ATLANTA — Federal regulators say a new settlement with one of the country’s largest pharmacy benefit managers could lead to lower prescription drug costs for consumers and save patients billions of dollars over the next decade.
The Federal Trade Commission announced a multibillion-dollar settlement with CVS Caremark, the pharmacy benefit manager, or PBM, owned by CVS Health. The FTC alleges that PBMs helped drive up prescription drug costs by encouraging higher list prices on certain medications while collecting rebates from drug manufacturers.
Most consumers are unfamiliar with PBMs, but they play a major role in the prescription drug system. PBMs act as intermediaries between insurance companies, pharmacies and drug manufacturers, helping determine which drugs are covered and how much patients pay.
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The three PBMs targeted by the FTC, CVS Caremark, Express Scripts and Optum Rx, collectively manage roughly 80% of prescriptions filled in the United States.
Apollon Constantinides, owner of Lakeside Pharmacy and Compounding Lab in Forsyth County, said PBMs have dramatically changed the prescription drug market during the decades he has spent working in independent pharmacy.
Constantinides began working in his father’s Atlanta pharmacy as a teenager and has operated Lakeside Pharmacy for more than 20 years.
“Now PBMs have a lot of control over the market and what pharmacies can carry, what can come to market, where it can go, who can give it to you, and it’s just an overreach,” Constantinides said.
The FTC made similar allegations in its lawsuit against the three major PBMs.
In its complaint, the agency said the country’s prescription drug affordability crisis is driven in part by PBMs’ “manipulation of drug price competition for their own gain.”
According to the FTC, PBMs benefited financially from manufacturer rebates tied to high-priced drugs, while some patients paid out-of-pocket costs based on those higher list prices.
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“They got paid in part by the size of the rebate, but it hurt many patients because many patients had to pay for drugs at the list price or in a way that was based on the list price,” FTC Director of Competition Daniel Guarnera said. “So many patients had to overpay for their drugs at the pharmacy counter.”
Under the settlement, FTC officials say rebate savings that previously went to the PBM will instead be passed on to patients.
“Patients will benefit from the rebates that previously had benefited only the PBM,” Guarnera said.
CVS Caremark defended the agreement in a statement to Channel 2 Action News.
“Today’s agreement advances and reinforces the changes we have already put in place and ensures affordability for families and patients across the country,” the company said.
The FTC estimates the CVS Caremark settlement will save consumers $4.5 billion over the next 10 years. The agreement also includes a provision capping insulin costs at $25 per month for affected patients.
Constantinides said he believes the settlement is a positive step for consumers.
“It’s all about dollars and cents,” he said. “The people that run these PBMs, they’re not focused on health care. They’re not focused on the medical side. They’re bean counters.”
The FTC has already reached a settlement with Express Scripts and is considering a proposed settlement with Optum Rx, the third major PBM named in the lawsuit.
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