Ensuring effective competition in healthcare markets is a critical priority for antitrust enforcers.  Traditionally enforcement has focused on manufacturers and providers but far too little attention has been given to intermediaries such as Pharmacy Benefit Managers (“PBMs”).  A lack of attention and enforcement has permitted a highly concentrated PBM market to evolve in which PBMs prevent transparency and exploit conflicts of interest to raise costs and deny necessary low-cost drugs and services to consumers.  This article outlines how these problems have arisen and how the FTC can conduct a comprehensive study to spotlight the market failures and need for enforcement and regulation.

By David A. Balto[1]



In the past two decades, the Federal Trade Commission has taken a lax approach to Pharmacy Benefit Managers (“PBMs”), the middlemen in prescription drug markets. This has led to tremendous concentration, significantly higher prices, restricted consumer access, and a variety of abusive practices. PBMs transformed from “honest brokers” supposedly negotiating with drug companies to obtain lower costs for insurers and patients into oligopolists using the rebates they extract from drug manufacturers and pharmacies to enrich themselves. 

The FTC is now considering conducting a study of PBM practices under Section 6(b) of the FTC Act.  This study, which is long overdue, can provide the public with great


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