FTC Exposes Shocking Drug Price Hikes

The Federal Trade Commission’s latest report exposes how pharmacy benefit managers are driving up specialty drug prices by over 1,000%, costing Americans billions.

At a Glance

Top three pharmacy benefit managers (PBMs) generated $7.3 billion through drug price markups over five years.
Some specialty drug prices were inflated by over 1,000% of the national average.
PBMs are accused of prioritizing their affiliated pharmacies, hurting independent businesses.
Bipartisan support in Congress for addressing PBM practices and drug price inflation.

FTC Unveils Shocking Drug Price Markups

A groundbreaking report from the Federal Trade Commission has revealed the alarming role of pharmacy benefit managers (PBMs) in driving up the costs of vital medications. The investigation focused on the three largest PBMs – CVS Health’s Caremark Rx, Cigna’s Express Scripts, and UnitedHealth Group’s OptumRx – which collectively control 60-80% of U.S. prescriptions.

The FTC’s findings are staggering: these PBMs generated $7.3 billion through drug price markups over a five-year period starting in 2017. More disturbingly, the report found that over 20% of “specialty drugs” were marked up by more than 1,000%, with an additional 41% marked up between 100-1,000%.

For the second time in less than a year, the FTC has released a highly critical report of pharmacy benefit managers, or PBMs. https://t.co/XSM1LbSgn8

— STAT (@statnews) January 14, 2025

Impact on Patients and Independent Pharmacies

The inflated costs primarily affect life-saving medications for conditions such as cancer, heart disease, and HIV. Cancer drugs alone accounted for nearly half of the $7.3 billion in markups. This practice not only burdens patients with skyrocketing medical expenses but also threatens the survival of independent pharmacies.

The FTC report also suggests that PBMs may be directing prescriptions to their own affiliated pharmacies, further exacerbating the issue. This has led to accusations of unfair competitive practices, with independent pharmacies claiming they are being squeezed by low reimbursement rates.

PBMs Push Back Against FTC Findings

Despite the damning evidence, the PBMs have disputed the FTC’s conclusions. CVS Health called the report “inappropriate and misleading,” stating that it’s their “top priority is to make health care more affordable.” Similarly, UnitedHealth’s OptumRx claimed they are “lowering the cost of specialty medications” and helped patients save $1.3 billion in 2024.

“CVS Caremark is actively upending this market-basket model with last year’s introduction of our TrueCost pricing option for specialty and non-specialty drugs. Clients representing 70% of CVS Caremark’s commercial members have already chosen to implement multiple elements of TrueCost for 2025,” CVS Caremark stated in response to the report.

Express Scripts has gone a step further, legally challenging the FTC’s claims. The Pharmaceutical Care Management Association, representing PBMs, also expressed concerns about the report’s findings.

Bipartisan Call for Action

The FTC’s report has garnered bipartisan support in Congress, with members from both sides of the aisle calling for swift action. FTC Chair Lina Khan emphasized the urgency of the situation, stating, “The FTC staff’s second interim report finds that the three major pharmacy benefit managers hiked costs for a wide range of lifesaving drugs, including medications to treat heart disease and cancer.”

As the debate continues, the FTC’s findings highlight the critical need for reform in the pharmaceutical industry. With ongoing legal actions against the top PBMs and growing bipartisan support for addressing these practices, there is hope that steps will be taken to curb drug price inflation and enhance accessibility to essential medications for all Americans.