Justice Department antitrust division probes health care conglomerates and pharmacy drug middlemen • Ohio Capital Journal

“Hearing about the depth of this problem is both eye-opening and validating for all of us,” Mekki said.

Mekki's agency is one of two major federal antitrust authorities. The other, the Federal Trade Commission, is already conducting one big investigation of pharmacy benefit managers and sues them Insulin pricing practices.

She spoke immediately after a panel discussion American Economic Liberties Project, a group that advocates for policies to address “today’s crisis of concentrated economic power.”

Roundtable participants discussed how they believe pharmacy benefit managers are driving community pharmacies out of business, making medications more expensive and, in some cases, making people sicker.

When it comes to concentrated economic power, it seems hard to beat Pharmacy Benefit Managers (PBMs) and their corporate parents—each of which ranks among the top 15 companies by revenue in the United States.

PBMs represent insurers in drug transactions and decide which drugs will be covered.

And with just three PBMs controlling access to about 80% of insured patients, they have enormous leverage to extract ever-larger discounts from drugmakers. This is a practice that has proven itself increase costs for many consumers at the pharmacy counter.

As the parent companies of PBMs become increasingly “vertically integrated,” they play important roles in many parts of the healthcare delivery chain, which can lead to conflicts of interest. For example, the big three PBMs are the dominant middlemen in drug transactions, and they are each part of a company that also includes a top 10 insurer. So they could try to get better deals for their sister insurance companies than for their competitors.

The major PBMs also determine how much pharmacies that dispense drugs they purchase from wholesalers will be reimbursed. Because PBMs control access to so many insured patients, independent pharmacies say they have no choice but to accept the contract terms offered to them.

“They say, 'We'll contract with you if we can pay you whatever we want,'” said Benjamin Jolley, a Salt Lake City pharmacist who works for the Economic Liberties Project.

While the companies that own PBMs decide how much they reimburse pharmacies, they also compete with them.

Each of the Big Three — CVS, United Health and Cigna/Express Scripts — owns mail-order pharmacies, and CVS also owns the largest retail chain in the country. In other words, healthcare companies can decide how much they pay their own pharmacies And those of their competitors.

Low reimbursements have been blamed for a wave of closures at community pharmacies, and now reimbursements and difficult retail conditions are contributing to closures Thousands of shops also belong to large chains. Experts fear that the closures will particularly affect the poor and the elderly almost impossible that they can speak face-to-face with a healthcare professional about their medications and chronic conditions such as diabetes and high blood pressure.

In an interview after Monday's roundtable, Justice Department's Mekki said she couldn't discuss what her agency might do about PBMs and the companies that own them. But she said her findings so far appear to be reminiscent of practices in other industries that the antitrust regulator has taken action against.

“One of the most consequential things we have done at the Justice Department is to think more about the middleman economy,” she said. “Sometimes it means financial services, as in our Visa case. Sometimes it means ticket sales, like in our Ticketmaster case. It appears there are many similar dynamics at play in the pharmaceutical industry.”

In the Visa case, Mekki's department is suing, accusing the company of exploiting its dominance in the debit card infrastructure This drives out competition and increases consumer costs. The Justice Department is also suing to overturn the Ticketmaster-Live Nation merger, saying the company exploited its dominance in entertainment ticketing, venues and advertising to charge patrons more and pay artists less.

These actions and those of the FTC are part of a revitalized approach to antitrust enforcement dying since the 1980s. Mekki said the Antitrust Division launched a healthcare task force earlier this year to address anti-competitive practices in the sector.

The idea “comes from the recognition that isolating our antitrust efforts in health care is no longer enough,” she said. “The economy is more consolidated and integrated than ever before.”

Just as she came to Ohio to hear from stakeholders about PBMs, Mekki said she and her colleagues wanted to hear from consumers.

“We are constantly in listening mode and if anyone out there has information about monopolization and collusion in all areas of the healthcare industry, from nurses to hospitals to pharmacies… we are interested and want to hear from you,” Mekki said.

She added that her office and the FTC have different resources and capabilities, so they coordinate and work to avoid duplication. A health care inquiry is particularly hopeful because it has support from officials across the political spectrum, Mekki said.

“We are pleased that there is bipartisan – actually bipartisan – interest in these issues,” she said. “Health care is so important. There is nothing more personal than the care we receive for ourselves and our families, and it now accounts for 20% of US GDP for good reason. We spend a lot of public money on these issues and we need to focus on how that money is distributed across the industry.”