Reading between the lines of the FTC's PBM report

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Was the Federal Trade Commission’s report on pharmacy benefit managers a miss?

At first glance, there's plenty there. The FTC goes after PBMs with some very harsh language , describing a world of powerful conglomerates that control cost and access up and down the drug supply chain.?

But the regulator doesn’t take the next step of calling for any action, such as breaking up companies like CVS or Cigna (which have merged PBMs and insurers, and in some cases drugstores over the years), or for putting any kind of new limits on their operations.?

The PBM lobby, which has been playing (and winning) this game for a long time, has also pointed to a forceful dissent from one of the FTC commissioners who argues that the agency didn’t do the work to prove, empirically, that the market is too consolidated. The judgment on Wall Street was similar — stocks of the PBM parent companies barely budged, and most of the analysts who track the industry greeted the report with a shrug.

There are a lot of ways this game can play out, and it’s certainly not over. A fruitless regulatory effort could turn into a successful political one. The FTC report may lack action, but it gives more material to lawmakers who have been playing around with PBM reform legislation.

And it’s important to note that this is an "interim" report. The FTC hasn’t gotten complete answers yet from PBMs’ group purchasing organizations, sub-units the industry set up to interact with drugmakers. Those GPOs likely hold many of the secrets of the outwardly hostile (but often secretly symbiotic) relationship between pharma and PBMs.?But the FTC is running out of time, and the PBMs likely know it. In Tuesday’s report, the regulator acknowledged that it will take until 2025 to get full answers from the GPOs. And it may have to drag them to court, which could add to the timeline.?

FTC Chair Lina Khan, the protagonist of the regulator’s expanded antitrust efforts in healthcare , is almost certain to be gone by then. Her term ends in late September, about six weeks before the presidential election. And should Biden (or another Democratic presidential candidate) lose the election to Trump, the FTC chair will shift to a Republican appointee who’s almost certain to take a different view of regulatory policy.

— Drew Armstrong , executive editor

Read more of our FTC coverage here:

• FTC says PBMs ‘exercise vast control’ over healthcare, but stops short of calling for antitrust action : Federal antitrust regulators issued a report describing the PBM industry as highly concentrated among a handful of companies that use their market power to put pressure on clients and competitors.
• FTC backs plan to target more patent settlements it sees as anticompetitive : The Federal Trade Commission on Tuesday offered up support for a proposed rule from the US Patent and Trademark Office that could help regulators more closely track pharma patent settlements that might be anticompetitive.