Following the British victory over the Axis powers at El Alamein, Prime Minister Winston Churchill said, “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.” The battle, in November 1942, proved to be a turning point in World War II, but more intense fighting was in store. 

The same dynamic is now at work in community pharmacy’s contest with the big pharmacy benefit managers. Coming on the heels of reporting in The New York Times and The Wall Street Journal that also called PBM practices into question, the FTC report asserts that PBMs have an adverse impact on the accessibility and affordability of prescription ­medications. 

“The FTC’s interim report lays out how dominant pharmacy benefit managers can hike the cost of drugs — including overcharging patients for cancer drugs,” said FTC chairwoman Lina Khan. “The report also details how PBMs can squeeze independent pharmacies that many Americans — especially those in rural communities — depend on for essential care. The FTC will continue to use all our tools and authorities to scrutinize dominant players across health care markets and ensure that Americans can access affordable health care.”

The report, the release of which was backed by Khan and three of the FTC’s four other members, focuses on the nation’s six largest PBMs — CVS Caremark, Express Scripts, OptumRx, Humana Pharmacy Solutions, Prime Therapeutics and MedImpact Healthcare Systems — and how they wield their power to the detriment of patients and pharmacy operators. Parts of corporate con0glomerates, the six big PBMs together account for 90% of the 6.6 billion prescriptions filled last year, with the top three — Caremark, Express Scripts and OptumRx — handling 80%, according to the report. Seventy percent of revenue generated by specialty medications flows through pharmacies linked to the industry leaders.

That scale enables them to exercise considerable, often decisive, leverage in determining where Americans fill their prescriptions, what those medicines cost and how pharmacy operators are paid. The report indicates that vertically integrated PBMs distort the marketplace, citing one instance in which the top three positioned affiliated pharmacies held onto $1.6 billion in revenue over and above product acquisition costs for two cancer medications in less than three years. 

The findings of the interim report, together with Khan’s pledge to make the health care sector a high priority, bode well for community pharmacy, but many obstacles need to be surmounted before the industry can expect any substantial relief. In opposing the release of the report, FTC commissioner Melissa Holyoak said that the work was “plagued by process irregularities … and leaves us without a better understanding of the competition concerns surrounding PBMs or how consumers are impacted by PBM practices.”

Additional evidence supporting the majority view at the FTC emerged last month when the House Committee on Oversight and Accountability released the results of its own investigation into PBMs. Chaired by James Comer (R., Ky.), the committee asserted that pricing practices of the three dominant players raised the cost of medications, negatively impacted patient care and hurt community pharmacies, while simultaneously enriching the PBMs. Comer, who said the conclusions were based on 140,000 pages of documents and communications that demonstrate PBMs’ anticompetitive tactics, summarized the findings: “Simply put, the committee’s investigation has found that — while PBMs’ position as middlemen should have enabled them to reduce the costs of prescription drugs and improve Americans’ health outcomes — they have not. Instead, the cost of prescription drugs has gone up every year for 15 years. Instead, patients have less choice and worse health ­outcomes.”

Among other findings, the report indicates that agreements between PBMs and pharmaceutical companies often prevent the inclusion of generic drugs and biosimilars on formularies, thus increasing costs for patients, government and payers in the private sector. At the same time, PBMs are establishing operations outside the United States in order to mitigate the impact of federal and state regulations. Most troubling of all, such PBM practices as prior authorizations, fail-first policies and formulary manipulation damage patient outcomes. 

It will come as no surprise that PBMs are contesting that characterization. CVS Caremark president David Joyner, who testified at the House hearing (along with Patrick Conway, chief executive officer of OptumRx, and Express Scripts CEO Adam Kautzner), asserted, “The way we have done our work over the past few decades has driven greater cost savings, better care and more robust benefits for the Americans we serve. Our work is rooted in greater simplicity and transparency for those who pay for pharmacy benefits, for people who take medicine and for the pharmacies that serve our patients.”

CVS Caremark pledged to redouble efforts to deliver greater affordability, improve transparency and enhance relations with pharmacy operators. At the beginning of August, David Cordani, CEO of Cigna — Express Scripts’ corporate parent — promised the company would adopt a more forceful stance in communicating what he asserted was the positive role that PBMs play in the nation’s complex health care system. 

Up until now, the PBM industry has been very resourceful in defending itself, successfully fending off most efforts to rein in its business practices. The tide appears to finally be turning, but it’s certain that PBMs won’t go down without a fight. 

As members of Congress and the FTC continue to evaluate the PBM industry and move closer to regulatory action, community pharmacies are struggling to maintain their financial viability. A recent survey of independent drug stores found that, without changes in the reimbursement model, as many as a third could go out of business by the end of the year.

At the same time, the top three drug chains are shuttering thousands of unprofitable or redundant locations. With the ongoing closures (a trend that will accelerate if Walgreens Boots Alliance follows through on plans to terminate a large number of underperforming stores — a group that comprises 25% of its outlets), pharmacy deserts are developing in many parts of the U.S., especially rural areas. As patient access to care diminishes, the situation should increase pressure on elected officials to address issues that have pushed many pharmacies to the brink. PBM reform is at the top of the list. 

Early this year, pharmacy advocates were cautiously optimistic that Congress would take up legislation to rein in PBM practices related to direct and indirect remuneration under Medicare. Hopes have dimmed amid the fractious politics of a tumultuous presidential campaign season. Odds of regulatory action by the Centers for Medicare and Medicaid Services (CMS) diminished with the Supreme Court’s decision to overturn the Chevron Deference, which had given federal agencies considerable leeway in deciding how laws passed by Congress are best implemented.

All of which means that pharmacy advocates must double down on efforts to secure meaningful PBM reform. The reports from the FTC and House Oversight Committee are further evidence that their cause is gaining traction. The question is how long it will take to convert that momentum into measures that relieve the increasingly heavy financial burden that pharmacies bear. By exhibiting the per-severance that Churchill did during the Second World War, pharmacy operators can still win their long battle for fair and adequate ­remuneration.