Through three years of Lina Khan’s leadership, the Federal Trade Commission has suffered an unprecedented streak of high-profile court defeats. That’s because the agency regularly makes decisions based on weak evidence, without demonstrating consumer harm and by relying on unproven legal theories. To this tally of shoddy work in pursuit of antitrust overreach, Ms. Khan has now added another entry: issuing an evidence-free interim report, which she has threatened could form the basis of future prosecutions.
In this report, which addresses pharmacy benefit managers, the FTC argues that “amidst increasing vertical integration and concentration,” PBMs “may be profiting by inflating drug costs and squeezing Main Street pharmacies.” The qualifier “may” appears throughout the report, signaling a lack of empirical evidence and analysis to support its conclusions about PBMs. In fact, many studies, including several by the FTC itself, contradict those conclusions.
PBMs are private businesses that manage prescription drug benefits on behalf of insurance-plan sponsors. They negotiate with drug manufacturers and pharmacies. Manufacturers trade lower prices for formulary access and more sales. Pharmacies trade discounts and increased retailing requirements for favorable placement in plan networks and more customers.
