Former U.S. Senator Toomey And Competitive Enterprise Institute Debunk Fundamentally Flawed FTC Report On PBMs

In case you missed it, former U.S. Senator Pat Toomey (R-PA) and senior fellow at the Competitive Enterprise Institute (CEI) Joel Zinberg, MD discuss the fundamental flaws in the Federal Trade Commission's (FTC) recent report on pharmacy benefit managers (PBMs), and how the Commission misconstrues the critical market-based value of PBMs and the savings they deliver for employers, in recent op-eds in Townhall and The Wall Street Journal.

The growing chorus of criticism against the FTC interim report should give Congress a clear sign that Congress should not use the report as a guide to any PBM policies.

See the full op-ed from Joel Zinberg in The Wall Street JournalHERE.

Read the piece from the former senator HERE.

Senator Toomey writes in Townhall:

"A recent Commission report on pharmacy benefit managers (PBMs) is the latest installment of an agenda designed to justify the further erosion of market forces in our health care system.

"The Commission's unbalanced and unempirical report strongly implies scale is inherently harmful. The opposite is true. In the case of PBMs, scale enables these companies to effectively negotiate savings from pharmaceutical companies on behalf of health plan sponsors, like America's employers.

Toomey explains that if the FTC had reviewed the full body of empirical evidence already available, it would have invalidated the pre-determined conclusions of the report:

"Perhaps the FTC relies on anecdotes and incendiary rhetoric because systematic analysis and actual data invalidate their pre-determined conclusions, by demonstrating that PBMs do, in fact, secure savings.

"PBMs secure $148 billion in overall savings every year for consumers and health plan sponsors, like employers and government agencies, according to an analysis published by the National Bureau of Economic Research (NBER) in 2022.

"These savings often take the form of rebates. Drug manufacturers compete against one another for formulary placements by negotiating rebates with PBMs. PBMs act as aggregators of health insurance plan sponsors' purchasing power, which creates greater negotiating power than most individual insurers or employers would have on their own."

Joel Zinberg in The Wall Street Journal echoes concerns over the report's conclusions contradicting what studies have found on the cost-saving role of PBMs:

"In this report, which addresses pharmacy benefit managers, the FTC argues that "amidst increasing vertical integration and concentration," PBMs "may be profiting by inflating drug costs and squeezing Main Street pharmacies." The qualifier "may" appears throughout the report, signaling a lack of empirical evidence and analysis to support its conclusions about PBMs. In fact, many studies, including several by the FTC itself, contradict those conclusions…

"My own study for the Competitive Enterprise Institute, as well as studies by University of Chicago economist Casey Mulligan, found that PBMs foster competition that lowers drug costs. Mr. Mulligan estimates that PBMs produce at least $145 billion in annual value to society beyond their resource costs."

Zinberg also notes that the FTC, itself, has previously concluded PBMs secure savings:

"The FTC concluded unanimously in a 2005 report that PBMs generate cost savings for consumers. The agency found that vertically integrated PBMs, which own mail-order pharmacies, dispensed cheaper generics at rates comparable to pharmacies not owned by PBMs. Further, in 2014, FTC economists wrote that PBMs' selective contracting on behalf of health networks is "an important tool to enhance competition and lower costs in markets for health care goods and services. Both economic principles and empirical evidence support that view."

"The new FTC report doesn't explain what changed from earlier FTC findings or provide research supporting its new conclusions. As FTC Commissioner Melissa Holyoak writes in a dissenting statement, the agency's new report fails to examine the basic question of "how PBM practices affect consumer prices."

Read other opposition from a former Secretary of State, academics, national organizations, and two current FTC commissioners HERE.

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PCMA is the national association representing America's pharmacy benefit companies. Pharmacy benefit companies are working every day to secure savings, enable better health outcomes, and support access to quality prescription drug coverage for more than 275 million patients.

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