The Federal Trade Commission announced Friday that it was suing three drug middlemen for inflating insulin prices.
The FTC accused the “Big Three” pharmacy benefit managers (PBMs) — UnitedHealth Group’s OptumRx, CVS Health’s Caremark, and Cigna’s Express Scripts — of “engaging in anticompetitive and unfair kickback practices that artificially inflate insulin list prices, deny patients access to lower-priced products, and pass on the costs of high insulin list prices to vulnerable patients.” According to the FTC, approximately 8 million Americans are insulin-dependent in the United States.
PBMs work with insurance companies to negotiate price discounts from drug companies in exchange for including drugs in their plans — in theory, saving patients money.
The lawsuit also includes a group purchasing organization for PBMs that includes Zinc Health Services, Ascent Health Services and Emisar Pharma Services.
The lawsuit alleges that the “Big Three” oversee about 80 percent of prescription drug plans in the United States and have created a kickback system that prioritizes large kickbacks from pharmaceutical companies, which has led to high insulin prices.
“This unjust system generates billions of dollars in rebates and fees for PBMs and their health plan sponsor clients, at the expense of some vulnerable people with diabetes who are forced to pay large out-of-pocket costs for their vital medicines,” the FTC said in a news release.
In a statement, CVS Caremark said the FTC’s allegations were “categorically false” and blamed drug companies for inflating drug prices.
“CVS Caremark is a pioneer in lowering the cost of insulin for all patients, whether they are insured, uninsured or underinsured,” the company said. “Our members pay less than $25 on average, well below list price and well below the Biden Administration’s $35 cap. Additionally, we are offering $25 insulin to all Americans, insured and uninsured, through our ReducedRx program at all of our 67,000 network pharmacies and more than 9,000 CVS pharmacies.”
Cigna’s chief legal officer, Andrea Nelson, said the FTC’s lawsuit continues a “troubling pattern” of “baseless, ideologically driven attacks on pharmacy benefit managers,” including the commission’s July report that accused PBMs of inflating drug prices. Cigna filed suit against the FTC on Tuesday, seeking to have the report retracted.
“The FTC, a government agency run on taxpayer money, has once again proven that it does not understand drug pricing and chooses to ignore the facts to score political points rather than focusing on its duty to protect consumers,” Nelson said in a statement. “The facts are that in the unlikely event that the FTC wins its lawsuit and forces PBMs to include drugs on their formularies even if they have a higher net cost to plan sponsors and regardless of whether they are clinically necessary, the FTC will raise drug prices in this country, which will hurt consumers and those who provide prescription drug benefits, including employers, unions, and the federal government itself.”
UnitedHealth Group did not immediately respond to a request for comment.
The FTC said insulin medications used to be more affordable — Humalog, made by Eli Lilly, cost about $21 in 1999. As a result of PBM kickback tactics, the price of the drug rose to $274 by 2017, the FTC said.
“Millions of Americans with diabetes need insulin to live, but for many of these vulnerable patients, the cost of insulin has skyrocketed over the past decade, in part due to powerful PBMs and their greed,” said Deputy Director Rahul Rao of the FTC’s Bureau of Competition.
The FTC said it “should be cautious” about future lawsuits to see whether drug companies such as Eli Lilly and Novo Nordisk, rather than just PBMs, are to blame for price gouging.
The National Association of Community Pharmacists supported the FTC’s lawsuit against the PBMs in a statement released Friday.
“One of the many ways PBMs game the system to the disadvantage of patients, taxpayers and small pharmacies is the kickback game,” said B. Douglas Hoey, the association’s CEO. “PBMs decide which drugs are covered by health plans. The most expensive drugs get bigger rebates. Naturally, the most expensive drugs stay on the formulary list even when there are cheaper alternatives. Patients end up paying more. Employers end up paying more. Taxpayers end up paying more. And more small pharmacies are forced out of business. Kickbacks create a powerful incentive to raise drug prices, which is completely counterproductive.”
In July, Democratic and Republican lawmakers at an Oversight Committee hearing blamed executives at Caremark, Express Scripts and OptumRx for soaring prescription drug prices in the U.S.
“On the one hand, we have the argument that PBMs are lowering prescription drug prices, but on the other hand, the Federal Trade Commission, major media outlets like the New York Times, and at least eight attorneys general, Democrats and Republicans, allege that PBMs are inflating the cost of medicines,” said Rep. Raja Krishnamoorthi, D-Illinois.
The committee began investigating PBMs’ role in rising health care costs in March 2023. The lawsuit also comes as states, most recently Vermont, are suing PBMs, accusing them of driving up drug costs.
