My video comment letter on FTC meeting today regarding PBM business practices

The Federal Trade Commission is meeting today on how pharmacy benefit managers (PBMs) affect drug prices and independent pharmacies. In a video comment letter, I am asking the commissioners to investigate PBMs’ mergers with big health insurers and look into if and how those mergers are contributing to constantly increasing deductibles and premiums. As these huge companies focus on profits, millions of Americans are accumulating thousands of dollars in medical debt. Many can’t afford to pick up their prescriptions because of outrageously high out-of-pocket requirements. Watch the video and read the transcription below.

Chairperson Khan and members of the Commission, thank you for this opportunity. My name is Wendell Potter, and I’m president of Business Leaders for Health Care Transformation and executive director of the Lower Out-of-Pockets NOW Coalition. 

My comments today relate to agenda item 6(b)--Study on Pharmacy Benefit Managers’ Relationship with Affiliated and Independent Pharmacies. Specifically, I will call attention to the effect that PBM business practices have on the ability of patients to pay for needed medications at their pharmacies.

I encourage the Commission to broaden its inquiry into the very significant consequences–to patients, employers and all of us as taxpayers and consumers–of the vertical integration in recent years of large PBM and health insurance corporations. 

In my prior career as vice president of corporate communication at Cigna, one of my responsibilities was developing campaigns to support the company’s business practices, acquisitions, and marketing and sales efforts. 

One of the reasons I left my job was my concern that the industry-wide strategy of moving Americans into high-deductible plans would have disastrous health and financial consequences for millions of families.  

My concern was well founded. Increasingly, Americans with insurance can not afford life-saving medications. As Cigna and other big insurers have merged with PBMs, underinsurance has become a crisis that puts more and more families in financial jeopardy, even as these massive, vertically integrated and shareholder-owned companies report record profits.

As the Commonwealth Fund has found, about one of every three Americans enrolled in a private health insurance plan today is underinsured. They don’t have enough money to cover the out-of-pocket requirements demanded by big insurers, which in recent years have become little more than business divisions of huge PBMs.

These vertically integrated companies are now among America’s largest and most profitable corporations. Together, just three of them–Unitedhealth, CVS Health and Cigna–control 79% of the PBM market. Meanwhile, to meet Wall Street’s profit expectations, they and other insurers have dramatically increased patients’ cost-sharing obligations over the past several years. Deductibles alone have more than doubled since the Affordable Care Act was passed.

As a consequence, an untold number of Americans are walking away from the pharmacy counter without picking up their prescriptions. They simply don’t have enough money to pay out of their own pockets what their insurer and PBM demands. 

These giant companies decide which drugs are on their formularies and how much their customers must pay on their own before their coverage kicks in.  

They have such market dominance that many employers assume they have little choice but to contract with them. Pharmacies also have to pay fees to access PBM claims databases. 

At the same time, the immense size of these companies enables them to extract large rebates from drug makers as a consideration of including their products on formularies. There is little evidence that those rebates are being passed on to consumers, but there is substantial evidence that drug makers raise the price of their drugs to compensate for the rebates the PBMs demand. 

The downstream impact to patients is enormous. Current data show, for example, that 1 in 4 Americans taking insulin ration this essential drug due to high list prices and out-of-pocket requirements. Lower-cost follow-on insulins and biosimilars can provide financial relief to patients, but some PBMs have refused to include them on formularies. Doing so would result in a decrease in rebates. To reduce patients’ out-of-pocket costs at the pharmacy counter, PBMs should include those and other lower list price drugs on formularies. The big rebates PBMs charge for insulin and other drugs must also be reined in. 

UnitedHealth, CVS Health and Cigna, which collectively control more than three-fourths of the PBM market, last year took in more than three-quarters of a trillion dollars from their customers, including state and federal governments. Meanwhile, Americans with insurance are dying prematurely or sinking deep into debt because of investor demands for ever-increasing profits.

It is important for you to study the impact of PBM’s business practices on independent and specialty pharmacies. It is just as important–if not more so–for your inquiry to include the impact of the merger of PBMs and insurance companies on the health and financial well-being of millions of Americans. 

Thank you.