Washington Matters

FTC Launches Probe of PBM Policies (Part 1)

Drug Benefit Trends
Posted 06/15/2004

By Daniel B. Moskowitz
Washington, DC-based Journalist

May 14 was the deadline for PBMs, health plans, and pharmacies to turn over to the Federal Trade Commission (FTC) data for the agency's probe into cost differences between PBMs that have their own mail-order operations and those that contract with outside mail-order facilities and retail pharmacies. The question is whether such shared ownership leads to a conflict of interest. Now the focus is on 3 issues:

  • Generic substitution.

  • Therapeutic interchange.

  • Drug repackaging.

But that's just the beginning of what may be a long-running investigation that could expand into "a more detailed empirical study," according to the FTC, and possibly legal action against some PBMs.

Commission staffers say that a previous study found evidence suggesting that on all 3 key issues, PBMs that own mail-order facilities show different preferences than those that do not. The current probe will try to expand on that study by sifting through such information as how the average prices paid by plan enrollees vary by dispensing channel, whether demographics of patients vary by dispensing channel, and whether there are differences in the most-dispensed drugs by dispensing channel. The FTC wants details on pass-throughs of rebates from pharmaceutical manufacturers to plan sponsors and is asking the dispensing pharmacies how often an alternative drug is substituted for the one originally prescribed by the physician, and why. The agency is also asking for any information in PBM company files relating to "strategies and business practices for lowering the net price" paid for pharmaceutical products.

The study was ordered by US Congress last year as part of the law adding a prescription drug benefit to Medicare.

Drug Benefit Trends 16(5):236-239, 2004.

© 2004 Cliggott Publishing, Division of CMP Healthcare Media
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