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Introduction
On July 9, the Federal Trade Commission (FTC) released its “interim staff report on prescription drug middlemen“, detailing how Pharmacy Benefit Managers (PBMs) profit on both sides of the trade – by driving up drug prices and putting pressure on smaller, non-chain pharmacies. Of course, this is nothing new to anyone who has studied the business model of PBMs like Express Scripts, which is owned by The Cigna Group (NYSE:CI), but regulatory and media attention is obviously increasing.
The New York Times, for example, published a rather detailed article on the subject three weeks ago, referring to PBMs as “The Opaque Industry Secretly Inflating Prices for Prescription Drugs“.
Similarly, OptumRx (owned by UnitedHealth Group Inc., UNH), Caremark (owned by CVS Health Corp., CVS) and Express Scripts are facing lawsuits related to their role in negotiating insulin prices.
In addition,…
