The Federal Trade Commission (FTC) has released a groundbreaking report detailing how the three largest pharmacy benefit managers (PBMs) CVS Health’s Caremark Rx, Cigna’s Express Scripts, and UnitedHealth Group’s OptumRx have profited substantially by inflating the prices of life-saving generic medications. According to the report, these companies amassed an estimated $7.3 billion in profits through price markups over five years, beginning in 2017.
The findings highlight a troubling trend of “excess” price hikes, some exceeding 1,000% above the national average costs of acquiring the medications. These price surges affected drugs used to treat critical conditions such as heart disease, HIV, and cancer, with cancer drugs accounting for nearly half of the $7.3 billion.
The FTC’s report underscores the dominance of these PBMs in the U.S. healthcare system. Collectively, they administer about 80% of all prescriptions in the country, granting them significant influence over drug pricing and distribution. The commission raised antitrust concerns, noting that these companies’ practices are inflating drug prices “at an alarming rate,” calling for urgent policy reforms.
The report builds on previous FTC investigations, which criticized the “Big Three” PBMs as healthcare conglomerates wielding disproportionate control over the sector. These organizations often leverage their ownership of affiliated pharmacies to funnel prescriptions toward higher-margin drugs, exacerbating the financial burden on patients.
Specialty drugs, particularly those for cancer and multiple sclerosis, have become major revenue drivers for these PBMs. In 2021, specialty drugs accounted for nearly 11% of the pharmacy-related operating income for the three companies, according to the FTC. The report analyzed 51 drugs and found that price-markup revenues ballooned from $522 million in 2017 to $2.1 billion in 2021.
The FTC’s findings also align with years of research and advocacy highlighting how PBMs contribute to the rising costs of specialty medications. Advocacy groups and researchers have long argued that drug middlemen, such as PBMs, are a significant factor behind Americans’ high prescription costs.
Unsurprisingly, the report has drawn sharp responses from the companies involved. CVS Health dismissed the report as “cherry-picked” and defended its efforts to make healthcare more affordable. OptumRx highlighted its role in saving eligible patients $1.3 billion last year, noting that the median out-of-pocket payment for those patients was just $5. Express Scripts criticized the report’s conclusions as “misleading.”
However, the FTC counters these claims by emphasizing that the data reflects systemic practices rather than isolated cases. The report alleges that PBMs are intentionally steering prescriptions to their affiliated pharmacies, further increasing their profits.
The FTC’s investigation has already sparked legal battles. Express Scripts filed a lawsuit against the commission, accusing it of making biased and unfounded claims. In response, the FTC sued the three PBMs, alleging anticompetitive practices that artificially inflated insulin prices. While the agency dismissed Express Scripts’ lawsuit, its case against the PBMs is ongoing.
With these revelations, the FTC is urging policymakers to take immediate action to address PBM practices. As the commission transitions to new leadership under President-elect Donald Trump’s administration, the future of drug pricing regulations remains uncertain.
The FTC’s report sheds light on the opaque pricing practices of PBMs and their role in driving up healthcare costs. For patients, particularly those reliant on life-saving medications, these price hikes represent more than just financial strain they are a matter of life and death.
As the healthcare industry grapples with these findings, the push for greater transparency and regulation of PBMs is gaining momentum. Policymakers face mounting pressure to implement reforms that prioritize patients over profits, ensuring that life-saving medications remain accessible and affordable for all.
