FTC Inquiry Hopes to Give Boost to Independent Pharmacies

Two weeks ago, the FTC announced that it would be launching an inquiry into the controversial prescription drug middleman industry. Commonly known as a PBM, Pharmacy Benefit Managers are to be required to provide records and information in relation to their practices.

Six of the largest PBMs will be asked to provide such data so that their roles within the pharmaceutical trade can be fully investigated.

As part of the work being carried out by the FTC the inquiry will thoroughly evaluate the impact of vertically integrated pharmacy benefit managers on the access and affordability of prescription drugs.

Compulsory orders are being sent out to CVS Caremark,  Express Scripts, Optum Rx, Humana, Prime Therapeutics, and Medimpact Health Systems.

Why are the FTC looking at these 6 PBMs?

The inquiry was launched to fully understand the role of the powerful PBMs and how they hold a level of authority within the medicinal industry that does not always put the patient first.  In short, a PBM is hired to negotiate both rebates and fees with the manufacturers of prescription drugs, create drug formularies and surrounding policies as well as reimburse pharmacies for patient prescriptions. Within this role they hold such sway that they can in effect, determine which drugs are prescribed to patients, which pharmacies can be used and as an end result determine how much patients can pay for their prescribed medication. Through this they also hold significant power and interest within health insurance companies and mail order speciality pharmacies.

Within its contractual and legal framework there are many intertwined contractual relationships that ultimately make it challenging and, in some cases, difficult for a clear and transparent understanding by the patient and the independent businesses affiliated with the pharmaceutical trade. At its conclusion it is hoped that this inquiry will shine a light on the influence these middlemen have on such an important part of American life-healthcare. Lina M. Khan, the chair of the FTC said, “This study will shine a light on these companies practices and their impact on patients, pharmacies, payers and doctors.”

Focuses of the inquiry

Over the past few years there have been several areas within the industry that have raised red flags among senior figures and now with the inquiry being given the green light, it is hoped that where any such practises have been carried out, those complicit will be held to account. Therefore, allowing for a more transparent industry and a fairer environment for both patients and the independent businesses within medicine. The main areas of scrutiny are:

• Fees and clawbacks charged to unaffiliated pharmacies.
• Methods to steer patients towards PBM owned pharmacies.
• Potentially unfair audits of independent pharmacies.
• Complicated and opaque methods to determine pharmacy reimbursement.
• The prevalence of prior authorizations and other administrative restrictions.
• The use of specialty drug lists and surrounding specialty drug policies.
• The impact of rebates and fees from drug manufacturers on formulary design and the costs of prescription drugs to payers and patients.

Part of the reasoning for this inquiry stems from the demand for information from members of the public that developed into something quite significant following the FTC receiving more than 24,000 public comments in relation to PBMs.

How is the inquiry being enforced?

With such large public support and backing from independent businesses the FTC are issuing the order to the 6 PBMs under a special FTC act that allows for the commission to conduct studies without the need for a legal enforcement purpose. From the date of issue, each of the PBMs have 90 days in which to respond.

With the commission supporting this move with a vote of 5-0 it is hoped that at its conclusion this enquiry will resolve the concerns members of the public and those within the pharmaceutical trade have raised about the operation of PBMS.

Our founder Kunal Vyas said:

“When I owned my pharmacy, we received audits every eight weeks due to our high volume. One hundred percent of our prescription drugs were hand-delivered to our patient's home. Understanding auditing practices, we built RxMile's technology to make our delivery processes audit-proof.

These PBM contracts forced upon us have so much red tape within the contract that gives PBMs many avenues to terminate. Something as simple as seeing a label for a courier company can terminate you due to the clause of not utilizing a common courier.

RxMile’s technology will make your pharmacy audit-proof. My fellow independent pharmacy owners, let's be diligent as we navigate through the examination of the PBM Probe. Thanks to you and the FTC for putting the small business owner first. Special thanks to Federal Trade Commission Chair, Lina M. Khan and her bravery! We can only hope that lobbyists and corruption will not stop this momentum.”

At RxMile we ensure patients are valued as patients and not as a transaction. By supporting the great work of independent pharmacies across the country through our pharmacy delivery software we can work together to focus on patient care first and foremost. If you are an independent pharmacy looking for the best way to fulfil your prescription home delivery schedules speak with us. Our team can help you with everything from starting a medication courier service through to helping you find drivers. We don’t just work within this industry. We live it. Owned by a former independent pharmacy owner, RxMile deliver in both product and promises. Book your demo today!