House Committee Launches Investigation of Pharmacy Benefit Managers (PBMs)

This article was originally published in Price Tags, a publication of the Pricing Conduct Committee in the ABA Antitrust Law Section.

On March 1, 2023, the House Committee on Oversight and Accountability launched aninvestigationinto alleged anticompetitive behavior by pharmacy benefit managers (PBMs). Committee Chairman James Comer requested information from government agencies and three of the largest PBMs, citing concerns that consolidation among PBMs has “forced manufacturers to raise their prices” and led to “increased costs for consumers.”

PBMs act as third-party administrators on behalf of health insurers and self-insured employers. As an intermediary between health plans and pharmacies, PBMs form pharmacy networks and negotiate reimbursements. PBMs also collect payments from health plans and distribute them to pharmacies. Additionally, PBMs work with clients, including health plans, employers, unions, and government agencies, to develop drug formularies, which are tiered lists of drugs that are covered at varying cost- sharing amounts. They also negotiate drug prices and concessions, such as rebates, directly with drug manufacturers.

Chairman Comer cited a committee report released in December 2021 that outlines some of PBM’S pricing practices that allegedly increase consumer costs, including raising manufacturer list prices to offset higher rebates and charging health plans more than they pay the pharmacies, a practice referred to as “spread pricing.” The Pharmaceutical Care Management Association (PCMA), a national trade association of PBMs whose members include the recipients of the Committee’s requests, responded in a statement that they “appreciate – and share – the committee's concern around drug pricing and existing gaps in affordability” but believe that the most effective way to lower drug costs is to increase competition in the prescription drug market.

The Committee’s inquiry follows a June 2022 statement from the Federal Trade Commission (FTC) explaining its enforcement policy on PBM rebates and fees. In it, the FTC states that it intends to “ramp up enforcement against any illegal bribes and rebate schemes that block patients’ access to competing lower-cost drugs.” The FTC outlined multiple legal authorities that could apply in these cases, including Sections 1 and 2 of the Sherman Act, Section 5 of the FTC Act, and Section 2(c) of the Robinson-Patman Act.