California's Anti-PBM Legislation Draws Fire from FTC Staffers

Ignoring concerns raised by pharmacistsand consumer leaders in California, officials at the Federal TradeCommission (FTC) called on GovernorArnold Schwarzenegger to veto legislationintended to prevent prescriptiondrug profiteering by pharmacy benefitmanagers (PBMs).

The bill, which passed the state Senateand Assembly earlier this year,requires PBMs to disclose arrangementsunder which they are paid bypharmaceutical manufacturers to givepreferences to certain drug products.

The goal of the legislation is toincrease cost transparency in transactionsbetween PBMs and their healthplan clients, and ensure that any realizedcost savings are passed on to consumers.The FTC, however, concludedthat the bill "is actually more likely toincrease the cost of pharmaceuticals,increase health insurance premiums,and reduce the availability of insurancecoverage" for pharmaceuticals.

"This bill looks good on paper butmay well harm consumers," said MaureenOhlhausen, acting director of theFTC's Office of Policy Planning. "Manydrug substitutions are good for consumers'health and their pocketbooks,"but the California bill "makes all substitutionsmore difficult, time-consuming,and expensive."