America's Top Three Insurers Reaped $7.3 Billion From Their Drug-Middlemen's Markups, FTC Says (nbcnews.com) 54
America's Federal Trade Commission has been "raising antitrust concerns" about them for years, reports NBC News.
The latest? America's three largest drug middlemen "inflated the costs of numerous life-saving medications by billions of dollars over the past few years, the FTC said in a report Tuesday." The top pharmacy benefit managers (PBMs) — CVS Health's Caremark Rx, Cigna's Express Scripts and UnitedHealth Group's OptumRx — generated roughly $7.3 billion through price hikes over about five years starting in 2017, the FTC said. The "excess" price hikes affected generic drugs used to treat heart disease, HIV and cancer, among other conditions, with some increases more than 1,000% of the national average costs of acquiring the medications, the commission said. The FTC also said these so-called Big Three health care companies — which it estimates administer 80% of all prescriptions in the U.S. — are inflating drug prices "at an alarming rate, which means there is an urgent need for policymakers to address it...."
Some of the steepest drug markups were "hundreds and thousands of percent," according to Tuesday's report, which highlights just how profitable specialty drugs have become for the three leading PBMs. Cancer drugs alone made up nearly half of the $7.3 billion, the commission wrote, with multiple sclerosis medications accounting for another 25%. Dispensing highly marked-up specialty drugs was a massive income stream for the companies in 2021, the FTC found. Out of tens of thousands of drugs dispensed, the top 10 specialty generics alone made up nearly 11% of the companies' pharmacy-related operating income that year, the agency estimated. Across the 51 drugs the agency analyzed, the Big Three's price-markup revenue surged from $522 million in 2017 to $2.1 billion in 2021, the report said.
"The FTC found that 22 percent of specialty drugs dispensed by PBM-affiliated pharmacies were marked up by more than 1,000 percent," reports The Hill, "while 41 percent were marked up between 100 and 1,000 percent. Among those drugs marked up by more than 1,000 percent, half of them were marked up by more than 2,000 percent."
And the nonprofit site progressive news site Common Dreams shares some examples from the FTC's 60-page report: "For the pulmonary hypertension drug tadalafil (generic Adcirca), for example, pharmacies purchased the drug at an average of $27 in 2022, yet the Big Three PBMs marked up the drug by $2,079 and paid their affiliated pharmacies $2,106, on average, for a 30-day supply of the medication on commercial claims," the publication notes. That's a staggering average markup of 7,736%... The new analysis follows a July 2024 report that revealed Big Three PBM-affiliated pharmacies received 68% of the dispensing revenue generated by specialty drugs in 2023, a 14% increase from 2016...
Responding to the FTC report, Emma Freer, senior policy analyst for healthcare at the American Economic Liberties Project — a corporate accountability and antitrust advocacy group — said in a statement Tuesday that "the FTC's second interim report lays bare the blatant profiteering by PBM giants, which are marking up lifesaving drugs like cancer, HIV, and multiple sclerosis treatments by thousands of percent and forcing patients to pay the price."
The latest? America's three largest drug middlemen "inflated the costs of numerous life-saving medications by billions of dollars over the past few years, the FTC said in a report Tuesday." The top pharmacy benefit managers (PBMs) — CVS Health's Caremark Rx, Cigna's Express Scripts and UnitedHealth Group's OptumRx — generated roughly $7.3 billion through price hikes over about five years starting in 2017, the FTC said. The "excess" price hikes affected generic drugs used to treat heart disease, HIV and cancer, among other conditions, with some increases more than 1,000% of the national average costs of acquiring the medications, the commission said. The FTC also said these so-called Big Three health care companies — which it estimates administer 80% of all prescriptions in the U.S. — are inflating drug prices "at an alarming rate, which means there is an urgent need for policymakers to address it...."
Some of the steepest drug markups were "hundreds and thousands of percent," according to Tuesday's report, which highlights just how profitable specialty drugs have become for the three leading PBMs. Cancer drugs alone made up nearly half of the $7.3 billion, the commission wrote, with multiple sclerosis medications accounting for another 25%. Dispensing highly marked-up specialty drugs was a massive income stream for the companies in 2021, the FTC found. Out of tens of thousands of drugs dispensed, the top 10 specialty generics alone made up nearly 11% of the companies' pharmacy-related operating income that year, the agency estimated. Across the 51 drugs the agency analyzed, the Big Three's price-markup revenue surged from $522 million in 2017 to $2.1 billion in 2021, the report said.
"The FTC found that 22 percent of specialty drugs dispensed by PBM-affiliated pharmacies were marked up by more than 1,000 percent," reports The Hill, "while 41 percent were marked up between 100 and 1,000 percent. Among those drugs marked up by more than 1,000 percent, half of them were marked up by more than 2,000 percent."
And the nonprofit site progressive news site Common Dreams shares some examples from the FTC's 60-page report: "For the pulmonary hypertension drug tadalafil (generic Adcirca), for example, pharmacies purchased the drug at an average of $27 in 2022, yet the Big Three PBMs marked up the drug by $2,079 and paid their affiliated pharmacies $2,106, on average, for a 30-day supply of the medication on commercial claims," the publication notes. That's a staggering average markup of 7,736%... The new analysis follows a July 2024 report that revealed Big Three PBM-affiliated pharmacies received 68% of the dispensing revenue generated by specialty drugs in 2023, a 14% increase from 2016...
Responding to the FTC report, Emma Freer, senior policy analyst for healthcare at the American Economic Liberties Project — a corporate accountability and antitrust advocacy group — said in a statement Tuesday that "the FTC's second interim report lays bare the blatant profiteering by PBM giants, which are marking up lifesaving drugs like cancer, HIV, and multiple sclerosis treatments by thousands of percent and forcing patients to pay the price."
Defence? (Score:4, Interesting)
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As if a free market for death is a good thing.
Re:Defence? (Score:4, Insightful)
The US has the exact opposite of a "free market" in healthcare.
All the high costs and markups are enabled by government regulations, licensing, certificates-of-need, import restrictions, etc. etc. All aided and abetted by the trade union American Medical Association.
Re:Defence? (Score:4, Insightful)
LOL that's it! Totally consistent with the article, too!
You want to find out what the real "exact opposite of a free market" is? Eliminate government regulations. Free markets are not destroyed by regulation, they require it. The greed of unbridled capitalism is the exact opposite of a free market, and that's what we see here.
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"Unbridled"? If that is the case, why don't just buy some Tadalafil directly from an Indian manufacturer, sell it to your friends, and profit!
If you can explain to me why this does not happen in our unbridled system, I'll be happy to accept your reasoning. I'm waiting...
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"The Free Market"
Ahh yes, well it’s a common misconception. We haven’t had the r in a long time and people keep calling it by the old name. I like the cut of your jib.
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Research and Development.
Please ignore the fact these drugs earned back their research costs decades ago.
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Re: Defence? (Score:2)
Irrelevant.
The PBMs do not do research nor do they manufacture.
They are middle-men.
Think of them as the warehouse that buys food from the farmers, stores and ships it to bakeries and groceries.
The analogy breaks down in that they don't Even do that much. They're just there in the middle.
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Research and Development. Please ignore the fact these drugs earned back their research costs decades ago.
Insurance companies don't (usually) develop drugs, so not sure R&D factors into the middle-men price mark-ups, even when those companies are also owned by the insurance companies themselves. In these cases, they're probably separate companies for tax, PR, and/or liability reasons -- or just a way to maximize profits even more.
Don't know how accurate this is, but I've read several articles that say drug companies base prices on (a) what profits the R&D money would have generated if it had simply
Skrelli? (Score:3)
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Why did Pharma Dude Skrelli go to jail and these guys not?
Presumably, what they've done (so far) is legal. What Martin Shkreli did wasn't. From wikipedia [wikipedia.org]:
In 2017, Shkreli was convicted in federal court on two counts of securities fraud and one count of conspiracy.
"Shkreli essentially ran his company like a Ponzi scheme where he used each subsequent company to pay off defrauded investors from the prior company."
And, he's, apparently, a dick.
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Yeah, Canadians... wow. I mean, we get hurt or sick and we go to the hospital. If they can help, they do, and when we come out we're NOT bankrupt.
If we're slaves, the masters are pretty fucking bad at their jobs, since there are no overseers or whips and our tax burden isn't that bad.
Re: Defence? (Score:4, Interesting)
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That sounds like bullshit, as I know multiple people who got diagnosed, treated, and are currently cancer-free. One kid, one middle aged woman who has gone through it twice, and another older person.
I also know people who died from it, cancer sucks. But it wasn't because they couldn't get diagnosed.
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Canadian here, eh. I got stuck in Central Europe during Covid. Good thing too, since I then got cancer and was treated and cured. If I was in Canada, I would likely have died waiting for the diagnostic appointment, and never have gotten any treatment. The whole experience cost me approximately 50 Euros per month for the insurance. I am still in Europe, since a catastrophic illness makes one uninsurable so I have to stay with the insurance company that I am at. So now I cannot move anywhere else, but life is good.
This is lies and bullshit. Everybody knows that Canadians can't be denied health insurance by law. Nice job, Russian troll.
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Not free, single payer funded by tax dollars. For the patients, it amounts to "free", compared to the U.S. system. In Canada, we spend 50% less per capita on health care as America. Yet we have 100% coverage, and there's no such thing as medical debt. A big reason for this is the elimination of 90% of the administrative overhead costs, not to mention HMO executive and shareholder payouts.
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It always makes me laugh when conservatives say shit like this as if people don't understand that taxes pay for their free services. You're not even being close to insightful here.
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We know taxes pay for it. Elections are won and lost over how good the ROI of tax payer dollars is on healthcare. What we don't have is all the wasted money going into the shareholders of a commercial healthcare systems that are tuned not to cure people but to get maximum returns. In fact there is a big focus
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Yes, keep telling yourself that as you go bankrupt after a medical emergency... maybe it'll make you feel better that you're not a terrible "slave" to publicly-funded universal healthcare...
Re: Defence? (Score:5, Interesting)
why? (Score:2, Insightful)
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What you will see provided openly are fairly vague, high-level, defenses of drug costs being high: lifesaving innovation isn't cheap, look at how far we've come in outcomes for X disease in the l
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the usa pays for the rest of the world to have cap (Score:2)
the usa pays for the rest of the world to have capped costs
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It stops the US government using market leverage against helpless billionaires.
Third party payers -Perverse Incentive - Wikipedia (Score:3)
Are third party payers somehow related to cost escalation?
https://en.wikipedia.org/wiki/... [wikipedia.org]
The phrase "perverse incentive" is often used in economics to describe an incentive structure with undesirable results, particularly when those effects are unexpected and contrary to the intentions of its designers.[1]
The Indian cobra
The results of a perverse incentive scheme are also sometimes called cobra effects, where people are incentivized to make a problem worse. This name was coined by economist Horst Siebert based on an anecdote taken from the British Raj.[2][3] The British government, concerned about the number of venomous cobras in Delhi, offered a bounty for every dead cobra. Initially, this was a successful strategy; large numbers of snakes were killed for the reward. Eventually, however, people began to breed cobras for the income. When the government became aware of this, the reward program was scrapped. The cobra breeders set their snakes free, leading to an overall increase in the wild cobra population.[4][5]
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Does Cobra venom have some benefit in healthcare? (apart from making anti-venom)
Tadalafil is also a d!ck pill (Score:4, Informative)
Cigna Express Scripts (Score:2)
No thanks. I can smell your money-lust, Cigna. Also my local pharmacist does a fine job for me, and the prescription is not expensive.
They're not jacking up the prices on "consumers" (Score:1)
They're jacking up the prices on INSURANCE, mainly Medicare, which pays the price because that's what it was negotiated at and what the great majority of pharmaceutical users are on. The patients not on insurance or medicare? Well they got hung out to dry because they don't have a "sugar daddy".
The medical industry is absolutely not a "free market" at all. I was trying to go to a mom and pop pharmacy (they still exist) because they could get some decent prices on some of my drugs. But my insurance provi
Reaped? (Score:2)
Is that the correct word? Seems like an extra letter was added.
E before A before making 'em pay (Score:2)
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Is that the correct word? Seems like an extra letter was added.
You stole my comment, but you're more than welcome to it. The important thing is that it gets said.
And the majority of voters... (Score:3, Insightful)
...voted to make it worse
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Imagine if there had been a candidate promising to get rid of health insurance. Even better if it were a credible promise. All kinds of people would have come out of the woodwork and turned out the vote.
As it was, neither the con artist nor the diversity hire presented a particularly compelling or credible vision. Normal and/or rational people dipped out of the voting booth, while extremists and weirdos kept on casting ballots.
Life expectancy vs. health expenditure (Score:5, Informative)
Interactive, time-lapse chart showing Life expectancy vs. health expenditure [ourworldindata.org] by country from 1970 to 2022.
The U.S. is an outlier -- and not in a good way...
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But we're #1! /s
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Interesting chart. The problem is that a critical mass of Americans think they cannot possibly learn anything from any other country on Earth, not to mention the fact that there are very wealthy and powerful forces who aren't interested in stopping the gravy-train that results from the fscked-up US healthcare system.
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Every country should have a "ministry of finding out what is better in other countries" that suggests laws based on their findings. Europe works a little bit like that now, but not enough. As for the US, LOL !
The U.S.actually has panels for that sort of stuff for Medicare and the ACA, to review procedures and medications for effectiveness and outcomes, but no one wants to listen to them. Those on the Right cry "Death Panels" etc ... and whinge about "unelected officials" limiting medical care ... I suspect it's more about keeping the "gravy train" GP mentioned going than anything else.
Brainwashed (Score:2)
I’m from Australia where, like the rest of the western world, you normally go to a hospital for free emergency treatment which is funded from general tax revenue and in Australia’s case a small additional tax for higher income workers. Employers do not have to fund workers healthcare.
But I find Americans are almost universally against this. I think USA MIC has spent a lot of effort on psyoping Americans to believe it’s Communism , or unfair to subsidise unhealthy people.
The Australian gove
Fuck them, just fuck them. (Score:2)
I needed an unimaginative steroid cream for a skin condition. My insurance uses CVS as a PBM - which means that I could ONLY go to CVS to get it. My co-pay was $250 per 60g tube with insurance. So I asked - how much would it cost if I didn't have insurance? $230 without insurance, sir. So I looked around, and checked Costco - $20 per 60g tube.
My employer chose CVS as their PBM because their bid for covering the employees was the lowest. I had no choice in the matter. Unlike most forms of insurance,
Famous... (Score:2)