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Hoey to FTC: Investigate and fix anticompetitive PBM contracting

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ALEXANDRIA, Va.  The vertical mergers of health insurance plans/pharmacy benefit managers with retail and mail order pharmacies is a “particularly pernicious example of consolidation that has resulted in substantial actual harm to competition,” the National Community Pharmacists Association said in comments to the Federal Trade Commission about contract terms that may exacerbate or lock in anticompetitive power disparities.

B. Douglas Hoey

NCPA CEO B. Douglas Hoey wrote: “The joining together of the major commercial health plans with PBMs and with consumer pharmacy operations created vertical entities wielding multi-market power unlike any since the railroad and oil monopolies that spawned antitrust laws. Each entity has the ability and the incentive to engage in anticompetitive, exclusionary contracting practices against competing pharmacies, many of which are small businesses like our members. The result is that our member pharmacies are forced out of the market, leaving patient populations without access to prescription medications except through mail order. Often, after thrashing small business pharmacies via low and below-cost reimbursement, the health plan-PBM-retail pharmacy conglomerate will offer to buy out and shutter the harmed pharmacy, adding to their portfolio of corporate owned pharmacies, which further consolidates the health care marketplace.”

PBM contracts with pharmacies are almost always adhesion contracts, Hoey said in his comments. He explained how independent pharmacies are forced to sign these take-it-or-leave-it contracts that contain language minimizing pharmacies’ ability to advocate for better terms as well as overly broad confidentiality language, non-disparagement clauses, data ownership conveyance and other vague requirements related to certain drug pricing programs. NCPA encouraged its membership to submit specific examples of these and other contractual issues to the FTC in their own comments. Hoey’s comments also reiterated NCPA’s continuing push for the FTC to level the playing field for independently owned pharmacies.

After submitting his comments, Hoey said, “PBMs use take-it-or-leave-it contracting to game the system and monopolize pharmacy markets at the expense of patient access to the independent pharmacies that patients very often prefer. Recent FTC actions to intensify antitrust scrutiny of vertical mergers are positive steps, but the agency also needs to specifically address the anticompetitive contracting practices of already-existing vertical entities that include PBMs. We appreciate this opportunity to offer solutions to the commissioners and share examples of contractual language to help inform their work to promote competition and ensure a fair, competitive heath care marketplace for independent pharmacies and their patients.”

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