Washington, D.C. — The American Economic Liberties Project today submitted a comment letter to the Federal Trade Commission in response to its Request for Information on Pharmacy Benefit Manager (PBM) business practices, urging the agency to move forward with an investigation of the industry.

“A comprehensive FTC-led study of PBM business practices is urgently needed,” said Zach Freed, Advocacy and Outreach Manager for the American Economic Liberties Project. “Over the last two decades, states, Congress, health care providers, and patient groups have gathered overwhelming evidence that PBMs drive up drug spending while weakening pharmacy networks and patient care through unfair and predatory tactics. Instead of focusing on these issues, FTC staff repeatedly discouraged state and federal regulation of the PBM industry, giving a veneer of legitimacy to PBM abuse. It is past time for the FTC to correct its record on PBMs. We support Chair Khan’s work to commence a new study and urge the FTC to begin work on one immediately.”

PBMs are middlemen who process pharmaceutical benefits for Medicare Part D, Medicaid, and other health insurance plans. In theory, plans pay PBMs to bargain down the price of drugs and to reimburse pharmacies for patients’ prescriptions. In practice, however, PBMs often abuse their position as middlemen to drive up the cost of drugs, over-charge Medicare and Medicaid, and skim as much money as possible from independent pharmacies. 

In 2005, the FTC released a study of the PBM industry characterizing competition among PBMs as “intense,” and from 2004-2014, senior FTC staff sent a series of letters to state and federal policymakers urging them not to pass PBM regulation bills. To this day, the PBM industry continues to cite this work by the FTC when fighting efforts to rein in the industry. 

Economic Liberties’ comment letter explains why a new FTC analysis is so vital. It chronicles the history of the PBM industry, and details how the FTC and DOJ allowed the big three PBMs — CVS Caremark, OptumRx, and Express Scripts — to become the opaque, abusive, and unaccountable behemoths they are today. The letter also describes the structural issues with the PBM industry, and catalogs the ways that PBMs abuse their business partners, patients, and taxpayers.

Read Economic Liberties’ comment letter to the FTC on PBMs here.

Learn more about Economic Liberties here.

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The American Economic Liberties Project works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. Economic Liberties believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.