On Tuesday, the Federal Trade Commission released a second interim staff report detailing significant price markups on specialty generic drugs by UnitedHealth Group Inc.'s UNH Optum unit, CVS Health Corp.'s CVS CVS Caremark, and Cigna Corp.'s CI Express Scripts.
The report found that these companies generated substantial revenue from markups on essential medications used to treat cancer, HIV, and other critical conditions, often inflating costs by hundreds to thousands of percentage points.
From 2017 to 2022, the three largest pharmacy benefit managers and their affiliated pharmacies accrued over $7.3 billion in dispensing revenue that exceeded the drugs' estimated acquisition costs.
The report builds on a prior FTC analysis from July 2024, which revealed that PBM-affiliated pharmacies garnered 68% of specialty drug dispensing revenue in 2023, up from 54% in 2016.
This occurred as costs to patients, employers, and health plan sponsors steadily rose. FTC Chair Lina Khan emphasized the need for the agency to continue investigating practices that may inflate drug costs and harm independent pharmacies.
The report also identified alarming trends in how PBMs handle specialty generic drugs.
PBM-affiliated pharmacies dispensed a disproportionate share of the most profitable prescriptions, suggesting these companies may be steering business toward their operations. This practice resulted in billions of dollars in additional income, including $1.4 billion from spread pricing — a strategy where PBMs bill plan sponsors more than they reimburse pharmacies for drugs.
The FTC's findings underscore the growing financial impact of PBMs on health care costs.
Between 2017 and 2021, plan sponsors' spending on specialty generic drugs increased at a compound annual growth rate of 21% for commercial claims, with patients' cost-sharing also climbing significantly.
In 2021 alone, plan sponsors paid $4.8 billion, while patients spent $297 million.
The study analyzed 51 specialty generic drugs, including critical medications such as Ampyra, Gleevec, Sensipar, and Myfortic.
These drugs accounted for a significant portion of operating income for the PBMs' parent healthcare conglomerates, with the top 10 drugs alone generating $6.2 billion in dispensing revenue above acquisition costs.
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