Feds expand probe into new layer of drug middlemen

The companies have been accused of driving up the prices of prescription medication

By: - June 21, 2023 1:01 pm
Pharmacy Shelves

(Mint Images/Getty Images)

The Federal Trade Commission this month announced that it was expanding its probe into drug middlemen — companies accused of increasing the cost of prescription drugs through secretive, one-sided arrangements with drugmakers and pharmacies. Specifically, it added a third company created by one of the biggest middlemen to its investigation.

The commission, which polices anti-competitive practices in the marketplace, on June 8 issued a compulsory order for Emisar Pharma Solutions to hand over “information and records on its business practices.” The order is part of a sweeping “6(b)” investigation into drug middlemen known as “pharmacy benefit managers” that began a year ago.

Part of some of the largest corporations in the United States, each of the PBMs is affiliated with a major insurer: CVS Caremark with Aetna, Express Scripts with Cigna, and OptumRx with UnitedHealth.

The PBMs create pharmacy networks, create lists of covered drugs and negotiate massive, secretive rebates and discounts from drugmakers in exchange for covering their products. The three largest are estimated to control 80% of the marketplace.

The PBMs have argued that they use their clout to negotiate discounts for the people they cover. But their critics say they aren’t transparent about their finances and that ever-increasing rebates are associated with even bigger increases in the list prices of drugs.

Even as concerns have been raised about the big-three PBMs, they’ve appeared to add another layer of secrecy.

The Capital Journal in 2021 reported the rise of “group purchasing organizations” started by each — CVS started one called Zinc Health Services, ExpressScripts launched Ascent Health Solutions and Optum launched Emisar. The companies negotiate rebates and other discounts from drug manufacturers on the behalf of the big three PBMs and some smaller players.

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Critics are not just concerned that adding another corporate layer will put yet another curtain around the companies’ practices. They’re also concerned that two of the three group-purchasing organizations are headquartered overseas, potentially making some of their dealings undiscoverable.

Express Scripts’ Ascent is based in Switzerland and Optum’s Emisar is headquartered in Ireland.

The FTC last year opened its probe into the big-three PBMs and into Humana Inc., Prime Therapeutics LLC, and MedImpact Healthcare Systems Inc. Then last month, it added Zinc and Ascent to the probe. This month, it added Emisar.

“Emisar, like Zinc and Ascent, negotiates rebates with drug manufacturers,” the FTC said in announcing the move. “Emisar negotiates these rebates on behalf of OptumRx and, like OptumRx, is a subsidiary of UnitedHealth Group. The Order to Emisar is substantially similar to the orders recently issued to Zinc and Ascent.”

In a separate proceeding, Ohio Attorney General Dave Yost in March filed suit against Express Scripts and Ascent, alleging they violated the Valentine Act, Ohio’s antitrust law. The case is pending.

This story was first published by the Ohio Capital Journal, a sibling site of the Pennsylvania Capital-Star. 

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Marty Schladen
Marty Schladen

Marty Schladen has been a reporter for decades, working in Indiana, Texas and other places before returning to his native Ohio to work at The Columbus Dispatch in 2017. He's won state and national journalism awards for investigations into utility regulation, public corruption, the environment, prescription drug spending and other matters.