FTC calls out significant markups by PBMs in the specialty generic drug market

Pointing to misuse of vertical integration, FTC says urgent need for policymakers to address growing problem.

The Federal Trade Commission published its second interim staff report “Specialty Generic Drugs: A Growing Profit Center for Vertically Integration Pharmacy Benefit Managers,” which focuses on pharmacy benefit managers’ (PBMs) influence over specialty generic drugs, including significant price markups by PBMs for cancer, HIV, and a variety of other critical drugs.

The report found that the three largest PBMs—Caremark Rx, LLC (CVS), Express Scripts, Inc. (ESI), and OptumRx, Inc. (OptumRx)—marked up numerous specialty generic drugs dispensed at their affiliated pharmacies by hundreds to thousands of percent. These markups allowed the PBMs and their affiliated specialty pharmacies to generate more than $7.3 billion in revenue from dispensing drugs in excess of the drugs’ estimated acquisition costs from 2017-2022.

Two days after this report was released, OptumRx's parent company reported an Optum Rx revenue increase of 15% in 2024.

At the same time, patient, employer, and other health care plan sponsor payments for drugs steadily increased annually, according to the staff report.

“We also found that this problem is growing at an alarming rate, which means there is an urgent need for policymakers to address it,” said Hannah Garden-Monheit, director of the FTC’s Office of Policy Planning, in a press release.

This report builds on the first interim report issued in July 2024.

This second interim report analyzed all specialty generic drugs dispensed from 2017 to 2022 for members of commercial health plans and Medicare Part D prescription drug plans managed by the three PBMs for which the FTC has relevant data, according to the press release. This includes an analysis of 51 specialty generic drugs Ampyra (used to treat multiple sclerosis), Gleevec (used to treat leukemia), Sensipar (used to treat renal disease), and Myfortic (used by transplant recipients).

Among additional key findings, the report noted this: “In the aggregate, the Big 3 PBMs also separately generated an estimated $1.4 billion of income from spread pricing—i.e., billing their plan sponsor clients more than they reimburse pharmacies for drugs—on the analyzed specialty generic drugs over the study period.”

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