TL/DR –
The Federal Trade Commission (FTC) has filed a lawsuit against the three largest pharmacy benefit managers (PBMs) in the US, including CVS’ Caremark, Cigna’s Express Scripts, and UnitedHealth’s Optum Rx, accusing them of anticompetitive practices that inflated insulin prices. The FTC alleges that these companies steered patients towards higher priced insulin to secure larger rebates from drug manufacturers, resulting in higher costs for patients not eligible for lower prices. The companies, which control approximately 80% of US prescriptions, have denied the FTC’s allegations, describing them as a misunderstanding of how drug pricing works.
Dive Brief:
- The Federal Trade Commission (FTC) has initiated a lawsuit against the three top pharmacy benefit managers (PBMs) in the U.S., accusing them of anticompetitive practices that inflated insulin drug prices.
- The FTC’s administrative complaint alleges that Caremark (owned by CVS), Express Scripts (owned by Cigna), and Optum Rx (owned by UnitedHealth) guided patients towards costlier insulin to gain larger manufacturer rebates.
- Consequently, patients ineligible for the discounted price faced substantial costs, the FTC claims. The accused PBMs together dominate about 80% of U.S. prescriptions.
Dive Insight:
The FTC’s anticipated lawsuit occurs amidst escalating tensions between PBMs, the drug supply chain intermediaries, and authorities seeking to curb soaring U.S. drug prices. The FTC accuses these companies of misusing their economic power by manipulating pharmaceutical supply chain competition, leading to higher medication costs for patients.
The FTC complaint primarily focuses on how PBMs negotiated insulin medication discounts with drug manufacturers. Critics argue that the existing structure motivates PBMs to prefer drugs with high list prices, leading to greater consumer expenses.
The FTC also names group purchasing organizations linked to the three PBMs — Zinc Health Services, Ascent Health Services, and Emisar Pharma Services — as defendants. In response, the accused PBMs denounced the FTC’s lawsuit, arguing it is based on a profound misunderstanding of drug pricing mechanisms.
PBMs assert they pass on the majority of rebate savings to their clients, saving customers money by negotiating decreased drug prices. Instead, they redirect blame towards drug manufacturers, suggesting the core issue behind unaffordable drugs in the U.S. are the list prices set by these manufacturers.
The FTC pointed out that PBMs are not the only entities contributing to the problem. They highlighted concerns about drug manufacturers such as Eli Lilly, Novo Nordisk, and Sanofi, noting their role in escalating the list prices of life-saving medications like insulin.
The FTC’s move to sue the PBMs was anticipated since mid-July, following the FTC’s release of their interim report on their ongoing investigation into the PBM industry. In response, Express Scripts sued the FTC, claiming the report was defamatory and damaging to their business.
Recently, there have been several lawsuits against PBMs for their alleged contribution to rising costs, including suits from state attorneys general and independent pharmacies.
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