Lankford, Colleagues Demand FTC Finish Investigation of Prescription Drug Price Middlemen

OKLAHOMA CITY, OK – Senator James Lankford (R-OK), a member of the Senate Finance Committee, joined his colleagues to send a letter to Federal Trade Commission (FTC) Chair Lina Khan to ask the FTC to complete its pharmacy benefit manager (PBM) investigation in a timely manner. Lankford sent a letter to the FTC in June to encourage this ongoing investigation into the practices of PBMs, whose price-hike gimmicks lead to uncertainty for local, family-owned pharmacies and drive up the costs of prescription drugs. The renewed push today comes after the FTC failed to commit to a timeline for its investigation during a recent oversight hearing on antitrust enforcement.

Lankford was joined by Senators Chuck Grassley (R-IA), Maria Cantwell (D-WA), Cindy Hyde-Smith (R-MS), Marsha Blackburn (R-TN), Jerry Moran (R-KS) and Thom Tillis (R-NC) in arguing that Americans cannot afford a delay, since PBMs’ potential anticompetitive behavior could be increasing the cost of medicine for consumers.

“As you know, PBMs operate with little to no transparency, making it very difficult if not impossible to understand the flow of money in the prescription drug marketplace and how PBMs determine the prices for prescription drugs. Recent consolidations between PBMs, insurance providers, and other health care entities have resulted in vertical integration whereby a small number of companies now manage the vast majority of prescription drug benefits,” the Senators wrote.

“There is widespread bipartisan support for examining PBMs and looking into whether they are causing Americans to pay higher prices for prescription drugs,” continued the Senators. “This is why we support the FTC’s decision to conduct a PBM study. We hear stories about rising drug costs all the time. A timely study into the business practices of these intermediaries would provide transparency, insight about possible competitive harms, and inform potential legislative action. With the FTC’s action on June 7, 2022, there is widespread support for the study and interest to review its findings in a timely manner. To ensure the 6(b) study’s usefulness, we urge the FTC to issue the report within one year of its issuance,” the senators concluded.

Lankford has worked for years to pursue workable solutions to lower prescription drug cost and stand up to PBMs. Lankford has repeatedly called out abusive practices of PBMS in the negotiation of the final price of a prescription drug. One of these harmful practices is the issuing of retroactive direct and indirect remuneration (DIR) fees, which are clawback fees required sometimes several months after a pharmacy dispenses a drug to a patient. These fees range in size and timing, causing local pharmacies great uncertainty and driving up seniors’ out-of-pocket drug costs. According to the Centers for Medicare and Medicaid Services (CMS), DIR fees have increased more than 107,400 percent between 2010 and 2020. This has contributed to the closing of hundreds of independent community pharmacies.

Lankford joined his colleagues to introduce the Protecting Drug Innovation Act. The bill would roll back the federal government’s authority to set and control drug prices covered by Medicare. The power to set drug prices was a key component of the Democrats’ so-called “Inflation Reduction Act” that passed without a single Republican vote.

In May Lankford celebrated a huge win for Oklahoma seniors and local pharmacies as Medicare officials finalized sweeping changes to Medicare Advantage and Medicare Part D plans for seniors. Part of this now-final rule from CMS mimics plans for lowering out-of-pocket drug costs for Medicare beneficiaries for which Lankford has advocated for several years. In January, Lankford celebrated the rule’s proposal.

You can read the full letter HERE and below:

Dear Chair Khan,

We support the Federal Trade Commission’s (FTC) issuance of a Section 6(b) order and conducting a study of pharmacy benefits managers’ (PBM) business practices. In your recent participation before the Subcommittee on Competition Policy, Antitrust, and Consumer Rights, you did not commit to a timeline to complete the FTC’s PBM study. We believe it is important for this study to be completed in a timely manner as consumers and taxpayers cannot afford any delay. We urge you to publicly commit and for the FTC to complete a study no later than one year from the issuance of the Section 6(b) order.

As you know, PBMs operate with little to no transparency, making it very difficult if not impossible to understand the flow of money in the prescription drug marketplace and how PBMs determine the prices for prescription drugs. Recent consolidations between PBMs, insurance providers, and other health care entities have resulted in vertical integration whereby a small number of companies now manage the vast majority of prescription drug benefits. CVS/Caremark, OptumRx and Express Scripts control roughly 75 percent of the PBM market and are owned by insurers Aetna, United Healthcare, and Cigna, respectively.

We support legislation that would require the FTC to conduct a study and report to Congress within one year on the effects of consolidation and potentially anticompetitive behavior that may impact prescription drug pricing. A few of the provisions required to be examined in the report include whether PBMs charge certain payers a higher price than competing pharmacies or steer patients to pharmacies at which the PBM has an ownership stake, whether PBMs use formulary designs to depress market share of low cost prescription drugs, and if more information about roles of intermediaries in the healthcare marketplace would benefit consumers. In 2021, this legislation was approved unanimously by the Judiciary Committee and awaits action by the full Senate.

There is widespread bipartisan support for examining PBMs and looking into whether they are causing Americans to pay higher prices for prescription drugs. This is why we support the FTC’s decision to conduct a PBM study. We hear stories about rising drug costs all the time. A timely study into the business practices of these intermediaries would provide transparency, insight about possible competitive harms, and inform potential legislative action. With the FTC’s action on June 7, 2022, there is widespread support for the study and interest to review its findings in a timely manner. To ensure the 6(b) study’s usefulness, we urge the FTC to issue the report within one year of its issuance. We appreciate the FTC’s commitment on this matter to patients and taxpayers.

Sincerely,

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