliated pharmacies, suggesting potential steering practices.
- Revenue Surges: Revenue from markups exceeded $7.3 billion, with a staggering 42% compound annual growth rate from 2017 to 2021.
- Spread Pricing Income: PBMs reportedly generated an additional $1.4 billion through spread pricing—charging plan sponsors more than pharmacies were reimbursed for drugs.
- Rising Costs for Consumers: Plan sponsor payments for specialty generic drugs soared, with patients contributing $297 million in out-of-pocket costs in 2021 alone.
Hannah Garden-Monheit, Director of the FTC’s Office of Policy Planning, emphasized the urgency of addressing these findings. “This problem is growing at an alarming rate, making it critical for policymakers to take action,” she said.
The FTC’s analysis builds on a July 2024 report, which found that PBM-affiliated pharmacies dominated the specialty drug market, generating 68% of dispensing revenue in 2023. The latest study, encompassing 51 specialty generic drugs and 882 National Drug Codes, underscores the systemic impact of PBM practices on drug affordability and access.
As part of an ongoing investigation, the FTC continues to examine PBMs’ business practices and their implications for competition, healthcare costs, and patient access. The Commission voted unanimously to issue the report.
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