At an Open Commission Meeting on August 1, 2024, the Federal Trade Commission (FTC) presented a report prepared by its staff entitled Pharmacy Benefit Managers: The Powerful Middlemen Inflating Drug Costs and Squeezing Main Street Pharmacies.

Although characterized as “interim,” the report posits the following observations about pharmacy benefit managers (PBMs):

• “PBMs have gained significant power over prescription drug access and prices through increased concentration and vertical integration.”
• “Increased concentration and vertical integration may have enabled PBMs to lessen competition, disadvantage rivals, and inflate drug costs.”
• “The largest PBMs’ outsized bargaining leverage may operate to the disadvantage of smaller unaffiliated pharmacies.”
• “PBM and brand drug manufacturer rebate contracts may impair or block less expensive competing products, including generic and biosimilar drugs.”
• “PBMs lead to higher prices” (a conclusion based on only two case studies).

Commissioner Melissa Holyoak, in dissenting from the release of the report, stated that “the Report was plagued by process irregularities and concerns over the substance—or lack thereof—of the original order. In fact, the politicized nature of the process appears to have led to the departure of at least one senior leader at the Commission.” Commissioner Holyoak added that “[e]ven if the Report’s assertions of increasing concentration are accurate, increased concentration ‘does not prove that competition in that market has declined.’ Though the Report baldly asserts that PBMs ‘have gained significant power over prescription drug access and prices,’ the Report does not present empirical evidence that demonstrates PBMs have market power—i.e., ‘the ability to raise price profitably by restricting output.”’

Commissioner Andrew N. Ferguson, although concurring in the release of the report, was likewise critical of the process and its findings. In particular, Commissioner Ferguson found the report to be “especially unusual” in that it “relies, throughout, in large part on public information that was not collected from the PBMs or their affiliates during the 6(b) process.” Furthermore, Commissioner Ferguson was critical of the finding, based on only two case-study drugs, that PBMs lead to higher prices and pleaded with the FTC “to determine whether these findings are representative of market dynamics for other drugs.” He added that “[w]e need to understand whether any anticompetitive or unfair or deceptive acts or practices on the part of PBMs or any other market participants are contributing to these prices.”