The Federal Trade Commission (FTC) has taken significant legal action against three major pharmacy benefit managers (PBMs) – CVS Health’s Caremark Rx, Cigna’s Express Scripts, and UnitedHealth Group’s OptumRx – accusing them of artificially inflating the cost of insulin, a life-sustaining medication for millions of Americans with diabetes. The FTC’s lawsuit alleges that these PBMs exploited their positions as intermediaries in the drug supply chain to secure higher rebates from insulin manufacturers, thereby increasing the drug’s list price and, consequently, out-of-pocket expenses for patients.
According to the FTC, the PBMs’ strategy involved excluding more affordable insulin options from their formularies in favor of more expensive versions that yielded higher rebates. This practice has been particularly detrimental to patients with high deductibles, who are often left to bear the brunt of these elevated costs. The FTC’s Bureau of Competition has noted that PBMs stand to gain when the list price of insulin is higher, enabling them to extract substantial rebates from drug manufacturers.
Rahul Rao, Deputy Director of the FTC’s Bureau of Competition, highlighted the considerable impact of these practices on vulnerable patients. “Millions of Americans with diabetes need insulin to survive, yet for many of these vulnerable patients, their insulin drug costs have skyrocketed over the past decade thanks in part to powerful PBMs and their greed,” he stated. The complaint further alleges that the implementation of exclusionary drug formularies by PBMs began in earnest around 2012, coinciding with a marked increase in insulin prices as manufacturers sought to remain competitive within this rebate-dependent system.
The FTC’s legal challenge represents an intensification of scrutiny over PBMs, who have been criticized for their lack of transparency and the complex nature of their operations. The three PBMs collectively manage roughly 80% of all prescriptions in the United States, underscoring the significant influence they wield over drug pricing and accessibility. CVS Health’s Caremark Vice President for External Affairs, David Whitrap, contended that the company has been proactive in making insulin affordable, citing the firm’s efforts to ensure that insured members pay less than $25 per month for their insulin. Whitrap denounced the FTC’s accusations as “simply wrong.” Similarly, Andrea Nelson, Chief Legal Officer for the Cigna Group, has challenged the foundation of the FTC’s lawsuit, describing it as an “unsubstantiated and ideologically-driven attack on pharmacy benefit managers.”
The Pharmaceutical Care Management Association (PCMA), representing PBMs, has also refuted the FTC’s allegations, asserting that the agency’s lawsuit disregards the positive contributions made by PBMs in reducing drug prices. The FTC’s complaint, however, points to a pernicious rebate system where higher list prices lead to increased rebates and fees for PBMs, further burdening diabetic patients with exorbitant insulin costs. Eli Lilly, Novo Nordisk, and Sanofi, the principal manufacturers controlling approximately 90% of the U.S. insulin market, have previously faced public and political pressure to lower their prices. These companies have all announced significant price reductions for their insulin products in recent years.
Despite the cap on out-of-pocket insulin costs established by the Inflation Reduction Act for Medicare Part D beneficiaries, many patients continue to struggle with high insulin prices. The FTC’s action aims to address the systemic issues within the drug pricing ecosystem, specifically targeting the practices of PBMs that have exacerbated the financial strain on diabetic patients. The agency has not ruled out future legal actions against insulin manufacturers, acknowledging their role in the escalating costs.
As the legal proceedings unfold, the pharmaceutical and healthcare sectors are poised to witness significant repercussions, with the potential for broader reforms to emerge from this litigation. The FTC’s pursuit of accountability and transparency within the PBM industry underscores the necessity of protecting patients from exploitative practices, ensuring equitable access to essential medications.
News Sources
- FTC sues the three largest PBMs for allegedly inflating the cost of insulin
- FTC sues pharmacy benefit managers for inflating price of insulin
- Federal Trade Commission accuses three drug middlemen of inflating insulin prices
- FTC sues top three pharmacy middlemen over insulin prices
- FTC sues three largest drug middlemen for allegedly inflating insulin prices
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Source: HaystackID
