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FTC Investigates Possible Inflation of Specialty Drug Costs

By Kit Yona, M.A. | Reviewed by Joseph Fawbush, Esq. | Last updated on

Treatments and medications for serious health conditions can take a toll on the body. They also often inflict unimaginable damage to finances. If you've ever wondered why so-called specialty drugs are so expensive, you're not alone.

In a report released in January 2025, the Federal Trade Commission (FTC) indicated that its data shows that the middlemen that negotiate drug prices between manufacturers, pharmacies, and insurers, known as pharmacy benefit managers (PBM), are responsible for increasing costs to levels some would consider exorbitant.

The report seems to hint a lawsuit requiring certain companies to comply with subpoenas demanding additional information is in the works. Will what the FTC already knows cause outrage?

The More You Know

This report is a follow-up to one released in July 2024. The first report noted the apparent power and profitability associated with PBMs. Through a Federal Trade Commission Act Section 6(b) special order, the FTC ordered documents and data from the largest PBMs.

This prompted CIGNA, Express Scripts Inc. (ESI) 's parent company, to file a defamation lawsuit. They and two other PBMs are embroiled in further but separate litigation with the FTC over unfair insulin pricing. It remains a pending case.

The FTC seems likely to take additional legal action to enforce the subpoena for their study of PBMs and specialty drug pricing. In the second report, the FTC alleges that three of the PBMs - ESI, Caremark Rx, LLC (owned by CVS), and OptumRx (owned by UnitedHealth) - haven't supplied the requested data. "The Big 3 PBMs," as named by the FTC, have either claimed compliance or cast blame on the insulin case.

Given some of the PBM numbers revealed by the FTC, consumers who read the report may find it difficult to side with the corporations. Prescription drugs accounted for over $600 billion in healthcare spending in 2023. The subset of so-called specialty drugs totaled $237 billion of that amount. According to the second interim report, PBMs were responsible for massive markups leading to high profits.

What The FTC Found

The FTC hasn't charged any of the Big 3 PBMs with any violations yet. However, the findings in the second interim report may serve as the basis for future legal actions. They include:

  • The Big 3 PBMs marked up some specialty generic drugs dispensed at their affiliated pharmacies by thousands of percent. Many others were marked up by hundreds of percent. For example, dimethyl fumarate (Tecfidera), a drug used to treat multiple sclerosis, had an acquisition cost of $177 and a sale cost to the pharmacy of $3,930.
  • Compared with unaffiliated pharmacies, a larger share of commercial prescriptions for the most profitable specialty generic drugs were dispensed by the Big 3 PBMs’ affiliated pharmacies.
  • The Big 3 PBMs’ affiliated pharmacies generated over $7.3 billion of dispensing revenue above NADAC (National Average Drug Acquisition Cost) on specialty generic drugs over the study period.
  • The Big 3 PBMs generated significant income on the specialty generic drugs assessed in this report from spread pricing. Spread pricing is when a PBM sets a price with a pharmacy and keeps any excess paid by the insurance company.
  • The top specialty generic drugs accounted for a significant share of the relevant business segments reported by the Big 3 PBMs’ parent healthcare conglomerates, jumping from 8% to 12% over two years.
  • Plan sponsor expenditures and patient cost sharing on specialty generic drugs increased at double-digit compound annual growth rates during the study period.

The numbers involved in the report can seem almost too large to be believed. The Big 3 PBMs will likely respond with additional lawsuits to fight the release of more data.

Taking Your Medicine

While the figures uncovered are revealing, the FTC is quick to note that they aren't suggesting legal action for any of the potential violations of the FTC Act or any other laws — yet. They insist the report is designed to educate and inform plan sponsors and lawmakers.

The FTC suggests that legislation may be the best solution for reining prescription drug costs. It remains to be seen if the incoming administration can produce better results in regulating prescription drug prices than they did last time.

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