On July 20, 2023, the Federal Trade Commission voted to withdraw its prior advocacy statements, studies and reports in support of pharmacy benefit managers. The FTC's statement, approved by a vote of 3-0, is part of its ongoing study into the PBM market.
In the statement, the FTC warns against relying on 11 letters and reports that were issued between 2004 and 2014 that had advocated against proposals to increase regulatory oversight and transparency of PBMs. The FTC explained that the earlier statements no longer reflect the realities of the PBM industry. Over the last two decades, the industry has become more concentrated both vertically and horizontally?with the largest PBMs now fully integrated upstream (with large health insurers) and downstream (with retail, mail order and specialty pharmacies). Among other competitive concerns, the FTC specifically highlights a concern that the increased concentration allows PBMs to use market power to undermine competition from independent pharmacies.
Since 2022, the FTC has been conducting an official study into the PBM market and the ways PBM business practices disadvantage independent pharmacies. This study is a culmination of the FTC's interest in promoting competition in pharmaceutical markets. The FTC's recent statement cautions against relying on any prior statements about the PBM industry, pending the results of its current study. This is significant because it foreshadows a final report from the study that ultimately is unfavorable to PBMs and PBM business practices.
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