Issue: October 2024
Fact checked byRichard Smith

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September 20, 2024
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FTC files administrative complaint vs. PBMs alleging artificially inflated insulin prices

Issue: October 2024
Fact checked byRichard Smith
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Key takeaways:

  • The FTC has filed an administrative complaint accusing three pharmacy benefit managers of artificially inflating the prices of insulin drugs.
  • The matter may be tried before an administrative law judge.
Perspective from Irl B. Hirsch, MD, MACP

The Federal Trade Commission announced it has filed an administrative complaint against three pharmacy benefit managers alleging “anticompetitive and unfair” rebate practices that have artificially inflated the price of insulin drugs.

The complaint accuses the three pharmacy benefit managers (PBMs) — CVS Health’s Caremark, Cigna’s Express Scripts and UnitedHealth Group’s OptumRx — and their affiliated group purchasing organizations (GPOs) — Zinc Health Services, Ascent Health Services and Emisar Pharma Services, respectively — of “engaging in anticompetitive and unfair rebating practices that have artificially inflated the list price of insulin drugs, impaired patients’ access to lower list price products, and shifted the cost of high insulin list prices to vulnerable patients,” the commission wrote in a press release.

Generic Breaking News infographic
The FTC has filed an administrative complaint against three pharmacy benefit managers that the agency claims used practices to artificially increase insulin prices.

The vote to file the complaint was 3-0-2, with commissioners Andrew N. Ferguson and Melissa Holyoak recusing themselves from the vote. An administrative complaint is filed when the FTC believes a law has been or is being broken and a proceeding is warranted and is the beginning of a proceeding in which the matter is tried before an administrative law judge, according to the release.

Representatives for CVS Caremark and Cigna/Express Scripts told Healio that the FTC’s action is unwarranted and if successful could force patients to pay higher prices for insulin. Healio was unable to reach UnitedHealth Group/OptumRx for a comment.

‘Perverse’ drug rebate system

The FTC stated in the release that its complaint accuses the PBMs and GPOs of creating a “perverse” drug rebate system that “prioritizes high rebates from drug manufacturers, leading to artificially inflated insulin list prices,” and the PBMs of excluding insulin options with lower list prices. The three PBMs administer approximately 80% of U.S. prescriptions, according to the release.

“These strategies have allowed the PBMs and GPOs to line their pockets while certain patients are forced to pay higher out-of-pocket costs for insulin medication,” the commission stated in the release.

“Millions of Americans with diabetes need insulin to survive, yet for many of these vulnerable patients, their insulin drug costs have skyrocketed over the past decade thanks in part to powerful PBMs and their greed,” Rahul Rao, deputy director of the FTC’s Bureau of Competition, said in the release. “Caremark, [Express Scripts] and Optum — as medication gatekeepers — have extracted millions of dollars off the backs of patients who need life-saving medications. The FTC’s administrative action seeks to put an end to the big three PBMs’ exploitative conduct and marks an important step in fixing a broken system — a fix that could ripple beyond the insulin market and restore healthy competition to drive down drug prices for consumers.”

The FTC also stated in the release that it “remains deeply troubled” by the actions of pharmaceutical companies providing insulin, and “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.”

Statement from CVS Health

David Whitrap, vice president of external affairs for CVS Health, told Healio the following by email:

“CVS Caremark is proud of the work we have done to make insulin more affordable for all Americans with diabetes. To suggest anything else, as the FTC did today, is simply wrong. We stand by our record of protecting American businesses, unions and patients from rising prescription drug prices.

“CVS Caremark has led the way in driving down the cost of insulin for all patients: insured, uninsured and underinsured. Our members on average pay less than $25, far below list prices and far below the Biden administration’s $35 cap. Further, we also provide access to $25 insulin to every American, whether insured or uninsured, through our ReducedRx program at every one of our 67,000 network pharmacies and more than 9,000 CVS pharmacies.

“Three brand drugmakers control nearly the entire insulin market, and without competitive lower-cost generic alternatives, they raised their list prices by as much as 500% in lockstep with one another prior to 2012. That’s when CVS Caremark fueled increased competition by creating new formulary options to fight back against these manufacturer price hikes. We negotiated deep discounts on behalf of our clients — American businesses large and small, unions, and local, state and federal government plans — and helped bring insulin back to affordable levels for their members.

“Any action that limits the use of these PBM negotiating tools would reward the pharmaceutical industry and return the market to a broken state, leaving American businesses and patients at the mercy of the prices drugmakers set. We will defend the use of these tools vigorously as we continue working to safeguard our clients and their members from drug price gouging by pharmaceutical manufacturers.”

Statement from Cigna/Express Scripts

Cigna/Express Scripts provided the following statement to Healio from Andrea Nelson, chief legal officer of The Cigna Group:

“This action 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. Once again, the FTC — a government agency funded by taxpayer dollars — is proving that the FTC does not understand drug pricing and instead is choosing to ignore the facts and score political points, rather than focus on its duty to protect consumers.

“The fact is that in the unlikely event the FTC succeeds in its suit and forces PBMs to include drugs on formulary even if they have higher net costs for plan sponsors — and regardless of whether they are clinically necessary — the FTC will drive drug prices higher in this country. This will hurt consumers and those who provide their prescription drug benefits — including employers, labor unions and the federal government itself.

“Express Scripts intends to vigorously defend itself to protect our ability to lower drug costs for the thousands of clients and the millions of Americans we serve. In a world where pharmaceutical manufacturers continue to raise the price of medications every year, Express Scripts’ work is more important than ever, and we won’t allow baseless suits and false information to deter us from our mission.”