Our legal 'drug cartel'

Just before President Trump pushed her out at the behest of his corporate donors, former Federal Trade Commission Chairwoman Lina Khan released a damning report about the most rapacious and anti-competitive actors in the healthcare system: pharmacy benefit managers.

These middlemen in the drug supply chain don’t discover new medicines. They don’t manufacture them. They don’t even physically dispense most prescriptions. Yet they rake in tens of billions of dollars each year by driving up costs for everyone else – especially patients battling cancer, HIV, heart disease and autoimmune conditions.

In their report, FTC investigators documented how the PBM industry – which is dominated by just three firms, CVS Caremark, Express Scripts and OptumRx, which collectively oversee roughly 80% of all prescriptions dispensed nationwide – imposed eye-popping markups on generic drugs used to treat deadly diseases. The PBMs’ affiliated pharmacies charged hundreds – even thousands – percent more than they paid to acquire drugs like the cancer treatment Gleevec and multiple sclerosis medication Ampyra.

This isn’t just a case of corporate greed. It’s the result of a rigged market.

In theory, pharmacy benefit managers could play a valuable role by negotiating with drug manufacturers for lower prices. Instead, PBMs have made the supply chain so convoluted that almost nobody on the outside – whether the patient, pharmacist, doctor or even employer sponsoring the health plan – can easily tell how much a drug will cost after discounts, rebates, various fees and clawbacks are applied.

Congressional investigations have revealed numerous instances in which PBMs steered patients toward more expensive drugs, which come with bigger discounts and rebates for the PBM “even when there are lower-cost and equally safe and effective competing options” available.

PBMs almost never disclose the total discounts they negotiate. So patients’ cost-sharing obligations are calculated based on a drug’s unnegotiated, inflated “list price,” rather than its true discounted price. As a result, patients spend billions more out-of-pocket than they otherwise would if the discounts were publicized.

These inflated costs are a key reason why 21% of American adults have skipped filling a prescription in the past year due to affordability, while 12% have skipped doses or cut pills in half.

The FTC also found clear patterns of self-dealing, where PBMs steered the most profitable prescriptions to their own affiliated pharmacies while boxing out independent, community pharmacies. Thousands of independent pharmacies have closed in recent years, leaving entire counties without a single brick-and-mortar store where patients can fill a prescription.

Finally, PBMs use their consolidated power to keep drugs off health plan formularies unless manufacturers pay exorbitant fees.

Congress has previously considered two bipartisan bills that would rein in PBMs’ worst abuses. And just last month, FTC chair Andrew Ferguson reignited a lawsuit that accuses PBMs of anticompetitive behavior.

Taking on PBMs won’t just lower drug costs. We must be willing to fight the entrenched interests hurting our families and finances and put patients ahead of profiteers.

– Howard Dean, former chair of the Democratic National Committee and former governor of Vermont. This piece originally ran in Salon