REPORT: More Bad News for Pharmacy Benefit Managers

Back in 2022, AMAC Members helped spark a Federal Trade Commission (FTC) investigation into pharmacy benefit managers (PBMs) for employing potentially unethical practices that could lead to higher patient prescription drug costs. The latest interim report stemming from that investigation has provided shocking new details on the extent to which PBMs are marking up drugs to increase profits.

According to the report, which was released on January 14, the “Big 3 PBMs,” which manage nearly 80 percent of all prescriptions filled in the United States, “marked up numerous specialty generic drugs dispensed at their affiliated pharmacies by thousands of percent, and many others by hundreds of percent.” Those drugs include potentially lifesaving medications to treat cancer, HIV, and heart disease, among other serious ailments.

As AMAC Action has previously reported, PBMs are private intermediaries that negotiate with drug manufacturers and pharmacies on behalf of insurance providers to deliver lower patient costs. However, in recent years, monopolistic practices and a lack of transparency have created cause for concern that PBMs may be abusing their position for their own gain while patients foot the bill.

In light of these concerns, AMAC Action has been a leading voice in calling for a federal investigation into PBM practices. From March through May 2022, the FTC opened a web page seeking comments on PBMs. Of the 24,000 comments the FTC received, 17,000 were from AMAC members. The FTC subsequently launched an investigation into the six leading PBM firms.

The FTC’s first interim report, released last July, described PBMs as “the powerful middlemen inflating drug costs and squeezing main street pharmacies.” Pointing to a “high degree of consolidation and vertical integration,” the first report concluded that “the leading PBMs can now exercise significant power over Americans’ access to drugs and the prices they pay.” These PBMs also “exert substantial influence over independent pharmacies, who struggle to navigate contractual terms imposed by PBMs that they find confusing, unfair, arbitrary, and harmful to their businesses.”

The second interim report that was just released provides figures to back up these assertions. In total, the Big 3 PBMs “generated an estimated $1.4 billion of income from spread pricing—i.e., billing their plan sponsor clients more than they reimburse pharmacies for drugs—on the analyzed specialty generic drugs over the study period.” Those costs, which served to line the pockets of PBMs, are passed on to patients.

Big 3-affiliated pharmacies also “generated over $7.3 billion of dispensing revenue in excess of their estimated acquisition cost… on specialty generic drugs.” Moreover, “PBM-affiliated pharmacy dispensing revenue in excess of NADAC increased dramatically at a compound annual growth rate of 42 percent from 2017-2021.” In other words, PBM-affiliated pharmacies made a lot more money from selling certain expensive generic drugs than what they paid to buy them, and this profit margin has grown rapidly over the years.

Just as alarmingly, this most recent FTC report found that “a larger, disproportionate share of commercial prescriptions for specialty generic drugs marked up more than $1,000 per prescription were dispensed by the Big 3 PBMs’ affiliated pharmacies compared with unaffiliated pharmacies. Dispensing patterns suggest that the Big 3 PBMs may be steering highly profitable prescriptions to their own affiliated pharmacies (and away from unaffiliated pharmacies).”

“This second interim report further underscores the need for pharmacy benefit manager oversight and reform,” said AMAC Action Senior Vice President Andy Mangione. “Independent pharmacies are going out of business across the country while patients are losing access to care and are being overcharged for their medications as a result of PBM business practices. AMAC Action remains committed to fighting for the necessary PBM reforms that will lower the cost of drugs for all Americans, including seniors on Medicare.”

More action from the FTC is expected in the coming months. AMAC Action will continue to keep you informed when those developments occur. It is proud to advocate for our members and hold PBMs to a high ethical standard for their critical role in the drug supply chain.

Call-to-Action Update

Last week, AMAC Action launched a call-to-action campaign giving voice to AMAC’s California members who are displeased with the anti-Trump debate taking place in the state’s legislature. The campaign called out the legislature and Governor Newsom for not addressing the needs of the victims of California’s devastating wildfires and instead using the session to scheme ways to stop the Trump agenda.

Over 1,000 messages were sent to the California legislature and Governor Newsom. The voice of AMAC members appears to have resonated with the legislature because, on January 23, the lawmakers unanimously passed a $2.5 billion wildfire aid package!

Legislation and Policy Support

UPDATE – Laken Riley Act (S. 5)

The AMAC Action-supported Laken Riley Act has now passed both the House and the Senate and should become the first bill signed into law by President Trump during his second term.

AMAC Action Supports Veterans Second Amendment Protection Act

This legislation ensures that our veterans’ due process and Second Amendment rights are fully protected by ensuring that no veteran is reported to NICS without a court ruling determining that they are a danger to themselves or others. Currently, veterans are reported to the National Instant Criminal Background Check System (NICS) simply because they require a fiduciary to manage their VA benefits. This unfairly stigmatizes them and deprives them of their rights without due process. Click here to read AMAC Action’s letter of support.

AMAC Action Supports H.R. 21 – Born-Alive Abortion Survivors Protection Act

This legislation ensures that newborns, regardless of the circumstances of their birth, are recognized as individuals with rights and deserve medical care. It also establishes consequences for those who fail to uphold this fundamental responsibility, reinforcing the principle that life must be respected. This legislation was PASSED by the House of Representatives. Click here to read AMAC Action’s letter of support.

AMAC Action Supports Personalized Care Act

This legislation offers seniors the ability to take control of their healthcare decisions and protect their financial independence by significantly expanding access to Health Savings Accounts (HSAs). By decoupling HSAs from high-deductible health plans, this bill ensures more individuals, including seniors on Medicare or participating in healthcare sharing ministries, can benefit from the flexibility HSAs offer. Furthermore, by increasing HSA contribution limits to $10,800 for individuals and $29,500 for families, seniors are better able to plan for and manage their medical expenses. Click here to read AMAC Action’s letter of support.

Meetings

January 21 Chapter Meeting: KS-04 Delegate Barb Schwerman hosted the chapter meeting. Connie Newcome, President of Kansans for Health Freedom, spoke about health freedom for the people of Kansas.

Action ☆ Academy 

Who Wants to Follow California?

In PragerU’s 5-minute video Who Wants to Follow California?, Michael Anton, lecturer in politics at Hillsdale College’s Washington D.C. campus and author of The Stakes: America at the Point of No Return, discusses how California, a one-time middle class paradise, has become a cautionary tale for other states. PragerU is a 501(c)(3) nonprofit that promotes American values in short educational videos for people of all ages.

Term of the Week: Advice and Consent of the Senate

“Throughout the summer of 1787, the framers of the Constitution debated where to place the power to make executive and judicial appointments. Eventually, they settled on the concept of a shared power—the president would make appointments with the ‘advice and consent’ of the Senate. Article II, section 2 of the United States Constitution provides that the president ‘shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the Supreme Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for.’

The president nominates all federal judges in the judicial branch and specified officers in cabinet-level departments, independent agencies, the military services, the Foreign Service, and uniformed civilian services, as well as U.S. attorneys and U.S. marshals. The vast majority are routinely confirmed, while a small but sometimes highly visible number of nominees fail to receive action or are rejected by the Senate. In its history, the Senate has confirmed 128 Supreme Court nominations and well over 500 cabinet nominations.”

(U.S. Senate: Constitution Day 2024: The Senate’s Power of Advice And Consent on Nominations. 17 Sept. 2024, www.senate.gov/artandhistory/senate-stories/constitution-day-2024-senates-power-of-advice-and-consent-on-nominations.htm.)

Class for January and February

Great Books 101: Ancient to Medieval

Reading great literature can help improve critical thinking skills, broaden your understanding of the world around you, and provide insight into human nature. In the free online course Great Books 101: Ancient to Medieval, Hillsdale College introduces you to great literature from early authors of Western Civilization. In 11 sessions learn about such classics as Homer’s Iliad and Odyssey, Dante’s Inferno, and Chaucer’s Canterbury Tales.

Quote of the Week

“The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew and act anew. We must disenthrall ourselves, and then we shall save our country.”

— President Abraham Lincoln

Fight to save the America we love! If you’d like to become a volunteer AMAC Action Delegate, please contact us at (855) 809-6976 or [email protected].