Cantwell says “we should all be very concerned” about PBM middlemen after reading FTC report

Today, the Federal Trade Commission (FTC) released an interim report showing that prescription drug middlemen are profiting at the expense of patients, inflating drug costs and squeezing local pharmacies. After reviewing the report, U.S. Senator Maria Cantwell (D-Wash.), Chair of the Senate Committee on Commerce, Science and Transportation, urged her colleagues to pass her bipartisan Pharmacy Benefit Manager Transparency Act that would hold these middlemen accountable. The Committee passed the bill 18-9 last year, and the legislation currently awaits a vote in the Senate.

“We should all be very concerned about the activities of PBM middlemen,” Sen. Cantwell said in remarks on the Senate Floor. “These are the people who are supposedly getting discounts for us on drug prices but then actually pocket those discounts.”

“PBMs are engaging in self-preferencing, meaning that they are steering rebates back to themselves, and it's affecting pharmacies, and it's affecting pharmacies in my state, where now in downtown Seattle you don’t have any 24-hour pharmacies anymore, and pharmacy deserts are starting to happen,” she continued.  

“The report also shows that PBMs have been using their market share to force independent pharmacies into unfair contracts,” Sen. Cantwell said. “The point is, are we going to do anything to stop that market power and to help the public who need better transparency on price?”

“I urge our colleagues here to take action on these PBM middlemen. This is a bipartisan effort,” she concluded. 

According to the FTC’s interim staff report, PBMs wield enormous power over patients’ ability to access and afford their prescription drugs, allowing PBMs to significantly influence what drugs are available and at what price. The interim report also found that PBMs hold substantial influence over independent pharmacies by imposing unfair, arbitrary and harmful contractual terms that can impact independent pharmacies’ ability to stay in business and serve their communities.

Sen. Cantwell introduced the Pharmacy Benefit Manager Transparency Act with Sen. Chuck Grassley (R-Iowa) in January 2023. The bill bans deceptive and unfair pricing schemes, prohibits arbitrary claw backs of payments made to pharmacies and requires PBMs to report to the FTC how much money they make through spread pricing and pharmacy fees. The bill has strong bipartisan support and has been endorsed by more than 200 organizations across the country, including AARP. Earlier this year, Cantwell and Grassley urged the FTC to complete its investigation into health care’s most powerful prescription drug middlemen.

Pharmacy benefit managers, or PBMs, were initially formed to process claims and negotiate lower drug prices with drug makers, but today, they administer prescription drug plans for hundreds of millions of Americans – three PBMs control nearly 80 percent of the prescription drug market. They serve as middlemen, managing every aspect of the prescription drug benefits process for health insurance companies, self-insured employers, unions and government programs. They operate out of the view of regulators and consumers — setting prescription costs, deciding what drugs are covered by insurance plans and how they are dispensed – pocketing unknown sums that might otherwise be passed along as savings to consumers and undercutting local independent pharmacies. This lack of transparency makes it impossible to fully understand if and how PBMs might be manipulating the prescription drug market to increase profits and drive up drug costs for consumers.

In Washington state and across the nation, PBMs are contributing to a hostile business ecosystem, especially for independent community pharmacies. In 2023, the state saw the closure of 60 pharmacies, and in the last 18 months, a record 83 pharmacies have closed in the state. These closures have a significant impact on Washington consumers.  A recent analysis by the Associated Press found that Washington state is the 6^th worst in the nation pharmacy access. There are currently only three 24-hour pharmacies open in the entire western side of the state, none of which are in Seattle.