The debate of whether pharmacy benefit managers (PBMs) are necessary in the healthcare field has been ongoing for years and doesn’t seem to be slowing down. PBMs are essentially middlemen and act as negotiating entities in the prescription drug supply chain. PBMs have the opportunity to set the prices of drugs in various ways. For example, PBMs get discounts directly from drug manufacturers and then sell them to pharmacies, while retaining a portion of the profit. Therefore, pharmacies must price their drugs based on how much they purchase them from pharmacy benefit managers.
There are many different sides to the debate of whether pharmacy benefit managers are necessary. The Pharmaceutical Care Management Association (PCMA), a national association that represents PBMS, argues that PBMs work to lower the price of prescription drugs for patients and payers. On their website, PCMA states that PBMs save payers and patients an average of $1,040 per person every year. On the other hand, PhRMA argues that patients and payers are paying more than they should because of PBMs. They claim that half of every dollar spent on medicine goes to middlemen and others.
In recent years, there have been numerous issues surrounding PBMs. In 2023, the Federal Trade Commission (FTC) filed multiple 6(b) motions, a special kind of report to study markets and competitions, against multiple PBMs. Further, in September of 2024, the FTC filed an administrative action alleging that the three largest PBMs, Caremark Rx, Express Scripts, and OptumRx violated Section 5 of the FTC Act by utilizing the rebating system to inflate insulin prices. Following this, in November 2024, the PBMs sued to block the FTC’s administrative action. The PBMs allegedthat the suit should have been brought in federal court. Further, Express Script, one of the PBMs, filed another complaint alleging that the FTC’s b(6) reports on PBMs were biased. Specifically, they argue that the report violates the Administrative Procedure Act (APA) because it is arbitrary and capricious and not in the public interest. However, on February 18, 2025, the Missouri District Court refused to block the proceeding. The court explained that the PBMs were unlikely to succeed in their arguments. Therefore, this case is ongoing and could have major implications for the future of PBMs. The FTC’s case, while it focuses on insulin prices, targets the core of the business model used by PBMs. If they succeed, PBMs will have to change the way they operate, essentially changing the entire industry. On the other hand, if Express Script wins on the b(6) report claims, other PBMs who receive similar reports could be more aggressive with their responses to the FTC. Either way, the conflict between the FTC and PBMs will rage on for years to come.