This overview is excerpted from Manatt on Health, Manatt’s subscription service that provides in-depth insights and analysis focused on the legal, policy and market developments.
In the wake of the FTC’s July 9 vote to release an interim staff report on PBMs, several media outlets are reporting that the Commission is poised to sue large PBMs. The timing and nature of the litigation is unspecified, although some reports suggest that action could come this month.
Litigation would represent a major step in FTC Chair Khan’s efforts to regulate PBM practices that she believes harm independent pharmacies and may lead to higher drug spending. Presumably, the FTC would use this information to support its litigation.
The report focused on three main criticisms of PBM practices:
- PBMs profiting from steering specialty drug prescriptions to affiliated pharmacies;
- PBMs harming independent pharmacies through unfair negotiating and reimbursement policies; and
- PBMs preferring higher-cost drugs over generics and biosimilars.
While it is difficult to predict the nature of potential FTC litigation, it is possible, based on the issues identified in the report, that the Commission may seek to enforce changes in PBM practices, including preventing PBMs from favoring their owned or affiliated pharmacies, ending certain PBM-imposed requirements on pharmacies in PBM networks, and requiring greater transparency of PBM formulary decisions.
