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FTC to launch inquiry into powerful 'prescription drug middleman industry'

Pharmacy benefit managers, or PBMs, control access to medications for millions of people, the Federal Trade Commission says.
Image: Prescription medicine
Bottles of pills at Rock Canyon Pharmacy in Provo, Utah, in May 2020.George Frey / AFP via Getty Images file
/ Source: Associated Press

The Federal Trade Commission is starting an inquiry into the operations of pharmacy benefit managers, and what the agency calls the "prescription drug middleman industry," that control access to medications for millions of Americans.

The consumer protection agency said Tuesday that that it will order the nation’s largest pharmacy benefit managers, or PBMs, to provide a range of information and records detailing how they do business.

PBMs run prescription drug coverage for big clients that include health insurers and employers that provide coverage. They help decide which drugs make a plan’s formulary, or list of covered medications. They also can determine where patients go to fill their prescriptions.

These businesses, the biggest of which are run by companies that also operate health insurers, have been criticized by doctors and patients over their formularies and other concerns about drug access.

“Although many people have never heard of pharmacy benefit managers, these powerful middlemen have enormous influence over the U.S. prescription drug system,” Federal Trade Commission Chair Lina M. Khan said in a statement. 

“This study will shine a light on these companies’ practices and their impact on pharmacies, payers, doctors, and patients.”

The FTC said it will seek to learn more from PBMs about drug manufacturer rebates and how they affect formulary design and the cost of drugs.