Just this week, the Sen­ate vot­ed 51-50 along par­ty lines (with tie break­er from VP Ka­mala Har­ris) to make Pres­i­dent Biden ap­pointee Al­varo Bedoya the de­cid­ing vote on a split 2-2 Fed­er­al Trade Com­mis­sion. And now that it is no longer split, a group of sen­a­tors wants the com­mis­sion to ac­tu­al­ly move for­ward on in­ves­ti­gat­ing phar­ma­cy ben­e­fit man­agers.

Re­pub­li­can sen­a­tors Chuck Grass­ley (IA) and Mike Braun (IN), along­side De­mo­c­rat sen­a­tor Ron Wyden (OR), sub­mit­ted a let­ter to FTC chair Lina Khan ear­li­er this week, af­ter the com­mis­sion­ers re­mained dead­locked in a 2-2 vote in Feb­ru­ary to for­mal­ly look in­to an­ti-com­pet­i­tive prac­tices at the hands of PBMs.

At the time, Khan said, “We have a re­al moral im­per­a­tive to act, this in­quiry is long over­due.”

This is not Grass­ley’s first let­ter re­gard­ing in­ves­ti­gat­ing PBMs to Khan — he sent a let­ter to her just back in March af­ter high­light­ing how PBMs op­er­ate with “lit­tle to no trans­paren­cy.”

Now on­to the let­ter: The sen­a­tors not­ed that Grass­ley and Wyden re­leased an 88-page re­port on the cost of in­sulin ear­li­er this year af­ter a two-year in­ves­ti­ga­tion from the Sen­ate Fi­nance Com­mit­tee in­to the three largest in­sulin man­u­fac­tur­ers (Sanofi, No­vo Nordisk and Eli Lil­ly) and three largest PBMs (Op­tum­Rx, Ex­press Scripts, and CVS Care­mark, which have a com­bined mar­ket share of 75-80%).

What they found was, at least on the in­sulin front, PBMs uti­lized a num­ber of con­tract­ing tac­tics to se­cure “pre­ferred for­mu­la­ry place­ment.” But as the sen­a­tors added through PBMs’ sheer mar­ket share:

De­spite, or per­haps be­cause of, this lev­el of con­sol­i­da­tion, PBMs op­er­ate with lit­tle trans­paren­cy, mak­ing it dif­fi­cult, if not im­pos­si­ble to un­der­stand how PBMs in­flu­ence pre­scrip­tion drug pric­ing.

As of 2019, some 37 mil­lion Amer­i­cans are on in­sulin, and 7 mil­lion re­quire it dai­ly. The sen­a­tors al­so not­ed that for peo­ple on Medicare Part D, more than 1 in 4 spend more than $5,000 a year for their in­sulin.

Some of those tac­tics that the sen­a­tors briefly men­tioned were found in four PBM prac­tices: re­bates, for­mu­la­ry ex­clu­sion lists, ad­min­is­tra­tive fees and price pro­tec­tion claus­es. For re­bates, they’ve in­creased in lock step with list price since 2013, if not ear­li­er, the sen­a­tors not­ed. They al­so said, “We found that PBMs with a large vol­ume of clients are able to ex­tract high­er re­bates from man­u­fac­tur­ers when com­pared to small­er pay­ers, who of­ten lack lever­age and re­sources.”

On for­mu­la­ry ex­clu­sion lists — the lists that dic­tate whether or not a health­care plan will cov­er the price of a drug — the Sen­ate com­mit­tee’s in­ves­ti­ga­tion found that pay­ers and PBMs in­creased their own use of the lists to con­trol drug costs, as man­u­fac­tur­ers had in­creased their re­bate of­fers to PBMs “sig­nif­i­cant­ly fol­low­ing the threat of ex­clu­sion.” For man­u­fac­tur­ers, ex­clu­sion of their drugs can end up re­sult­ing in fi­nan­cial loss­es and re­duced mar­ket share.

Then the let­ter went on to ad­min fees — while in­for­ma­tion is not well known thanks to con­fi­den­tial re­bate agree­ments, what the com­mit­tee found sug­gest­ed that fees range be­tween 3% and 5% of the list price, which can be prob­lem­at­ic as the list price can be in­creased to of­fer PBMs con­ces­sions in ex­change for pre­ferred for­mu­la­ry place­ment.

The let­ter then cit­ed a law re­view ar­ti­cle pub­lished in the Har­vard Jour­nal on Leg­is­la­tion from le­gal re­searcher Robin Feld­man:

[T]hese pay­ments re­duce the drug com­pa­ny’s net in­come from sales of the drug and in­crease the PBM rev­enue re­lat­ed to a spe­cif­ic drug. Even when a drug com­pa­ny pays for ser­vices from a PBM, if the val­ue of the ser­vice is sub­stan­tial­ly less than the pay­ment made, the trans­ac­tion is sim­ply an in­di­rect price con­ces­sion. Once again, rais­ing list price can leave room for the drug com­pa­ny to of­fer these good­ies . . . [and, as a re­sult], many peo­ple be will be forced to pay high­er list prices.

Be­yond the re­bates, ex­clu­sion lists and ad­min fees, the fi­nal tac­tic men­tioned was price pro­tec­tion claus­es, ini­tial­ly de­signed to lim­it a drug mak­er from in­creas­ing the list price be­yond a pre-spec­i­fied amount — and if the mak­er goes above that amount, the PBM and health plan re­ceive an ad­di­tion­al re­bate, de­pend­ing on the con­tract. How­ev­er, the com­mit­tee’s in­ves­ti­ga­tion found that those claus­es don’t de­ter an­nu­al in­fla­tion of the list price — and PBMs ac­cept them as long as they get more con­ces­sions at the end of the day.

In clos­ing, the sen­a­tors wrote to the FTC: