New SCPC Comments to FTC Detail Steps to Foster Competition in Pharmaceutical Pricing and Supply Chain

DATE: December 12, 2017

2017 Year-End Focus on Drug Pricing by Senate HELP, House Energy and Commerce Committees Demonstrate Ongoing Saliency of Examining PBM Market Manipulation

Washington, DC — In the wake of issuing new comments to the Federal Trade Commission (FTC) detailing steps to foster more competition in the prescription drug marketplace, the Senior Care Pharmacy Coalition (SCPC) welcomed both House and Senate year-end hearings on drug pricing and associated supply chain issues to reform an opaque pharmacy benefit manager (PBM) business model that keeps consumers, lawmakers and regulators alike in the dark about pricing determinations and activities and that adds costs to consumers while reducing their access to clinically appropriate medications.

“We commend the FTC for their recent focus on the pharmaceutical and pricing supply chain, and are pleased key Committees in both the U.S. Senate and House are pursuing drug pricing and supply chain issues this week,” said Alan G. Rosenbloom, President and CEO of SCPC — the only federal advocacy organization devoted exclusively to the interests of the nation’s long term care (LTC) pharmacies and the elderly patients they serve. “From our perspective, these hearings create the opportunity to continue placing a bright spotlight on a PBM business model centered upon siphoning billions annually out of consumers’ pockets and the Medicare program itself,” he said.

SCPC has been advocating for several years that any solution to address drug pricing issues must address the multitude of PBM pricing abuses and other sharp business practices. “We will continue to share our ideas and policy solutions publicly for both hearings this week, and look forward to aggressively pursuing these bipartisan reforms in 2018 with likeminded members of Congress.”

In submitting its comments to the FTC in response to the agency’s recent workshop, “Understanding Competition in Prescription Drug Markets: Entry and Supply Chain Dynamics,” SCPC focused on four key areas:

I. Context regarding the LTC pharmacy sector, and the difference between retail and LTC pharmacy

II. The PBM Marketplace: A Classic Oligopoly

III. The Impact of PBM Oligopoly, and

IV. Policy Recommendations and Conclusions

In its submission, SCPC strongly encourages the FTC and, where appropriate, the Justice Department, to:

1. Regularly exchange information with CMS Part D representatives concerning PBM pricing and practices.
2. Investigate whether PBMs and the corporate conglomerates of which they are a part exploit undue market power in violation of antitrust law and regulation.
3. Closely scrutinize the proposed CVS Health acquisition of Aetna in the context of the market power and leverage the corporate conglomerates – particularly CVS Health – have been able to develop. SCPC believes the appropriate markets to consider vis-à-vis this proposed transaction occur at the nexus of health insurance, the prescription drug supply chain, chain pharmacies of all stripes and PBMs. Considering this proposed transaction simply as vertical integration without appreciation of all the hidden relationships and implications across markets does a disservice to competition and consumers.
4. Issue clear guidance on the limits of vertical and horizontal integration of pharmacies, health plans, PBMs and other major actors in the LTC pharmacy market.
5. Issue recommendations to Congress regarding ways the Part D statute could be modernized to limit the negative impact PBMs and the corporate conglomerates of which they are a part have on costs and quality for consumers, federal health care expenditures and free market competition.

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The SCPC is the national association for independent LTC pharmacies. Our member pharmacies provide care and services to patients in LTC facilities across the country occupying approximately 675,000 beds. Visit us at www.seniorcarepharmacies.org to learn more.