JustCare

Tag: FTC

  • FTC criticizes Rx middlemen in new report

    FTC criticizes Rx middlemen in new report

    In a health care world filled with insane prices and complexities, the prescription drug middlemen, sometimes called Pharmacy Benefit Managers or PBMs, are at the top of the “is this even possible” list. The Federal Trade Commission or FTC criticizes PBMs sharply in a new 71-page report, reports Reed Abelson and Rebecca Robbins for The New York Times. Only when the government negotiates prescription drugs prices will we see fair prices for prescription drugs; PBMs would cease to exist.

    So that we’re all on the same page: In a better world, PBMs would negotiate lower drug prices from pharmaceutical companies so that health insurance companies could pass on those savings to their members. In our world, the big health insurance companies own the PBMs and pocket all or most of the savings for themselves. Insured Americans end up paying more for their drugs in many cases than people without insurance. Sometimes, their insurers direct them to use higher cost brand-name drugs (because the pharmaceutical manufacturers pay the PBMs a fair bit to steer people to those drugs); people’s insurers might not even offer the generic substitute or do so at a higher copay.

    PBMs keep drugs prices so high that, in many instances, even with a Medicare Part D prescription drug benefit, you will pay less for the full cost of your prescription from Costco or using GoodRx than the Part D copay. PBMs also sometimes overcharge people for the cost of drugs.

    What the FTC says: “[T]hese powerful middlemen may be profiting by inflating drug costs and squeezing Main Street pharmacies.” They “wield enormous power and influence” and their practices “can have dire consequences for Americans.” The only quibble I have with that statement is the “may be;” PBMs profit substantially from these tactics.

    The FTC has not sued a PBM yet. But, the PBMs and the big insurers who own them have taken notice and now worry that they will be sued for anticompetitive conduct. Until there’s a Democratic majority in both houses of Congress and a Democratic president, it seems unlikely that our federal government will block their bad behavior. The Republicans appear to have no interest in reducing drug prices.

    Who owns the three biggest PBMs? CVS Health owns Caremark, UnitedHealth Group owns Optum Rx and Cigna owns Express Scripts. These three PBMs control about 80 percent of the prescription drug market in the US.

    It seems to me that the only way to stop the PBMs from driving up drug costs is to put them out of business. In an ideal world, the US would negotiate drug prices as every other wealthy nation does. PBMs would lose their value. Americans would not be victims of PBM abuse.

    As you might expect, the PBMs disagree strongly with the FTC’s report. They are huge corporations, and they will fight back as hard as they can. They correctly claim that they have enormous leverage to bring down drug prices. But they fail to acknowledge that once they negotiate lower prices, they pocket most, if not all of the savings, and/or pass the savings on to the health insurers who own them.

    The evidence speaks volumes: The PBMs have pharmacies that send mail-order drugs to patients. The FTC found that PBMs paid their pharmacies a lot more for two generic cancer drugs than it would cost to buy these drugs directly from a wholesaler. As a result, in less than three years, they made $1.6 billion in revenue from these two drugs.

    Here’s more from Just Care:

  • Public Citizen urges the Biden administration to keep profiteers out of health care, protect patients from corporate greed

    Public Citizen urges the Biden administration to keep profiteers out of health care, protect patients from corporate greed

    In a response to a request for information from the Department of Health and Human Services, the Department of Justice (DOJ) and the Federal Trade Commission (FTC), Public Citizen and several dozen other groups urge the Biden administration to keep profiteering out of health care, stop health care consolidation, and protect patients from corporate greed. Private equity, health insurers and pharmaceutical companies need to be reined in. They call for a universal health care system in the US.

    Eagan Kemp, health care policy advocate at Public Citizen, explains that private equity is taking over the US health care system, driving up patient costs and undermining quality of care. Profits come first, second and third. The Biden administration should eliminate the profiteering and ensure our health care system meets patient needs.

    Today, our profiteering health care marketplace has driven up costs and left millions of patients without care or paying exorbitant prices for their care, even with insurance. As a result, we spend an average of $13,500 a year  per person, often twice as much as every other wealthy country, on health care. No other developed country has so many companies extracting profits from its health care system.

    Insurers operating Medicare Advantage plans can compromise patient care in order to maximize profits. They are paid a fixed amount per enrollee upfront. So, they market to the healthy and create obstacles to care—e.g., delay and deny needed care—which lead people with costly conditions to disenroll.

    Public Citizen argues that the government needs to standardize coverage in Medicare Advantage so that insurers cannot inappropriately deny needed care. The administration should improve network adequacy requirements. The administration needs to better oversee the Medicare Advantage plans and recoup overpayments. It should not give plans a star rating if they are violating their contractual obligations. And, it should penalize bad actors in meaningful ways.

    Here’s more from Just Care:

  • Food prices are soaring as are profits at Walmart and other big food corporations

    Food prices are soaring as are profits at Walmart and other big food corporations

    If you spend any time at the grocery store, you can’t help but notice that prices are going up and up and up. The big corporations, like Pepsi and General Mills, say it’s all about supply chain issues, while their profits soar. Veronica Riccobene reports for the Lever on“What’s going on?”

    In four years, grocery prices are up 25 percent overall, while shareholders with interests in grocery stores have seen $77 billion in distributions.

    In 2022, people typically spent 11 percent of their disposable income on food. The price of a dozen eggs has just about doubled in four years. Food and Water Watch says that an average family of four living thriftily spends 50 percent more today than it did four years ago, $976, up from $654.

    More Americans are going hungry. Three and a half million more people are facing food insecurity since the pandemic. Today, about 28 million adults in the US do not have ongoing access to food. Some are calling on President Biden to step in and keep the food companies from driving up food prices. The marketplace is broken.

    Companies buy back their stocks to drive up their stock prices. Corporate executives and shareholders benefit. Consumers are hurt.

    Tyson Foods’ execs and shareholders are some of the big beneficiaries of stock buybacks. Tyson raised the price of meat nearly 30 percent and saw its profit margins more than double between 2021 and 2022. It’s operating costs rose, but price increases more than offset those costs—by 33 percent.

    According to the Federal Trade Commission,  Walmart, Kroger, and Amazon “used rising costs as an opportunity to further hike prices to increase their profits.” The price of food and drinks rose seven percent more than their costs.

    Walmart raised prices more than 50 percent on some of its generic food brands in the three years between 2020 and 2023. General Mills raised the price of cereal 12 percent in 2023 from the prior year. It also shrunk the amount of cereal in the box to 18.1 ounces from 19.3 ounces.

    In addition to raising prices, companies are shrinking the size of their products. They call it “shrinkflation.”

    As grocery store corporations get larger, they can engage in price fixing. Only about four companies control half the market for nearly 80 percent of groceries sold. Walmart sells nearly 30 percent of all groceries in the US. Costco sells about 7.1 percent of groceries and Kroger sells 5.6 percent. The Federal Trade Commission is now trying to stop a merger between Kroger and Albertsons on antitrust grounds.

    The consolidation is particularly stark among retailers. Just this year, the Federal Trade Commission sued to block a $24.6 billion merger between Kroger and Albertsons, alleging it violates antitrust law.

    Senator Elizabeth Warren is leading the charge in Congress to stop the grocery store price gouging through the Price Gouging Prevention Act. Her bill would make it a federal offense for corporations to price gouge.

    Here’s more from Just Care:

  • FTC cleaning up junk patents on 20 brand-name drugs

    FTC cleaning up junk patents on 20 brand-name drugs

    Pharmaceutical companies don’t only get to set their prices on brand-name drugs, they can flood the FDA with patents to keep those brand-name drugs without generic competition for extensive periods of time. Thankfully, the Federal Trade Commission (FTC) is challenging what it is calling “junk” patents on 20 brand-name drugs, Bruce Gil reports for Quartz. The goal is to clean up the mess in the drug patent arena, allow generic drugs to enter the market sooner, and bring down drug prices.

    Ozempic is one of the 20 drugs that the FTC claims has junk patents. If not undone, it will take longer for generic alternatives to compete with it. Novo Nordisk will be able to continue to charge insanely high prices for Ozempic. The FTC is also disputing the patents on Saxenda and Victoza.

    As a rule, a drug patent extends for 20 years beginning when the drug manufacturer files the patent. Once the manufacturer files the patent, it can charge what it pleases for a drug.

    Manufacturers tend to file patents as early as they can, usually even before requisite clinical trials are completed and their drugs are approved. They then file more patents as a way to extend their ability to control the price of their drugs.

    The manufacturers claim they need to recoup their research and development investments. But, substantial evidence suggests that these investments do not justify the prices.

    Junk patents generally support small changes to a drug, such as how they are manufactured or how they are taken, e.g., orally or by injection. With Ozempic, the FTC challenge is to a patent on its “injection device with torsion spring and rotatable display.” By having this device listed in the FDA’s Orange Book, Novo Nordisk gets 30 months of additional exclusivity on its drug.

    But, even if the FTC wins its challenges on these 20 brand-name drugs and they are removed from the FDA’s Orange Book, the manufacturers can sue companies for violating their patents. Through these lawsuits, the pharmaceutical companies can continue to quash competition.

    Some say that the FDA needs more time to review patent applications in order to nip them in the bud and deny them where appropriate. One study finds that if those determining whether patents should be issued were given 50 percent more time, more patents would be denied and Americans would spend about $5 billion less each year for drugs.

    Here’s more from Just Care:

  • FTC investigates CVS Caremark and other Pharmacy Benefit Managers

    FTC investigates CVS Caremark and other Pharmacy Benefit Managers

    Given the number of cases against corporate health insurers for violating their contractual obligations with Medicare, the issue is not whether there will be more, but which health insurers will be found culpable, when, and will the federal government protect enrollees from the bad actors. The FTC is now taking a deep look into the largest Pharmacy Benefit Managers (PBMs), all of whom are linked in one way or another to a health insurance company covering Medicare benefits. What would the FTC or anyone else need to find for Congress to step in to remove PBMs and private insurers from the administration of Medicare benefits?

    Pharmacy Benefit Managers are middlemen that work in collaboration with the Medicare Part D health insurers. PBMs negotiate rebates and fees with drug manufacturers. They also decide which drugs go on the health insurers’ list of covered medicines, where people can buy their prescriptions, what they pay out of pocket, and a slew of related policies. PBMs pay pharmacies to fill prescriptions for Part D enrollees.

    Most recently, the law firm of Frier Levitt announced a significant victory on behalf of a minority and woman-owned specialty pharmacy, Mission Wellness, against CVS Caremark. CVS Caremark is a Pharmacy Benefit Manager (PBM) serving the Medicare population through Medicare Part D. Mission Wellness prevailed on its claim that CVS Caremark imposed unreasonable “direct and indirect remuneration” or DIR fees on it.

    In arbitration, Frier Levitt obtained an award of more than $3.6 million for breach of contract. CVS Caremark was ordered to return all the DIR fees it had received from Mission Wellness as well as to pay attorneys’ fees and interest. But, to date, CVS Caremark has not paid the amount awarded.

    If you think that the CVS Caremark breach of contract does not affect you, think again. When a Medicare contracting entity fails to pay health care providers what they are due, providers reconsider whether they will continue treating people with Medicare. Mission Wellness lost money as a result of the DIR fees, while it was a member of CVS Caremark’s Part D network.

    You might wonder why CMS isn’t looking out more for people with Medicare and hasn’t cancelled its contract with CVS Caremark. According to Frier Levitt: “Caremark refused to provide the required discovery throughout the arbitration, including discovery necessary to “audit” Caremark’s calculations of medication adherence, which serves as the basis for its recoupment of DIR fees.  Even after being sanctioned by the Arbitrator, Caremark refused to provide the basis for the DIR methodology.”

    Right now, the FTC is investigating CVS Caremark and other PBMs in the Medicare Part D program regarding recoupment of DIR fees. The biggest PBMs are part of corporations that include health insurance companies and pharmacies. The FTC wants to know what fees PBMs charge pharmacies that are not in their networks, what they do to incentivize patients to use their pharmacies, their prior authorization policies, how rebates and fees from drug manufacturers affect which drugs are on a formulary and what people pay, and more.

    Here’s more from Just Care: