Walden, Burgess request federal merger review of Pharmacy Benefit Managers

DATE: August 14, 2018

The Ripon Advance

U.S. Reps. Greg Walden (R-OR) and Michael Burgess (R-TX) want details about whether the mega-mergers among Pharmacy Benefit Managers (PBMs) has contributed to rising national drug prices for the more than 266 million Americans using PBM prescription drug plans.

“Consolidation in the PBM industry is part of a larger trend of consolidation in the health care market more generally. PBMs play a significant role in the health care market and are likely to influence health care costs,” wrote Rep. Walden, chairman of the U.S. House Energy and Commerce Committee, and Rep. Burgess, chairman of the Energy and Commerce Health Subcommittee, in a July 27 letter sent to Federal Trade Commission (FTC) Chairman Joseph Simons.

U.S. Rep. Greg Harper (R-MS), chairman of the Energy and Commerce Oversight and Investigations Subcommittee, also signed the letter, in which the committee leaders requested that the FTC conduct a retrospective review of PBM mergers and how they’ve impacted consumer drug prices.

PBMs, according to the Pharmaceutical Care Management Association, provide prescription drug plans to U.S. residents who have health insurance from a variety of sponsors including: commercial health plans, self-insured employer plans, union plans, Medicare Part D plans, the Federal Employees Health Benefits Program (FEHBP), state government employee plans, managed Medicaid plans, and others.

“PBMs are projected to save employers, unions, government programs, and consumers $654 billion – up to 30 percent – on drug benefit costs over the next decade,” according to the association.

However, the lawmakers said there’s “conflicting information” about the impact of PBMs on patients’ health care costs, and cited a May 2017 literature review finding that “PBMs have used their market power to try to increase their profits and that PBMs have encouraged higher list prices for prescription drugs that increase co-pays for patients.”

“Because some mergers may benefit patients while other mergers may harm patients, we believe it is important to closely monitor these trends,” they wrote.

The members noted that there has been “a significant amount of consolidation in the PBM industry” during the last decade. For example, the nation’s three largest PBMs — CVS Health Corp./CVS Caremark, Express Scripts Holding Co., and UnitedHealthcare/Optum Rx — accounted for roughly 70 percent of 2016 market revenues, while the two largest PBMs were responsible for almost 52 percent of market revenues, according to the letter.

“All three of these PBMs have participated in mergers,” wrote Reps. Walden, Harper, and Burgess.

The lawmakers requested that Simons provide them with a response by Aug. 10 on whether the FTC would conduct the review.

As of today, there has been no report on whether the FTC responded by the deadline. But according to the Bureau of National Affairs (BNA) this week, the FTC and the U.S. Food and Drug Administration (FDA) may be forming a partnership to strengthen reviews of PBMs and brand drugmakers due to escalating public pressure around drug price increases and mergers.

Neither federal agency directly regulates drug prices. The FTC monitors anti-competitive behavior and the FDA regulates the release of drugs for consumer sales, according to BNA.