The FTC decided not to investigate PBM business practices. But there is a silver lining.
Republicans and Democrats on the Commission want to investigate Americans' out-of-pocket costs at the pharmacy counter.
While I was disappointed that the FTC yesterday decided not to move ahead with what would have been the first step in an investigation of pharmacy benefit managers’ business practices, I was encouraged that the two Republicans on the Commission, Noah J. Phillips and Christine S. Wilson, expressed concerns about what insured patients are now having to pay out of their own pockets at the pharmacy counter.
The commissioners were meeting to vote on a proposal to launch an inquiry into how PBM’s business practices affect specialty and independent pharmacies. I said in my statement that while that is important, they should broaden their inquiry into the mergers in recent years of big PBMs and health insurance companies. Three PBMs now control nearly 80% of the market, and all three are now part of huge corporations–UnitedHealth Group, CVS Health (Aetna) and Cigna–that own and operate health insurance plans and administer many other plans for large employers and federal and state governments.
Since Cigna’s acquisition of Express Scripts in 2018 and CVS Health’s merger with Aetna in 2017, more and more patients are walking away from the pharmacy counter without their prescriptions. As a consequence, they are not taking essential medications because they don’t have enough money to cover the deductibles and other out-of-pocket expenses their PBMs/insurers demand. Millions of others use credit cards to pay their out-of-pockets and go so deep into debt they often have to file for bankruptcy.
Even though the Commission was deadlocked 2-2 (Commission Chair Lina Kahn and Commissioner Rebecca Kelly Slaughter, both Democrats, voted to move forward while Phillips and Wilson voted against it), maybe my video influenced their thinking. I will be reaching out to each of the four commissioners in the coming days encouraging them to revise the scope of their inquiry and move ahead as soon as possible. An untold number of Americans with insurance are dying every day because they can’t afford their out-of-pockets. Meanwhile, UnitedHealth, CVS Health and Cigna reported huge profits in 2021 and used billions of dollars they collected from customers to buy back shares of their own stock.
Watch my video comment letter 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.