FTC looking to accelerate inquiry into prescription-drug middlemen, chair says

By Eleanor Laise

Drug patents that can keep prescription prices artificially high are also set for more scrutiny, according to Lina Khan

The Federal Trade Commission is working to accelerate its inquiry into the prescription-drug middlemen known as pharmacy-benefit managers, while also expanding its scrutiny of drug patents that can keep prescription prices artificially high, FTC Chair Lina Khan told reporters Tuesday.

Khan said the agency is "proceeding as expeditiously as we can" on the pharmacy-benefit manager inquiry, which launched in 2022 and aims to examine the industry's methods for determining pharmacy reimbursement, tactics that may steer patients toward PBM-owned pharmacies, and other issues. Though such inquiries can typically take five to six years, the FTC is looking to shorten the timeline and will share more details in the next one to three months, Khan said during a discussion with reporters Tuesday hosted by health-policy research nonprofit KFF.

In another move targeting high prices for prescription drugs, Khan signaled that the agency is expanding its scrutiny of drug patents listed in the Food and Drug Administration's catalog of approved drug products, known as the "Orange Book." The agency last year challenged more than 100 patents held by manufacturers of brand-name asthma inhalers, epinephrine autoinjectors and other products, as part of a broader examination of improperly listed patents that can delay generic competition and block patients' access to lower-cost medicines.

Asked Tuesday whether other classes of drugs were on the agency's radar, beyond the initial focus on asthma and allergy treatments, Khan said the FTC is "continuing to scrutinize the Orange Book, and in the next couple of weeks we'll be sharing more."

As it hits the gas on strategies that could boost competition in ways that ultimately lower prescription-drug prices, the FTC is facing substantial industry pushback. The agency has asked the largest PBMs - including CVS Health Corp.'s (CVS) Caremark, Cigna Group's (CI) Express Scripts and UnitedHealth Group Inc.'s (UNH) Optum Rx - to provide data and documents on their business practices. But to date, none of the companies involved in the inquiry have turned over sufficient data to be in full compliance with the order, Khan said in a February letter to Sen. Charles Grassley, an Iowa Republican.

"CVS Health has been working cooperatively with the FTC on an expedited basis" to respond to the inquiry, the company said in a statement to MarketWatch Tuesday. To date, the company said it has "provided several million pages worth of documents and all of the requested data, which totaled several terabytes." Optum and Express Scripts did not immediately respond to requests for comment.

"Companies often times don't have an incentive to comply expeditiously, and so we've been setting that up to move as quickly as we can," Khan said Tuesday. "Given the public salience of these issues as well as the urgency, it's my preference to not wait three years, four years, until we have an 800-page report and put it all out in one go," she said, adding that she would look to inform the public promptly about any preliminary conclusions.

Khan also on Tuesday addressed cybersecurity risks in the healthcare industry, in light of the cyberattack on UnitedHealth's Change Healthcare unit. Such vulnerabilities could factor into the FTC's reviews of prospective deals, she said - noting that new merger guidelines published by the agency last year sought to spell out how dimensions of competition among companies can include not only price and quality, but also data security and other factors.

"If we think a merger could substantially lessen competition in ways that could eliminate either the incentive to continue investing in data security or otherwise create some of these consolidation risks, that could definitely be part of our analysis," Khan said.

Within the pharmaceutical industry, the agency under Khan's leadership has already sued to block drugmaker Amgen Inc.'s (AMGN) proposed acquisition of Horizon Therapeutics, as well as Sanofi's (SNY) proposed deal for an exclusive license to Maze Therapeutics Inc.'s treatment for Pompe disease. Amgen settled with the FTC over the Horizon deal, while Sanofi scrapped the Maze deal.

-Eleanor Laise

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04-23-24 1512ET

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