Letter to Hon. Lina Khan, Chairwoman of the Federal Trade Commission - Grassley Presses FTC To Investigate Pharmacy Benefit Managers' Role In Consumer Drug Prices

Letter

Dear Chair Khan,

I write in regards to the Federal Trade Commission's (FTC) recent deadlocked vote on February
17 to initiate a 6(b) Study into the business practices of Pharmacy Benefit Managers (PBMs). I
urge you to find consensus and vote to move forward on a revised 6(b) study to examine
competitive concerns within the PBM industry.

As you know, PBMs operate with little to no transparency, making it very difficult if not
impossible to understand the flow of money in the prescription drug marketplace and how PBMs
determine the prices for prescription drugs. Recent consolidations between PBMs and insurance
providers have resulted in vertical integration whereby a small number of companies now
manage the vast majority of prescription drug benefits. CVS/Caremark, OptumRx and Express
Scripts control roughly 75% of the PBM market and are owned by insurers Aetna, United
Healthcare, and Cigna, respectively.

I have introduced legislation, S. 1388 the Prescription Pricing for the People Act, which would
require the FTC to conduct a study and report to Congress on the effects of consolidation and
potentially anticompetitive behavior that may impact prescription drug pricing. A few of the
provisions required to be examined in the report include whether PBMs charge certain payers a
higher price than competing pharmacies or steer patients to pharmacies at which the PBM has an
ownership stake, whether PBMs use formulary designs to depress market share of low cost
prescription drugs, and if more information about roles of intermediaries in the healthcare
marketplace would benefit consumers. This legislation was approved unanimously by the
Judiciary Committee last year.

There is widespread bipartisan support for examining PBMs and looking into whether they are
causing Americans to pay higher prices for prescription drugs. I hear stories about rising drug
costs all the time at my 99 county meetings. A study into the business practices of these
intermediaries would provide transparency and insight about possible competitive harms.
Looking at the record from the FTC's open hearing on February 17, there is widespread support
amongst all of the Commissioners to conduct a 6(b) study into the business practices of PBMs. A
more targeted focus for the study on the impact of PBMs on consumers and the out of pocket
costs of their prescription drugs appears to be an area of agreement. I encourage you to come
together with your fellow commissioners to find common ground on a meaningful 6(b) study.

Sincerely,[...]

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