reporter: Marty Schladen
Huge health conglomerates have another reason to worry that their business model might be disrupted. On a visit to Columbus Monday, one of the country’s top antitrust watchdogs said her agency is taking a hard look at the businesses and their practices.
Doha Mekki, the No. 2 official in the U.S. Justice Department’s Antitrust Division, said her agency is investigating whether it should take action in the health care space generally, and specifically about insurance middlemen known as pharmacy benefit managers.
“Hearing about the depth of this problem is eye-opening for all of us, and it’s also confirmatory,” Mekki said.
Mekki’s agency is one of two major federal antitrust enforcers. The other, the Federal Trade Commission, is already conducting a major investigation of pharmacy benefit managers and is suing over their pricing practices regarding insulin.
She was speaking just after a roundtable discussion held by the American Economic Liberties Project, a group that advocates for policies to address “today’s crisis of concentrated economic power.”
Participants in the roundtable talked about how they believe pharmacy benefit managers are driving community pharmacies out of business, making medicine more expensive, and in some cases making people a lot sicker.
When it comes to concentrated economic power, it seems hard to top pharmacy benefit managers, or PBMs, and their corporate parents — each of which is among the 15 largest companies by revenue in the United States.
PBMs represent insurers in drug transactions, and they decide which medicines will be covered.
And, because just three PBMs control access to about 80% of insured patients, they have enormous leverage to extract ever-bigger rebates from drugmakers. That’s a practice that’s been shown to increase costs for many consumers at the pharmacy counter.
Because PBMs’ parent companies are increasingly “vertically integrated,” they’re big players in numerous parts of the health delivery chain in ways that could create conflicts of interest. For example, the big-three PBMs are the dominant middlemen in drug transactions, and they’re each part of a company that also owns a top-10 insurer. So they could try to get better deals for their sister insurance companies than for their competitors.
The big PBMs also determine how much to reimburse pharmacies that dispense drugs they buy from wholesalers. Because the PBMs control access to so many insured patients, independent pharmacies say they have no choice but to accept whatever contract terms they’re offered.
“They say, ‘We will contract with you if we can pay you whatever we want,'” said Benjamin Jolley, a Salt Lake City pharmacist who works with the Economic Liberties Project.
At the same time the companies that own PBMs decide how much to reimburse pharmacies, they also compete with them... CONTINUE READING
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