Out-of-pocket expenses for prescription drugs exceeded $91 billion in 2023, as reported in late July by the House Committee on Oversight and Accountability. This is a staggering but sadly unsurprising sum. The financial, physical, and emotional damage caused by a broken prescription drug market warrants the full use of the Federal Trade Commission’s extensive investigative authority and substantial expertise. However, the FTC’s recently released interim report on Pharmacy Benefit Managers (PBMs), the groups hired by employers and insurers to secure drug rebates and bulk pricing discounts, fell short of that standard.
The good news is that the FTC is aware of this problematic status quo. The bad news is that the FTC may have rushed its work by publishing an interim report in place of conducting a more thorough, expert-led report, as is its common practice.
Historically, FTC reports on various markets, as described by FTC commissioner Andrew Ferguson, “have provided Congress and the public with evidence-based, objective, and economically sound information that can shape the national debate on a wide range of important issues that affect consumers and competition.” So long as reports are compiled and shared in a manner that realizes that high bar, there is little reason to question the Commission’s investigatory efforts. In fact, the provision of reliable, thorough information is emblematic of the purpose of the FTC itself. As one senator summarized during legislative debate over the FTC Act: “[W]e [the Senate] want trained experts; we want precedents; we want a body of administrative law built up.”
Yet, a brief review of the FTC’s recently released report on PBMs exposes how this singular provision of the FTC Act can be a tool to expand the FTC’s political ends more so than a robust means of investigation.
The first sign of regulatory mischief is the timing of the report. Rather than wait to release a report at the culmination of the FTC’s exhaustive analysis of PBMs, the commission opted to publish an interim report. This is not only rare but also appears to have hindered the quality of the underlying report.
Federal Trade Commission
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