Pressure Mounts on FTC to Investigate Pharmacy Benefit Managers’ Co-Manufacturing Agreements

Two U.S. senators are calling on the Federal Trade Commission (FTC) to expand its scrutiny of major health care corporations and their pharmacy benefit managers (PBMs), urging a new investigation into controversial “co-manufacturing” agreements. These agreements, according to Senators Sherrod Brown of Ohio and Ron Wyden of Oregon, allow PBMs to extend their control over the drug supply chain, raising concerns about higher drug prices and limited options for consumers.

PBMs, such as CVS Caremark and Express Scripts, act as intermediaries between drug manufacturers and insurers, negotiating prices, creating pharmacy networks and determining reimbursement rates. While these companies claim that their large scale helps lower drug prices for patients, recent developments suggest they may also be engaging in practices that could stifle competition and drive up costs. According to the Oregon Capital Chronicle, Senators Brown and Wyden have voiced their concerns in a letter to the FTC, highlighting the potential harm these agreements could have on consumers.

The senators’ letter, sent last week, focuses on the growing influence of health care conglomerates that own both PBMs and other health-related businesses, such as mail-order pharmacies and insurance companies. For example, CVS Health, which owns CVS Caremark, also controls Aetna, a major health insurer, and the largest retail pharmacy chain in the country. The letter notes that co-manufacturing agreements between PBMs and drug makers blur the lines between negotiators and suppliers, making it difficult to ensure fair competition.

“The concern with these ‘co-manufacturing’ agreements is that they are a veiled attempt by PBMs to control additional parts of the supply chain, resulting in fewer drug choices and higher drug costs for consumers,” the letter stated, per the Oregon Capital Chronicle. The senators argue that rather than manufacturing drugs themselves, PBMs are leveraging their position to increase control over the supply chain without providing tangible benefits to patients.

One key area of concern involves PBMs’ dealings with drug makers producing biosimilars of adalimumab, an arthritis treatment sold under brand names like Humira. The co-manufacturing agreements allow CVS Caremark and Express Scripts to wield significant influence over how these drugs are priced and distributed, potentially limiting competition and driving up costs for consumers, the senators allege.

Read more: FTC Takes On Prescription Drug Middlemen Over High Insulin Costs

CVS, however, disputes these claims, asserting that its co-manufacturing efforts have resulted in savings. According to CVS, these agreements helped save clients $500 million on immunosuppressive drugs similar to Humira. Nonetheless, critics argue that the vertical integration of CVS and its control over both the PBM and pharmacy operations create conflicts of interest, allowing the company to prioritize its financial interests over consumer welfare.

This latest call for action comes on the heels of ongoing antitrust investigations into PBMs. The FTC has already filed a lawsuit against the largest PBMs, including CVS Caremark, Express Scripts, and OptumRx, over their role in inflating insulin prices. Additionally, the FTC is conducting a broad “6(b)” investigation into PBM practices, with a July report accusing the companies of artificially raising drug prices and harming patients.

Brown and Wyden, both members of the Senate Finance Committee, are pushing for a separate 6(b) investigation into the co-manufacturing deals. In their letter, they argue that these agreements represent yet another attempt by conglomerates to control the pharmaceutical supply chain without adding value for patients. “They don’t seem to be making anything,” the letter reads. “They’re just taking control of yet another part of the drug supply chain.”

Source: Oregon Capital Chronicle