U.S. FTC Sues Files Lawsuit Against PBMs Over High Insulin Costs
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.
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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.
The U.S. Federal Trade Commission (FTC) has taken legal action against the country’s three largest pharmacy benefit managers (PBMs)—UnitedHealth Group Inc.’s Optum, CVS Health Corp.’s CVS Caremark, and Cigna Corp.’s Express Scripts. The lawsuit, filed on Friday, accuses these PBMs of unfairly pushing diabetes patients toward high-priced insulin products while securing massive rebates from pharmaceutical manufacturers.
This legal move is a crucial part of the Biden administration’s broader efforts to reduce drug prices, particularly for life-saving medications like insulin. The FTC claims that the PBMs’ actions have contributed to higher out-of-pocket costs for diabetes patients who rely on insulin to manage their condition.
FTC Alleges PBMs Excluded Cheaper Insulin Options
According to the lawsuit, the PBMs deliberately excluded lower-cost insulin alternatives from the formularies, or drug lists, they manage for insurers. The FTC alleges that this practice forced patients to pay significantly higher prices while the PBMs collected rebates from pharmaceutical companies. This exclusion disproportionately affected patients with coinsurance and high-deductible health plans, as they were required to pay inflated costs without benefiting from the rebates negotiated by the PBMs.
The FTC’s complaint highlights the critical role PBMs play in the U.S. healthcare system, with Optum, CVS Caremark, and Express Scripts jointly managing around 80% of all prescription drugs nationwide. Their dominant position gives them substantial influence over which medications insurers cover and at what price, making their practices a focal point for federal regulators.
PBMs Respond, Denying Wrongdoing
Following the FTC’s announcement, all three PBMs issued statements strongly denying the allegations. CVS Caremark spokesperson David Whitrap dismissed the claims as “simply wrong” and defended the company’s track record in negotiating lower prescription drug prices. He emphasized that PBMs work to protect patients from rising healthcare costs, not increase them.
Cigna’s Chief Legal Officer Andrea Nelson also pushed back against the lawsuit, accusing the FTC of “scoring political points” rather than addressing the real issue of pharmaceutical pricing. Nelson warned that forcing PBMs to include certain lower-cost drugs could, in some cases, result in higher overall healthcare expenses.
Similarly, Optum Rx spokesperson Elizabeth Hoff rejected the FTC’s allegations, calling them “baseless.” She stated that the company’s efforts have already helped lower insulin costs for customers, claiming that the average monthly price paid by Optum patients is now less than $18.
Vice President Kamala Harris Ties Insulin Costs to 2024 Campaign
Lowering prescription drug costs has been a key focus for the Biden administration, particularly as Vice President Kamala Harris continues her 2024 presidential campaign. Harris has frequently highlighted her efforts to reduce insulin prices during campaign stops, reinforcing the administration’s commitment to making life-saving drugs more affordable for millions of Americans.
The lawsuit aligns with the administration’s broader push to improve access to affordable healthcare, an issue that resonates deeply with many voters. With insulin prices historically fluctuating and often being prohibitively expensive, the lawsuit against PBMs is expected to be a major talking point in Harris’s campaign moving forward.
Impact on Millions of Diabetes Patients
The FTC’s lawsuit underscores the devastating impact of high insulin prices on millions of Americans with diabetes. FTC Deputy Director Rahul Rao of the Bureau of Competition called out PBMs for acting as “medication gatekeepers” who have prioritized their profits over patient needs.
“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,” Rao stated. He further argued that PBMs have played a critical role in inflating drug costs, making it harder for patients to afford their necessary medications.
The lawsuit also highlights the involvement of PBM-owned purchasing organizations—including Zinc Health Services, Ascent Health Services, and Emisar Pharma Services—in securing millions of dollars in rebates while patients continued to struggle with high costs.
PBMs Push Back Against FTC’s Actions
The three PBMs named in the lawsuit have aggressively defended their role in the prescription drug industry, arguing that the FTC is unfairly targeting them. Express Scripts recently launched its own legal action against the FTC, demanding that the agency retract a report accusing PBMs of enriching themselves at the expense of independent pharmacies.
CVS Caremark also defended the PBM industry’s role in negotiating lower drug prices. Company representatives warned that restricting PBMs’ ability to negotiate with pharmaceutical manufacturers could ultimately benefit the drug companies rather than patients.
Will Insulin Manufacturers Face Legal Scrutiny Next?
Notably, the FTC’s lawsuit does not name any of the major insulin manufacturers—Eli Lilly, Sanofi, and Novo Nordisk—as defendants. However, the agency criticized these companies for their role in what it described as a “broken system” that has allowed insulin prices to spiral out of control.
FTC officials indicated that while the current lawsuit focuses on PBMs, further legal action against pharmaceutical companies could follow. Given that insulin manufacturers have long been accused of price gouging, there is growing speculation that they may also face heightened regulatory scrutiny soon.
What This Lawsuit Means for the Future of Drug Pricing
The FTC’s lawsuit represents a significant escalation in the federal government’s fight against high prescription drug costs. If the case succeeds, it could lead to major changes in how PBMs operate, potentially forcing them to prioritize lower-cost medications over rebate-driven decision-making.
Legal experts suggest that this lawsuit could also pave the way for increased transparency in the drug pricing system, compelling PBMs and pharmaceutical companies to disclose more details about their pricing negotiations. In the long run, such measures could help reduce costs not just for insulin but for a wide range of prescription medications.
As the case moves forward in the FTC’s in-house court, it is expected to have far-reaching implications for the pharmaceutical and healthcare industries. Millions of diabetes patients, healthcare providers, and insurers will be closely watching to see how the legal battle unfolds and whether it results in lower insulin prices.
A Defining Moment in the Battle Over Drug Costs
The FTC’s lawsuit against the nation’s top PBMs marks a critical moment in the ongoing battle over prescription drug prices in the United States. As the Biden administration ramps up its efforts to curb healthcare costs, this legal action serves as a powerful statement against industry practices that regulators say have hurt millions of patients.
With Vice President Kamala Harris placing insulin affordability at the center of her campaign, this lawsuit could also have major political ramifications as the 2024 election approaches. Whether the FTC can successfully hold PBMs accountable remains to be seen, but one thing is clear: the fight for lower drug prices is far from over.
