(WASHINGTON, D.C.) – Yesterday, the Pharmaceutical Care Management Association (PCMA) submitted comments to the Department of Justice (DOJ) Antitrust Division and the Federal Trade Commission (FTC) encouraging them to seek information about the business practices of large drug wholesaler companies. Earlier this year, DOJ and FTC issued a request for public comments about reinstating guidelines for business collaborations to ensure such practices increase competition rather than hamper it.
The three largest drug wholesaler companies control the movement of 96% of prescription drugs as they move through the U.S. drug supply chain, and there are questions about whether that market power is used in ways that lead to higher drug prices for patients, particularly for generic drugs, and higher acquisition costs for pharmacies.
The letter also urges DOJ and FTC to explore the role of pharmacy services administrative organizations (PSAOs), the largest of which are owned by the same “Big 3″ drug wholesalers. PCMA’s letter raises the question of how PSAOs may use private contract information to influence wholesale drug prices.
In addition to reinstating the 2000 Collaboration Guidelines, which provided important compliance certainty, PCMA makes two additional recommendations to DOJ and FTC:
- Provide guidance on whether wholesaler sales programs could force out competition and increase consumer prices; and,
- Provide guidance on how PSAOs sharing information with drug wholesalers, gained through PSAO collaboration with pharmacies, could raise concerns about coordinated pricing, the potential exercise of market power, and impacts on costs for consumers.
The letter concludes:
“Ultimately, the question is whether plan sponsors, employers, and patients who pay the costs of health care are realizing the benefit of generic competition or whether certain arrangements allow intermediaries to capture a disproportionate share of the savings by preferring their own products and using information about end-user rates to inform wholesale pricing.”
The letter also reads in part:
“The FTC and DOJ should examine the extent to which wholesaler contracting practices (including product availability terms and conditional discounting) affect pharmacy purchasing decisions, including the selection of higher-cost products or wholesaler private-label drugs and the potential implications for manufacturer competition and affordability…
“Wholesalers that influence pharmacies into purchasing a particular volume of drugs or using a preferred list of drugs might limit competition from rival wholesalers or more competitively priced manufacturers. These arrangements could also enable wholesalers to incentivize pharmacy use of more profitable drugs that might not be the best financial deal for the pharmacy or the consumer. Given the potential for these incentives to affect dispensing and purchasing decisions, we encourage the agencies to assess how such arrangements interact with information available through affiliated PSAOs and whether that combination could further affect pricing dynamics in the wholesale pharmaceutical supply chain.”
Read the full letter to DOJ and FTC HERE.