The FTC published their second report on PBMs on Tuesday, Jan. 14. Entitled Specialty Generic Drugs: A Growing Profit Center for Vertically Integrated Pharmacy Benefit Managers, it's another sharply critical illustration of the unabated greed of the monopolistic Big Three PBMs (Caremark Rx, Express Scripts, Inc., and OptumRx). Below are the key findings in the report.

The Big 3 PBMs (Caremark Rx, Express Scripts, Inc., and OptumRx) marked up numerous specialty generic drugs dispensed at their affiliated pharmacies by thousands of percent, and many others by hundreds of percent.

Of the specialty generic drugs analyzed in this report and dispensed by the Big 3 PBMs’ affiliated pharmacies for commercial health plan members between 2020 and 2022, 63% were reimbursed at rates marked up by more than 100% over their estimated acquisition cost (NADAC) while 22% were marked up by more than 1,000%. Additionally, the Big 3 PBMs reimbursed their affiliated pharmacies at a higher rate than unaffiliated pharmacies on nearly every specialty generic drug examined. These large markups and disparities in reimbursement rates were present across critical drugs used to treat serious diseases and conditions, including cancer, HIV, multiple sclerosis, and pulmonary hypertension, among others.

A larger share of commercial prescriptions for the most profitable specialty generic drugs were dispensed by the Big 3 PBMs’ affiliated pharmacies compared with unaffiliated pharmacies.

44% of commercial specialty generic 30-day equivalent prescriptions were dispensed by PBM-affiliated pharmacies over the 2020-22 period, compared with 72% of prescriptions for drugs marked up more than $1,000 per prescription. These dispensing patterns suggest that the Big 3 PBMs may be steering highly profitable prescriptions to their own affiliated pharmacies (and away from unaffiliated pharmacies).

The Big 3 PBMs’ affiliated pharmacies generated over $7.3 billion of dispensing revenue in excess of NADAC on specialty generic drugs over the study period.

Dispensing revenue in excess of NADAC is a measure of how much pharmacies earned from marking up the price of drugs in excess of their estimated acquisition costs. For PBM-affiliated pharmacies, this source of revenue increased dramatically at a compound annual growth rate of 42% from 2017-21. Among the drugs in our analytic sample, $5.9 billion (81%) of revenue in excess of NADAC came from commercial claims, while $1.4 billion (19%) came from Medicare Part D claims. Drugs within selected therapeutic classes accounted for the majority (95%) of this revenue, including $3.3 billion for oncology drugs (44% of total), $1.8 billion for multiple sclerosis drugs (25%), for $824 million transplant drugs (11%).

In the aggregate, the Big 3 PBMs also generated significant income on the specialty generic drugs assessed in this report from spread pricing—i.e., billing their plan sponsor clients more than they reimburse pharmacies for drugs.

While FTC staff was unable to account for certain adjustments made by the PBMs due to data limitations, we provide an estimate of the combined spreads retained by PBMs on the drugs in our analytic sample of approximately $1.4 billion over the study period using the methodology described below. Most of this income came from dispensing commercial prescriptions (97%) through unaffiliated pharmacies (90%).

The top specialty generic drugs accounted for a significant share of the relevant business segments reported by the Big 3 PBMs’ parent healthcare conglomerates.

Operating income from the Big 3 PBMs’ affiliated pharmacies dispensing of the analyzed specialty generic drugs accounted for 12% of the aggregated operating income reported by the parent healthcare conglomerates’ business segments that include their PBM and pharmacy businesses in 2021, up from less than 8% just two years earlier. The top 10 specialty generic drugs alone accounted for nearly 11% of the business segments’ 2021 aggregated operating income.

Plan sponsor expenditures and patient cost sharing on specialty generic drugs increased at double-digit compound annual growth rates during the study period.

Plan sponsor and patient payments both increased at compound annual growth rates of 21% for commercial claims, and 14-15% for Medicare Part D claims.

View the full FTC Report