Bipartisan Group Asks FTC to Address 'Fraudulent Activities' by PBMs

A bipartisan group of state legislators has urged the FTC to stop defending the pharmaceutical benefit manager (PBM) industry and to crack down on "deceptive and fraudulent practices" utilized by PBMs.

PBMs are capable of securing lower-priced pharmaceuticals for buyers, according to a letter from lawmakers in 10 states and the District of Columbia. "However, there have been numerous state and federal investigations and enforcement actions that have uncovered a variety of deceptive and fraudulent practices by PBMs," the lawmakers say in a letter addressed to FTC Chairwoman Deborah Majoras.

"Our own experiences as state legislators dealing with state agencies which must negotiate with PBMs has shown that PBMs often act contrary to the interests of the buyers they represent," according to the lawmakers, who are members of the National Legislative Association on Prescription Drug Prices.

For example, PBMs often direct individuals to drugs that provide the PBM with the highest rebates and the greatest margins, while failing to pass those savings on to purchasers, the lawmakers say. Furthermore, they contend, the operations of PBMs are often not transparent, which enable them to engage in these practices without regulations from market forces. Numerous states are devoting considerable enforcement resources to combat fraudulent and anticompetitive conduct by PBMs, the letter says.

"Despite the growing body of evidence of at worst fraudulent activity, and at best merely obfuscating behavior, the FTC has either remained on the sidelines or weighed in apparently in support of the PBM industry," the lawmakers write. The state lawmakers contend the FTC misunderstands the dynamics of the prescription drug market, including that competition among PBMs would create an efficient level of disclosure and transparency.

A copy of the state legislators' letter is available online at ()a href="http://www.nlarx.org/resolutions/index.html" target="_blank">http://www.nlarx.org/resolutions/index.html