Are the PBMs Really in Trouble This Time?

If the Federal Trade Commission proceeds, it will need to present evidence we’ve yet to see

Letter to The WSJ. 

"Regarding “Drug-Benefit Managers Face FTC Suit Over Insulin Prices” (Page One, July 11): The Supreme Court holds that consumer welfare is the paramount goal of antitrust law. Therefore, if the Federal Trade Commission proceeds, it will need to present evidence we’ve yet to see.

It will need to show that the opaque pricing strategies and contracting arrangements restricted the availability of biosimilar competitor drugs without providing countervailing benefits for patients. In practice, unlawful monopolization would essentially mean the rebates—which pharmacy-benefit managers (PBMs) receive from drugmakers in exchange for favorable insurance formulary listings—make no business sense other than for maintaining a drugmaker’s monopoly.

Perhaps the FTC will expand upon the circumstantial and anecdotal evidence flagged in its interim report to argue that rebates are restricting access to drugs, limiting competition from generics and raising prices for payers and patients. PBMs, though, will counter that negotiating rebates in a competitive market lowers premiums or other costs, and that favorable formulary listings encourage the research and development of new cures.

Satya Marar

Visiting fellow, Mercatus Center

Arlington, Va."