The pharmacy chain CVS has evolved into a conglomerate with various healthcare-related businesses, including a medical insurer, pharmacy benefit manager, specialty pharmacy, and more. A bipartisan bill introduced in Congress aims to require conglomerates like this to divest their pharmacy businesses. / AFP PHOTO / MANDEL NGAN (Photo credit should read MANDEL NGAN/AFP via Getty Images)
Bipartisan legislation recently introduced aims to prevent companies from owning pharmacy benefit managers and health insurers along with pharmacy businesses. Senators Warren (D-MA) and Hawley (R-MO) are pushing for these conglomerates to divest their pharmacy operations within three years. However, historical precedent suggests this will be a challenging process. Since the Sherman Anti-Trust Act was passed over 130 years ago, the government has rarely enforced divestitures against perceived monopolies. Even if successful, conglomerates like Medco and Express Scripts have found ways to maintain control of the prescription drug supply chain through alternative means.
Senator Warren and critics argue that CVS Health and similar conglomerates use their size to steer patients to their pharmacies, raising prescription drug costs and driving independent pharmacies out of business. Legislation co-sponsored by Senators Warren and Hawley would require these conglomerates to sell off their pharmacy businesses.
Critics target large PBMs that control pharmacies, accusing them of engaging in anticompetitive practices. Alongside the Warren/Hawley bill, other legislation aims to address PBM practices such as lack of transparency, insufficient pass-through of rebate savings, and pricing strategies that disadvantage independent pharmacies.
PBMs negotiate drug prices for various stakeholders and control a significant portion of prescriptions in the US. The opaque nature of rebates and spread pricing are key concerns, as they impact drug costs for patients and pharmacies.
Senator Warren has been vocal in opposing industry mergers that result in market dominance. She has support from the current FTC Chair Lina Khan in scrutinizing business practices in various industries, including healthcare and technology.
The appointment of Andrew Ferguson as the new FTC Chair may impact future antitrust enforcement. While Trump’s administration focused on PBM transparency, the evolution of PBMs like Medco and Express Scripts highlights the challenges of unraveling intricate healthcare conglomerates.
The FTC has historically taken action against monopolistic practices, including cases involving pharmaceutical companies and PBMs. The resolution of these cases often involves divestitures and extensive legal proceedings.
Efforts to curb consolidation in the healthcare industry, particularly within the PBM sector, face resistance due to complex corporate structures and industry dynamics. Severing ties between PBMs and pharmacies, as proposed by Senators Warren and Hawley, presents a formidable task.
