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The Federal Trade Commission expanded its inquiry into pharmacy benefit managers Wednesday when it issued compulsory orders requiring two PBM-affiliated group purchasing organizations to turn over information about their business practices.
The orders target Zinc Health Services and Ascent Health Services, which act as intermediaries between drug manufacturers and some of the country’s largest PBMs. Zinc negotiates rebates on behalf of CVS Caremark, while Ascent Health Services acts on behalf of Express Scripts, Prime Therapeutics, Envolve Pharmacy Solutions and Humana Pharmacy Solutions. The group purchasing organizations have 90 days to provide records to the agency.
Industry observers noted that PBMs’ bargaining leverage makes their need to rely on group purchasing organizations unclear.
“The letters seem like a logical next step in FTC’s study of the drug supply chain. Like the PBM industry itself, there isn’t a lot of clarity as to why PBMs need to form GPOs,” said Duane Wright, senior government analyst at Bloomberg Intelligence.
The FTC issued similar orders last year to CVS Caremark, Express Scripts, Prime Therapeutics and Humana Pharmacy Solutions, along with OptumRx and MedImpact Healthcare Systems, as part of its inquiry into PBMs’ effect on the cost of prescription medications.
PBMs act as intermediaries negotiating drug prices with manufacturers and pharmacies on behalf of payers. Lawmakers and regulators have sought to investigate whether the companies’ practices have led to inflated prices.
Antonio Ciaccia, CEO of drug pricing research firm 46brooklyn Research and president of 3 Axis Advisors, described GPOs as “the middlemen of the middlemen.”
“The GPO creates a new layer and an even greater ability to create a larger disconnect between the list prices and the real prices of medicines,” he said.
PBMs have faced heightened pressure in Congress, with a House committee advancing a bill this week that would require the companies to provide details on their prescription drug spending to employers, among other provisions. A Senate committee voted to advance a different bill last week that would address PBM practices, including by banning spread pricing.
The House Oversight Committee launched an investigation into PBMs last month.
The FTC’s compulsory orders to the GPOs could trigger similar congressional scrutiny, Wright said.
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