How do you solve a problem like Bedoya?
You call your senator and tell them that you need a full FTC.
Tweets have consequences. Especially when they’re about charged political issues. And when they (even indirectly) disparage powerful politicians. Politicians who may one day vote on whether or not you should be confirmed to a powerful government appointment.
Five months ago, President Joe Biden appointed Alvaro Bedoya as the 5th member of the Federal Trade Commission. During the confirmation process, it came out that Mr. Bedoya had retweeted a few tweets that put republicans in a bad light and apparently he doesn’t like ICE. As a result, the Senate Commerce Committee was split evenly on party lines on whether to confirm him as Commissioner. Under Senate Rule XXXI paragraph 6, since the Senate failed to confirm or reject him, the president’s appointment was returned to him. President Biden resubmitted his appointment of Mr. Bedoya on January 4.
Yesterday, the FTC voted on whether to execute a 6(b) study of Pharmacy Benefit Managers. That vote also failed due to being a tie on party lines. The two democrats voted yes and the two republicans voted no. With a full commission, yesterday’s outcome could have been very different.
There are many pharmacists today who have learned the names of Commissioner Noah Phillips and Commissioner Christine Wilson and have decided that they don’t like them. Based on their comments yesterday, I’m still hopeful that the FTC will get a 6(b) study of PBMs approved. I’m not privy to the details of what the study was attempting to do, and I’m not privy to what the orders to the PBMs were. Only the Commissioners and the FTC staff know what exactly they were voting on. It’s possible that Commissioners Phillips and Wilson were just making excuses to vote no on a measure they didn’t want to see actually succeed. But… I’m going to take them at their word – the proposed study truly may have been inadequately comprehensive – apparently a previous draft didn’t include PhRMA-PBM rebate payments! PBMs are complex beasts, and their impact on the average American is bigger than just their mom-and-pop drugstore closing. And apparently the latest draft was sent to them at 9 PM last night.
I’ve served on a board of directors before. I’m quite aware of how annoying it would be to have to review changes to a major agenda item in all of 16 hours. It’s actually kind of comforting to me to see that the commission is not just a rubber stamp of the Chair’s views and preferences. Too often, I think, it’s easy for boards to fall into groupthink and just rubberstamp the decisions of staff and the chairperson. Deliberation and no votes are an important part of the democratic process as we’ve created it in our country.
Am I disappointed? Absolutely. The plight of the independent community pharmacist seems to get worse every passing day. Scratch that - the plight of the community pharmacist at chains and indies and grocery stores seems to get worse all the time. Starting salaries have dropped dramatically since I started pharmacy school in 2014. Reimbursements are too low to support adequate overlap and technician help, so pharmacists at chains are drowning in work. #pizzaisnotworking #SheWaited #HerNameWasAshleigh
But, hear me out on this, what if the proposed study didn’t include any demands for information on the structure of DIR fees, or GER, or BER, or DFER or how MAC pricing is set, or how rebates from PhRMA work or how PBMs solicit business to their mail order and owned pharmacies, or how they force drug cost information from wholesalers, or what’s with Zinc and Ascent, or Aberrant Products, or spread pricing, or how specialty pharmacy carveouts work or… I could go on for a while. I’d be annoyed if the study didn’t include mail order steering practices or GER, for example (though not as disappointed as if this is the end of the story and the FTC doesn’t vote again in the next 6 months on the same subject). Commissioner Phillips said he wasn’t sure what this version of the study was trying to accomplish. If it didn’t include Generic Effective Rates, my comments may have even encouraged a no vote! Here they are, for reference (video here, starting at minute mark 12:33):
“Commissioners and Chair Khan,
Thank you for the opportunity to speak to you today. I am a third-generation independent community pharmacist. I consult with pharmacies to help them understand “DIR fees” – the post-adjudication fees that PBMs contractually force upon pharmacies as a condition of accepting taxpayer-subsidized Medicare Part D business. These fees, as documented by CMS, have increased by 109,000% in the past 10 years. The deliberate structure of these fees means that kindhearted clinician pharmacists regularly lose money on Medicare business, to the benefit of those that engage in pure financial engineering. In my pharmacy, after working with a beloved patient for 10 years, I discovered to my dismay that due to these fees, the apparent profit of filling her 393 prescriptions per year was not $2000/year as the claim transmissions suggested, but was in fact a net LOSS of $2000/year. This was due to a “Generic Effective Rate,” a PBM financial engineering tactic that I now know far more about that I ever cared to know. In my attempts to continue to serve this patient while making the pharmacy financially sustainable, she became frustrated and left our pharmacy, never to return. “GER” despite its shield of boringness, has a cost in destruction of therapeutic pharmacist-patient relationships.
Yesterday, I helped a pharmacy owner to de-mystify these DIR fees. To his horror, he discovered that his own mother’s medications were not only being sold at a loss, but he was in fact paying her PBM more in fees than the total revenue of her prescriptions in exchange for the privilege of handing over his inventory. This was due to his revenue being based upon a PBM-set MAC price, and the fee being based upon the wildly inflated AWP benchmark price. The world pharmacists practice in today is a world where economics 101 principles do not apply, and abuse of market power reigns supreme. I urge you to move forward with your proposed order and to put a stop to these tactics.”
I want the FTC to do a 6(b) study that will equip them with a deep understanding of the anticompetitive practices that the largest PBMs engage in – deeper than I can ever hope to gain through my personal interest in the subject. The goal here for me isn’t to make a political statement that the Biden Administration cares about little pharmacies, it’s to restructure the market from the insanity we’re in to a market that is fair to all comers.
My heart goes out to the FTC staff that have been working on scoping this study and just got told that their work wasn’t good enough. That has to hurt. But I trust that they won’t give up the fight. They hold the best hopes of my profession in their hands. Rewrite the study proposal. Make it superb, so that the next time this comes up for a vote, we’ll KNOW that the no votes are disingenuous and in bad faith. I believe in you. If you want my help in knowing what questions to ask, I’m happy to help.
Yesterday’s vote, and the last several FTC meetings have been lessons in the wisdom of the structure of the FTC. It’s a FIVE member commission, not a four member commission. You’re not supposed to have ties. We’re in the situation of having only 4 commissioners and a failed vote yesterday because Ted Cruz thinks that Alvaro Bedoya is a “bomb-thrower extremist left-wing activist.” Culture war issues of the day, like “Critical Race Theory” and “kids in cages” are idiotic reasons to not have a full commission. But that’s part of why we’re here – because Ted Cruz latched on to a 50-year old academic approach with a catchy name and Mr. Bedoya retweeted the understandably angry response of a direct descendant of enslaved people. Let me be clear – children should not be separated from their parents by government force except in very limited circumstances. Entering the country illegally should not be one of those reasons. But the FTC doesn’t set immigration policy. There’s likely something that they SHOULD investigate with regard to the border – Big Private Jail is a powerful, rolled up industry. But the politics of the rhetoric here, the “kids in cages” line, is a really really dumb reason to not have a full Federal Trade Commission.
Mr. Bedoya was born in Peru. He has dedicated his career to ensuring the privacy rights of immigrants and working people. He is a distinguished lawyer and fierce advocate of privacy rights, especially online privacy rights. For a start, I think that he would be appalled at the use of prescription claims data by GoodRx and their contracted PBMs (which is like all of the PBMs at this point).
I think he’d be a great addition to the Commission. So does Chair Lina Khan. I’d like to see him confirmed. The vote on his confirmation was supposed to be 3 weeks ago, but it was postponed due to one of the committee members having a stroke. The vote on his confirmation to the FTC will come up to the Senate Commerce committee again soon. This means that there is something useful to do with our frustration with the vote today. We can call our senators and urge them to confirm Mr. Bedoya’s appointment. We can ask our patients to call their senators and urge his confirmation.
The members of the Commerce Committee are listed here. If you are in MS, SD, MO, TX, NE, KS, AK, TN, IN, UT, WI, WV, FL or WY, your senator voted against confirming Mr. Bedoya in December. Call them. Tell them that their obsession with partisan politics and culture war issues is putting your ability to serve your patients at risk. Have your patients tell their senator that their drug prices are unnecessarily high and they have to go to CVS instead of the pharmacy of their own choice because of the choice to elevate petty battles over “CRT” above the needs of American citizens to have a functional FTC.
I’ll be calling Mike Lee’s office today. If he votes no, as I expect he will despite my efforts, I’ll be doing my best to get one of the many excellent candidates running for his seat elected in his place in the June 28 primary and in the November 8 general election. This is how our democracy works: You talk to the FTC and they don’t listen, so you call your senator and he doesn’t listen, so you vote him out and get someone who WILL listen into office instead. And you grease some palms and donate some cash so that people give you the time of day. It’s a flawed system, but it’s our system, and doing the hard work of showing up to meetings, calling your representatives and voting is the only way to make the system work in your favor.
Pharmacists have a big sphere of influence. Now is a time to use that influence to get something done instead of just complaining to each other about the problems. I’ve said before that I think our profession can be a light to guide the way for all of the rest of the industries that have similar problems to us. Getting a full FTC (and a fully staffed FTC! There are fewer staffers there than there were 50 years ago when the number of mergers was a fraction of what it is today) wouldn’t just help us get this PBM study over the finish line – it would help the bicycle enthusiast who complained about the rollup of indy bike shops and the hotelier who complained about his abusive franchise arrangement (the terms sounded pretty familiar!). We have the influence and the motive to push on this. Call or email your senator today.