The US Federal Trade Commission (FTC) has sued the nation’s three largest pharmacy benefit managers (PBMs), alleging that they have steered patients to buying higher-priced insulins so that they can reap more profits.
The three PBMs administer 80% of prescriptions in the United States, the FTC said in a statement announcing the action.
The agency filed an administrative complaint, which means its allegations will be tried in a formal hearing before an administrative law judge. It will not be heard in a criminal court.
The three PBMs “have extracted millions of dollars off the backs of patients who need life-saving medications,” Rahul Rao, deputy director of the FTC’s Bureau of Competition, said in the statement.
The FTC action is not the first taken by a government agency against PBMs. Ohio Attorney General Dave Yost sued Express Scripts and Prime Therapeutics in March 2023, alleging antitrust violations.
The FTC’s complaint, which is not yet public, alleges that PBMs excluded lower-priced insulins from their formularies “in favor of high list price, highly rebated insulin products.”
The FTC describes a market in which PBMs, as they consolidated market power, began to extract higher rebates from drug makers. In turn, insulin manufacturers started raising their prices. That allowed PBMs to collect larger rebates, even as drug makers profited, according to the FTC.
The PBMs “engaged in unfair methods of competition and unfair acts or practices under Section 5 of the FTC Act by incentivizing manufacturers to inflate insulin list prices, restricting patients’ access to more affordable insulins on drug formularies and shifting the cost of high list price insulins to vulnerable patient populations,” said the FTC, in its statement.
Andrea Nelson, chief legal officer for The Cigna Group, said in a statement that the lawsuit “continues a troubling pattern from the FTC of unsubstantiated and ideologically-driven attacks on pharmacy benefit managers, following the FTC’s biased and misleading July 2024 report, which Express Scripts demanded the Commission retract earlier this week.”
Conduct ‘Raises Serious Concerns’
Drug makers are not off the hook, said the FTC. Mr. Rao said in a separate statement that “all drug manufacturers should be on notice that their participation in the type of conduct challenged here raises serious concerns and that the Bureau of Competition may recommend suing drug manufacturers in any future enforcement actions.”
The lawsuit comes on the heels of a report issued by the FTC in July, in which it accused the industry of driving small pharmacies out of business and of having extraordinary control over where Americans access prescription drugs and how much they pay.
The agency also noted in that report that some PBMs had still not responded to its requests for information, some 2 years after first asking.
Cigna’s Express Scripts sued the FTC on September 17, 2024, claiming that the report hurt the company’s reputation.
The report is “74 pages of unsupported innuendo leveled against Express Scripts and other PBMs under a false and defamatory headline and accompanied by a false and defamatory press release,” said the Cigna suit.
Cigna is seeking to have the report scrubbed from the FTC website and an injunction that would bar FTC Chairwoman Lina Khan from participating in any FTC business relating to Express Scripts.
Cigna’s Ms. Nelson accused the FTC of trying to “score political points” and said that forcing PBMs to include some drugs on its formularies “will drive drug prices higher in this country.”
CVS Health’s Caremark and UnitedHealth’s Optum also pushed back, as did the industry trade group, the Pharmaceutical Care Management Association.
“This action not only fails to accurately consider the role of the entire prescription drug supply chain, but disregards positive progress, supported by PBMs, in making insulin more affordable for patients,” the association said in a statement. “In contrast to the rhetoric, the current insulin market is actually working, with PBMs effectively leveraging greater competition to drive down insulin prices and doing their part to make insulin affordable for patients through innovative programs,” said the group.
“The FTC has missed the mark entirely,” David Whitrap, vice president for external affairs at CVS Health, said in a statement emailed to this news organization.
CVS Health members “on average pay less than $25, far below list prices and far below the Biden Administration’s $35 cap,” said Mr. Whitrap, who added that the PBM had protected customers from “pharma price-gouging.”
UnitedHealth’s Optum also said that it had reduced insulin prices for members to an average of less than $18 per month. “This baseless action demonstrates a profound misunderstanding of how drug pricing works,” wrote Elizabeth Hoff, a spokesperson for UnitedHealth’s Optum Rx, in an email to this news organization.
A version of this article appeared on Medscape.com.