The FTC Sues against major pharmacy benefit managers concerning insulin pricing practices
The U.S. Federal Trade Commission (FTC) has launched a lawsuit against the nation’s three largest pharmacy benefit managers (PBMs)—UnitedHealth Group Inc’s Optum, CVS Health Corp’s CVS Caremark, and Cigna Corp’s Express Scripts—alleging that they unfairly steered diabetes patients toward higher-priced insulin products in order to collect substantial rebates from pharmaceutical manufacturers. The lawsuit, filed on Friday, is part of the Biden administration’s broader efforts to drive down drug prices, particularly life-saving medications like insulin.
According to the FTC’s case, the PBMs excluded lower-cost insulin options from the formularies (lists of drugs covered by insurers) they manage. This conduct allegedly led to higher out-of-pocket costs for patients, including those with coinsurance and deductibles, who did not benefit from the rebates negotiated by the PBMs.
PBMs Control 80% of U.S. Prescriptions
The lawsuit highlights the dominant role of PBMs in the American healthcare system, stating that Optum, CVS Caremark, and Express Scripts jointly administer 80% of all prescriptions in the U.S. PBMs play a key role in deciding which medications are covered under health plans, and their negotiating power gives them significant control over drug prices.
In response to the lawsuit, CVS spokesperson David Whitrap issued a statement defending the company’s efforts to make insulin more affordable, describing the FTC’s allegations as “simply wrong.” He emphasized CVS Caremark’s track record of protecting patients from rising prescription drug costs.
Meanwhile, Cigna’s Chief Legal Officer Andrea Nelson criticized the FTC for “scoring political points” and warned that forcing PBMs to include certain drugs with higher overall costs would ultimately drive up drug prices in the U.S. Optum Rx spokesperson Elizabeth Hoff also called the FTC’s claims “baseless,” asserting that the company’s actions have already lowered insulin costs for customers to an average of less than $18 per month.
Vice President Kamala Harris Emphasizes Insulin Cost on Campaign Trail
The Biden administration has made lowering drug prices, especially insulin, a key priority. Vice President Kamala Harris, who is also the Democratic nominee in the 2024 election, has frequently highlighted her work on reducing insulin costs during her campaign. The lawsuit against the PBMs aligns with the administration’s ongoing push to improve access to affordable healthcare for Americans, especially those with chronic conditions like diabetes.
Millions of Diabetes Patients Impacted by Rising Insulin Prices
FTC Deputy Director Rahul Rao of the Bureau of Competition condemned the actions of the PBMs, describing them as “medication gatekeepers” who have profited at the expense of patients needing life-saving insulin. Rao remarked, “Countless Americans with diabetes depend on insulin for survival, yet for many of these patients, the cost of their insulin medication has soared in the last decade, partly due to the greed of influential Prescription Benefit Managers (PBMs).”
The lawsuit also pointed to the role of Zinc Health Services, Ascent Health Services, and Emisar Pharma Services, purchasing organizations created by the PBMs, in extracting millions of dollars in rebates while patients saw rising costs.
The three PBMs have responded strongly to the FTC’s lawsuit, arguing that the Commission is biased against their industry. Express Scripts recently sued the FTC, seeking to force the agency to withdraw a report accusing PBMs of enriching themselves at the expense of smaller pharmacies. CVS Caremark also defended the role of PBMs in negotiating drug prices, warning that any restriction on their ability to negotiate would ultimately benefit pharmaceutical companies, not patients.
The FTC did not name the three major insulin manufacturers—Eli Lilly, Sanofi, and Novo Nordisk—in the lawsuit, though it criticized their involvement in what the agency referred to as a “broken system.” The FTC has declared that it retains the right to pursue additional legal measures against these pharmaceutical firms in the future.
This lawsuit represents a major move by the FTC to hold PBMs accountable for their role in rising drug costs, particularly for diabetes patients. As the case moves forward in the FTC’s in-house court, it could have far-reaching implications for the pharmaceutical and healthcare industries, as well as for millions of Americans who rely on insulin to manage their condition. The Biden administration’s focus on reducing insulin prices is likely to remain a key issue in the 2024 election, with Vice President Harris championing healthcare reform on the campaign trail.
This news article covers the FTC’s legal action against major PBMs, linking the story to the broader context of the Biden administration’s efforts to lower drug prices.
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