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Pharmacy benefit managers "are raking in billions in excess revenue—$7.3 billion over just five years—while squeezing independent pharmacies and leaving patients and health plan sponsors with skyrocketing costs."
The U.S. Federal Trade Commission on Tuesday published the second part of its investigation into how prescription drug middlemen are marking up the prices of specialty generic drugs dispensed at their affiliated pharmacies by hundreds—and in some cases, thousands—of percent, underscoring what advocates say is the need for urgent action by policymakers.
The FTC's second interim staff report on consolidated pharmacy benefit managers (PBMs) found that the three largest of these middlemen—CVS Health's Caremark Rx, Cigna Group's Express Scripts, and UnitedHealth Group's OptumRx—"marked up two specialty generic cancer drugs by thousands of percent and then paid their affiliated pharmacies hundreds of millions of dollars of dispensing revenue in excess of estimated acquisition costs for each drug annually."
"Of the specialty generic drugs analyzed in this report and dispensed by the 'Big Three' PBMs' affiliated pharmacies for commercial health plan members between 2020 and 2022, 63% were reimbursed at rates marked up by more than 100% over their estimated acquisition cost... while 22% were marked up by more than 1,000%," the report states.
"For the pulmonary hypertension drug tadalafil (generic Adcirca), for example, pharmacies purchased the drug at an average of $27 in 2022, yet the Big Three PBMs marked up the drug by $2,079 and paid their affiliated pharmacies $2,106, on average, for a 30-day supply of the medication on commercial claims," the publication notes. That's a staggering average markup of 7,736%.
"The FTC's second interim report lays bare the blatant profiteering by PBM giants."
"Such significant markups allowed the Big Three PBMs and their affiliated specialty pharmacies to generate more than $7.3 billion in revenue from dispensing drugs in excess of the drugs' estimated acquisition costs from 2017-22," the FTC said. "The Big Three PBMs netted such significant revenues all while patient, employer, and other healthcare plan sponsor payments for drugs steadily increased annually."
The new analysis follows a July 2024 report that revealed Big Three PBM-affiliated pharmacies received 68% of the dispensing revenue generated by specialty drugs in 2023, a 14% increase from 2016.
"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," FTC Chair Lina Khan said in a statement Tuesday. "The FTC should keep using its tools to investigate practices that may inflate drug costs, squeeze independent pharmacies, and deprive Americans of affordable, accessible healthcare—and should act swiftly to stop any illegal conduct."
Khan's time as chair is limited. Republican U.S. President-elect Donald Trump's inauguration is next week and he has named Andrew Ferguson as the next FTC chair. As Ferguson is already on the commission, his elevation to chair won't require Senate confirmation.
Greg Lopes, spokesperson for the Pharmaceutical Care Management Association, a PBM lobby group, said Tuesday that "it's clear this report again fails to consider the entirety of the prescription drug supply chain and makes sweeping assertions about the role of PBMs disconnected from a full appreciation of their critical cost-saving role for employers, unions, taxpayers, and patients."
Last September, the FTC sued the Big Three and their affiliated group purchasing organizations for allegedly "engaging in anticompetitive and unfair rebating practices that have artificially inflated the list price of insulin drugs, impaired patients' access to lower list price products, and shifted the cost of high insulin list prices to vulnerable patients."
FTC Office of Policy Planning Director Hannah Garden-Monheit said Tuesday that the problem of PBM price inflation "is growing at an alarming rate, which means there is an urgent need for policymakers to address it."
To that end, U.S. Sens. Maria Cantwell (D-Wash.) and Chuck Grassley (R-Iowa) introduced the Pharmacy Benefit Manager Transparency Act of 2023, a bill backed by the AARP aimed at increasing transparency and "holding PBMs accountable for deceptive and unfair practices that drive up prescription drug costs and force independent pharmacies out of business."
"This report is a call to action for policymakers to dismantle these exploitative schemes."
Responding to the FTC report, Emma Freer, senior policy analyst for healthcare at the American Economic Liberties Project—a corporate accountability and antitrust advocacy group—said in a statement Tuesday that "the FTC's second interim report lays bare the blatant profiteering by PBM giants, which are marking up lifesaving drugs like cancer, HIV, and multiple sclerosis treatments by thousands of percent and forcing patients to pay the price."
"By steering prescriptions for the most expensive specialty generic drugs to their own pharmacies, PBMs are raking in billions in excess revenue—$7.3 billion over just five years—while squeezing independent pharmacies and leaving patients and health plan sponsors with skyrocketing costs," Freer added. "This report is a call to action for policymakers to dismantle these exploitative schemes, outlaw the rebate system driving up prices, and restore fairness and affordability to the U.S. healthcare system."
350 Seattle and the Stop GTN Xpress Coalition urge Washington Senators Maria Cantwell and Patty Murray to heed the warning of the International Energy Agency and oppose the GTN Xpress.
When I heard about the ongoing fires in eastern Canada, and the accompanying smoke that covered much of the U.S. East Coast, I was reminded of the Bob Dylan refrain from “Blowin’ in the Wind,” yet with different words: How many fires will it take ’til we know, that it’s past time to stop burning fossil fuels? Do we need the entire country to be covered in smoke before we take all necessary steps to turn the climate crisis around?
While President Joe Biden’s Inflation Reduction Act was a step in the right direction, the International Energy Administration (IEA) has been clear: “If governments are serious about the climate crisis, there can be no new investments in oil, gas, and coal.” Yet TC Energy, the company behind the Keystone Pipeline, seeks approval for a new gas project in the Pacific Northwest called the GTN Xpress. The project would increase the amount of gas coming into the region by expanding an existing pipeline.
350 Seattle and the Stop GTN Xpress Coalition urge Senators Maria Cantwell (D-Wash.) and Patty Murray (D-Wash.) to heed the warning of the IEA and oppose the GTN Xpress.
If the Federal Energy Regulatory Commission were to approve the expansion, it would result in more than 3.47 million tons of greenhouse gas emissions each year—that’s the equivalent of adding 754,000 cars to the road annually.
Here’s the background: GTN’s existing pipeline runs across eastern and southeast Washington, through central Oregon, and into California. The proposed expansion project would push more fracked gas through the existing pipeline by upgrading three existing compressor stations. Compressor stations are fracked gas-powered industrial facilities that control how much gas moves through the pipeline. If the Federal Energy Regulatory Commission (FERC) were to approve the expansion, it would result in more than 3.47 million tons of greenhouse gas emissions each year—that’s the equivalent of adding 754,000 cars to the road annually.
Yet is such a project needed? The answer is an overwhelming no. In a 2022 article, the Sightline Institute analyzed the gas demands of the Northwest in connection with the GTN proposal and concluded that the additional gas is not needed. The article noted that Washington and Oregon will require 100% renewable electricity generation by 2040 and 2045, respectively, meaning that gas will no longer be required for power generation. Additionally, in 2022 Washington passed legislation requiring all-electric heating in new commercial buildings.
Not only is the GTN Xpress unnecessary and bad for the climate, utility customers would likely face increased costs to pay for this expensive infrastructure upgrade. Additionally, nearby communities would see increased air pollution from the compressor stations, as well as face a heightened risk of explosions and fires in the event of an accident. In 2022, the attorneys general of Oregon, Washington, and California made similar arguments against the project in a motion to intervene in the GTN Xpress FERC proceedings.
Opposition to this project is growing. So far, more than 50 local and national organizations ranging from grassroots environmental groups to health professionals have opposed GTN Xpress. In addition to opposition from the attorneys general of Washington, Oregon, and California, several elected representatives from the region have also spoken out against the project; Democratic Oregon Senators Jeff Merkley and Ron Wyden, Governor Tina Kotek of Oregon, and Washington’s own Governor Jay Inslee have all expressed opposition to the GTN proposal.
The websites of both Senators Cantwell and Murray indicate that they see themselves as advocates for the environment. If so, they need to stand by their principles and speak out publicly now against the GTN Xpress. The addition of their voices to the growing opposition to the project could make a difference in FERC’s decision making. FERC is expected to approve or deny this project as early as mid-July, 2023.
The Senate Commerce Committee's ongoing delay in confirming President Joe Biden's nominee to fill the empty seat on the deadlocked Federal Communications Commission is being criticized as a "gift" to powerful tech companies.
Gigi Sohn, co-founder of advocacy group Public Knowledge and longtime net neutrality defender already had a confirmation hearing in December, but Biden renominated her after the committee, chaired by Sen. Maria Cantwell (D-Wash.), failed to bring her nomination to the Senate floor for a vote.
Sohn is appearing for a second time before the Commerce Committee Wednesday.
The further delay "only hurts the American public and deadlocks the FCC--which is precisely the point," said Matt Wood, vice president of policy and general counsel to Free Press, on Wednesday.
Republicans on the committee and telecom industry lobbyists "don't want the agency to function, and they'll drum up any excuse to delay, derail, or distract regulators from doing their jobs," Wood added. "Today's hearing is entirely unnecessary."
\u201c"Today\u2019s hearing is entirely unnecessary. Sohn has already answered the committee\u2019s questions in great detail. Hundreds of organizations from across the political spectrum strongly support her nomination." - @mattfwood\n#SenateCommerce\n\nhttps://t.co/R57AX3PiPb\u201d— Free Press (@Free Press) 1644422668
The committee had been scheduled to vote on advancing Sohn's nomination last week, but Cantwell announced a day before the planned vote that it would be further delayed, citing committee member Sen. Ben Ray Lujan's (D-N.M.) absence as a result of a stroke.
"There is no legitimate rationale for holding a second hearing about a recusal that both the Office of Government Ethics and the FCC's general counsel determined was not needed."
Without Lujan present, Republicans would have been able to block Sohn's nomination by voting along party lines. Evan Greer, director of digital advocacy group Fight for the Future, expressed understanding of the delayed vote due to Lujan's unforeseen health crisis, but said last week that the second hearing was "utterly unrelated."
"The timeline suggests Cantwell was considering this even before that," she tweeted after Wednesday's hearing was announced.
Greer wrote to Senate Majority Leader Chuck Schumer (D-N.Y.) last week, calling for Cantwell to be dismissed from her position as chair of the committee and saying she "has been actively and egregiously preventing Democrats from making good" on Biden's promise to ending the FCC's 2-2 deadlock so it can reinstate net neutrality rules repealed by the Trump administration and pass other regulations.
"She has repeatedly caved to disingenuous opposition from Republicans and industry lobbyists, leading to inexcusable delays" in Sohn's confirmation process, Greer wrote.
As advocacy group Free Press said last month, telecom giant Comcast's hiring of a new lobbyist appeared specifically aimed at challenging Sohn's nomination.
Republicans on the Commerce Committee have claimed Sohn's nomination to the FCC is unsuitable due to her past comments about right-wing news outlets like Fox News, which she accused of spreading "propaganda" in a tweet in 2020.
Sen. Roger Wicker (D-Miss.), the ranking member on the committee, has claimed Sohn's past as a board member at a discontinued nonprofit streaming service, Locast, disqualifies her. Locast was ordered by a federal court to shut down and settled with several broadcast networks whose content it streamed.
Sohn has pledged to recuse herself from some broadcast regulatory matters if confirmed to be an FCC commissioner--though her recusal is not required by government ethics officials--to ensure "the public has full confidence that policymakers will make decisions free of bias."
Holding a second hearing rather than simply proceeding with a vote once Lujan is able to participate, said observers, will give Republicans an opportunity to raise their purported concerns again.
"We have to deal with Sen. Wicker's disingenuous and blatant obstructionism over this crucial nomination," said Wood last week. "And with Sen. Cantwell caving to unreasonable demands from opponents to Sohn, we're going to see a hearing full of political posturing that serves no one except industry players eager to draw out the calendar and keep the FCC deadlocked."
Wood laid blame with the White House's delay in naming FCC nominees last year as well as Wicker's "continued opportunistic nonsense," saying it isn't clear whether Cantwell "participating in that obstruction or just wildly ineffective at countering it."
The delay caused by Cantwell's decision to hold another hearing "is a gift to AT&T, Comcast, and the other companies that have worked for years to weaken the FCC's authority and who benefit from a deadlocked agency," said Joshua Stager, deputy director for broadband and competition policy at New America's Open Technology Institute, last week.
"There is no legitimate rationale for holding a second hearing about a recusal that both the Office of Government Ethics and the FCC's general counsel determined was not needed," he added.
Stager and Greer both noted that the second hearing "sets a dangerous precedent" for Biden's future nominees--a concern that was bolstered Tuesday as Communications Dailyreported that Republicans on the committee are now seeking a second hearing for Alvaro Bedoya, Biden's nominee to serve on the Federal Trade Commission.