FTC and DOJ Host Listening Forum on Effects of Mergers in Health Care Industry

On April 14, 2022, the Federal Trade Commission (FTC) and Department of Justice (DOJ) held a public forum to hear from stakeholders about the effects of mergers within the health care industry and the effects of consolidation on healthcare workers, patients, and businesses.  Among the speakers were several prominent voices seeking Pharmacy Benefit Manager (PBM) reform, including Dr. Madelaine Feldman, the president of the Coalition of State Rheumatology Organizations, Inc. Dr. Feldman spoke eloquently about the harm PBM vertical integration has caused her rheumatology patients, especially through the use of manufacturer rebates.  She discussed how these rebates often drive up list prices for drugs, resulting in higher copayments for her patients, who must often pay a percentage of these drugs (the cost of which reach into the tens of thousands). She also discussed how PBM formularies are used to extract rebates from manufacturers, resulting in her patients being barred from accessing drugs with the lowest list prices in favor of those with higher list prices, but for which the PBMs receive substantial rebates.  Speakers from the pharmacy industry were generally concerned about “vertical integration” – among PBMs, health plans, and pharmacies.

Vertical integration occurs when one corporate actor owns multiple supply chain participants.  In this case, of chief concern is the fact that the three largest health insurers—Aetna (CVS Health), Cigna, and UnitedHealth, each own a PBM—Caremark, Express Scripts, Inc., and OptumRx, Inc., respectively, each of which operates its own mail order retail and specialty pharmacies, which compete directly with independent pharmacies.  As one commenter observed, “no price setter should own any price-taker”; that is, those who set prices should not also be permitted to compete with those for whom it sets the price.

When the forum was opened to short comments from members of the public, Jonathan Eisenberg, Deputy General Counsel for the AIDS Healthcare Foundation (AHF) made striking comments as well.  He cautioned the FTC and DOJ, when considering merger guidelines, to consider the effects of mergers not only on businesses, but also on patients.  He observed how the “cookie-cutter” approach to “standardized” pharmacy care simply does not work for specialized organizations like AHF, which use specialized methods that improve patient outcomes and are not amenable to a standardized approach.  Indeed, Frier Levitt specializes in representing specialty pharmacies and dispensing practices harmed by such “cookie-cutter” approaches.

FTC Chair Lina Khan and DOJ Assistant Attorney General Jonathan Kanter both took a moment to thank the speakers for their participation in the forum and stressed the importance of public participation as the agencies revise antitrust policy with respect to mergers.  Both the FTC and DOJ have recently begun looking into the anticompetitive effects of mergers across industries, and public comments on the impact of PBM practices are open until April 25.  Stakeholders are encouraged to post comments, which the FTC will read and consider as it seeks to address the growing PBM problem.

How Frier Levitt Can Help

Frier Levitt attorneys have been at the forefront of highlighting and fighting PBM abuses for years, and regularly represent independent pharmacies in disputes against PBMs, including abusive DIR fees.  Frier Levitt also has expertise in communications with government agencies and has drafted letters and public comments on behalf of many pharmacy providers.  Call Frier Levitt today to learn more.