Enlarge / Lina Khan, chair of the Federal Trade Commission (FTC), testifies before the House Appropriations Subcommittee at the Rayburn House Office Building on May 15, 2024, in Washington, DC. (credit: Getty | Kevin Dietsch)

Firms that serve as intermediaries to negotiate and control prescription drug access in the US "wield enormous power," largely with "extraordinarily opaque" business practices, and may be "inflating drug costs and squeezing Main Street pharmacies" for profit, according to a searing interim report released Tuesday by the Federal Trade Commission.

Amid a national focus on America's uniquely astronomical drug costs, the FTC is taking aim at firms that largely work deep in the bowels of the country's labyrinthine health care system, well hidden from public understanding and scrutiny: pharmacy benefit managers (PBMs).

PBMs were initially hired by various payors—employers, health insurance companies, government health plans, and others—to manage prescription drug benefits through various plans. But PBMs have evolved over the years to also negotiate rebates from drugmakers, set reimbursements for dispensing pharmacies, and develop drug formularies (the list of drugs that a health plan covers.) While those functions alone grant PBMs a large amount of power, consolidation and integration over recent years has concentrated that power in troubling ways, according to the FTC report.

Enlarge / Stephen Ubl, president and chief executive officer of Pharmaceutical Research and Manufacturers of America (PhRMA), speaks during a Bloomberg Live discussion in Washington, DC, in 2017. (credit: Getty | Andrew Harrer)

After a series of decisive court losses, the pharmaceutical industry appears to be taking its fight against Medicare drug price negotiations directly to the people—and the White House is not impressed.

This week, the high-powered industry group PhRMA (the Pharmaceutical Research and Manufacturers of America) released two eye-catching attacks on federal efforts to lower America's singularly astronomical drug prices. In a press release Tuesday, PhRMA announced an analysis suggesting that the Medicare drug price negotiations—part of the Biden administration's 2022 Inflation Reduction Act—could actually cost some seniors and people with disabilities slightly more in out-of-pocket costs. The analysis, however, relies on a key—and questionable—assumption that the federal government will set price limits using the highest possible estimate for maximum fair prices in 2026.

Milliman, the consulting firm PhRMA commissioned to do the study, cautioned that the actual prices "will certainly vary due to differences in unit cost and utilization trend, 2026 benefit designs, and actual 2026 maximum fair prices."

Enlarge / Lars Fruergaard Jorgensen, chief executive officer Novo Nordisk A/S, during an interview at the company's headquarters in Bagsvaerd, Denmark, on Monday, June 12, 2023. (credit: Getty | Carsten Snejbjerg)

After some persuasion from Sen. Bernie Sanders (I-Vt.), the CEO of Novo Nordisk will testify before lawmakers later this year on the "outrageously high cost" of the company's diabetes and weight-loss drugs—Ozempic and Wegovy—in the US.

CEO Lars Jørgensen will appear before the Senate Committee on Health, Education, Labor, and Pensions (HELP), which is chaired by Sanders, in early September. The agreement came after a conversation with Sanders in which the CEO reportedly "reconsidered his position" and agreed to testify voluntarily. As such, Sanders has canceled a vote scheduled for June 18 on whether to subpoena Novo Nordisk to discuss its US prices, which are considerably higher than those of other countries.

The independent lawmaker has been working for months to pressure Novo Nordisk into lowering its prices and appearing before the committee. In April, Sanders sent Jørgensen a letter announcing an investigation into the prices and included a lengthy set of information requests. In May, the committee's investigation released a report suggesting that Novo Nordisk's current pricing threatens to "bankrupt our entire health care system."