On Thursday, June 9, 2022, the Federal Trade Commission (FTC) announced that, during its June 16 open meeting, it would be voting on whether to issue a policy statement concerning rebates and fees in the pharmaceutical industry. The announcement explained that the policy statement would “describ[e] the FTC’s intent to examine rebates and fees paid by drug manufacturers to pharmacy benefit managers (PBMs) and other intermediaries in exchange for disfavoring the lowest cost drug products, including in the case of insulin.” Because this is a policy statement, and not a rulemaking, the document should not create new legal obligations for companies and likely will attempt to ground its positions in prior commission enforcement actions. But the FTC also could take the position that common industry practices may violate Section 5 of the FTC Act’s prohibitions on unfair competition and on unfair and deceptive acts and practices. We plan to analyze carefully both the policy statement and any comments by commissioners, which may explain further the agency’s thinking or (in the case of dissenting commissioners) possible legal vulnerabilities with the FTC’s approach.
Possibly Related Development
This announcement comes shortly on the heels of the FTC’s announcement on Tuesday that it had voted to approve a study of the PBM industry under section 6(b) of the FTC Act. As part of that study, the FTC sent subpoenas to six PBMs: CVS Caremark; Express Scripts, Inc.; OptumRx, Inc.; Humana Inc.; Prime Therapeutics LLC; and MedImpact Healthcare Systems, Inc. The subpoenas include a number of requests for documents, data, and information regarding those PBMs’ rebate practices, among many other topics. Given the close timing here, we think that the FTC likely intends to use information from the study to begin executing on whatever priorities it announces in the forthcoming policy statement.
Next Steps for Us and Pharma Cos.
We likely will know more about the FTC’s thinking next week, and we plan to share our analysis of the FTC’s policy statement at that time. But in the meantime, pharmaceutical companies should consider reviewing their rebate contracts with these six PBMs because those contracts likely are going to be the first that the FTC focuses on as part of its enforcement in this area.
If you are interested in watching the FTC’s open meeting, the meeting begins at 1pm ET. The agency will post a link to the live stream on the press release. The meetings begin with statements by members of the public, which can last anywhere from a few minutes to an hour, depending on how many sign up. After that, the commissioners begin the business portion of the meeting.
Our firm’s FTC practice is headed by two recent FTC alums: Gail Levine was the deputy director for the Bureau of Competition and Christopher Leach was an attorney in the Bureau of Consumer Protection’s Division of Financial Practices.