The Federal Trade Commission (FTC) filed a lawsuit Friday against the three largest pharmacy benefit managers (PBMs), accusing them of engaging in anticompetitive practices that “artificially” inflate the list price of insulin while increasing their profits.
The agency's actions target CVS Caremark Rx, Cigna's Express Scripts and UnitedHealth's OptumRx, which together fill about 80% of prescriptions in the United States.
The FTC accused the companies of creating an “unfair” drug rebate system that favors insulin from manufacturers that sell at a higher list price, even when cheaper insulin is available.
This system allowed PBMs and their affiliated group purchasing organizations, which broker drug purchases for hospitals and other health care providers, to “line their own pockets” with bigger kickbacks while patients paid higher copayments, the lawsuit alleges.
In a statement, the FTC said one PBM vice president acknowledged that the strategy allowed the Big Three to “keep sipping on those juicy kickbacks.”
“Millions of Americans with diabetes need insulin to live, but for many vulnerable patients, the cost of insulin drugs has skyrocketed over the past decade because of powerful PBMs and their greed,” Rahul Rao, Deputy Director of the FTC's Bureau of Competition, said in a statement.
“Caremark, ESI and Optum have acted as pharmaceutical gatekeepers, squeezing millions of dollars from patients who need life-saving medicines,” Rao said.
The lawsuit, which has not yet been made public, represents increased scrutiny by the Biden administration of PBMs' business practices and seeks to shine a light on opaque middlemen at the heart of the drug distribution system.
Companies strongly opposed the move.
“This action continues the FTC's disturbing pattern of baseless, ideologically driven attacks on pharmacy benefit managers,” said Andrea Nelson, Cigna Group's chief legal officer.
Cigna's Express Scripts on Tuesday sued the FTC over an interim report released in July on PBMs, demanding that it be retracted, saying the report was “filled with false and misleading claims” about the PBM industry.
An OptumRx spokesman said the FTC's “baseless action demonstrates a gross misunderstanding of how drug prices work.”
A CVS Caremark spokesperson said: “We are proud of the work we've done to make insulin more affordable for all Americans with diabetes. It is simply wrong for the FTC to suggest otherwise, as they did today. We stand by our track record of protecting American businesses, unions and patients from rising prescription drug prices.”
PBMs negotiate the terms under which hundreds of millions of Americans get prescription drugs: they negotiate prices with drug companies, make payments to pharmacies, and determine which drugs are available to patients and how much they cost.
As the industry has consolidated, critics say PBMs have increasingly exercised control over patients' access to medicines. PBMs are vertically integrated, performing the roles of health plans and pharmacists. The largest PBMs are owned by insurance companies, which in turn own specialty, mail-order and retail pharmacies.
Drug companies and PBMs blame each other for rising drug costs: Drug companies say they need to raise list prices because of high PBM kickbacks, while the middlemen say the kickbacks are passed on to health plan sponsors.
But the FTC said PBMs shouldn't be blamed solely for high insulin prices: “The Bureau remains deeply concerned about the role that pharmaceutical companies such as Eli Lilly, Novo Nordisk and Sanofi have played in raising the list prices of life-saving medicines like insulin,” the FTC said in a statement.
The agency said it “may recommend suing pharmaceutical companies” in the future.
