FTC Accuses Three Drug Middlemen of Inflating Insulin Prices

The Federal Trade Commission announced on Friday that it is suing three major drug middlemen, accusing them of inflating insulin prices. 

Unfair Rebate Practices

The FTC claims that the “Big Three” pharmacy benefit managers (PBMs) — UnitedHealth Group’s Optum Rx, CVS Health’s Caremark, and Cigna’s Express Scripts — have engaged in anticompetitive and unfair rebate practices that have artificially raised insulin prices, limited access to lower-cost products, and placed the burden of high prices on vulnerable patients. Approximately 8 million Americans rely on insulin in the U.S., according to the FTC.

Pharmacy benefit managers (PBMs) collaborate with insurance companies to negotiate discounts from drug manufacturers in exchange for including certain drugs in their coverage plans, theoretically aiming to save patients money. The lawsuit also targets the PBMs’ group purchasing organizations: Zinc Health Services, Ascent Health Services, and Emisar Pharma Services.

According to the complaint, the “Big Three” PBMs control about 80% of all prescription drug plans in the U.S. It alleges that they established a rebate system that prioritizes high rebates from drug manufacturers, which contributed to inflated insulin prices.

“This perverse system results in billions of dollars in rebates and fees for the PBMs and their health plan sponsor clients — but does so at the expense of certain vulnerable diabetic patients who must pay significantly more out-of-pocket for their critical medications,” the FTC said in a news release, reported by NBC News.

Rejected The FTC’s Allegations

In a statement, CVS Caremark rejected the FTC’s allegations as “simply wrong,” placing the blame on drug manufacturers for increasing the prices of medications.

“CVS Caremark has led the way in driving down the cost of insulin for all patients: insured, uninsured, and underinsured,” the company said. “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.”

Cigna’s Chief Legal Officer, Andrea Nelson, stated that the FTC’s lawsuit reflects a “troubling pattern” of “unsubstantiated and ideologically driven attacks on pharmacy benefit managers.” 

“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,” Nelson said in a statement. 

“No One Should Pay Higher Prices”

UnitedHealth Group did not immediately respond to requests for comment.

The FTC noted that insulin medications were once more affordable, citing Humalog, manufactured by Eli Lilly, which cost about $21 in 1999. By 2017, the price had risen to $274, attributed to the rebate system strategy employed by PBMs, according to the FTC.

In a statement, White House Press Secretary Karine Jean-Pierre said they would not comment on the lawsuit but emphasized that “no one should pay higher prices because of corporate greed.”

The National Community Pharmacists Association expressed support for the FTC’s lawsuit against the PBMs in a statement released on Friday.

“One of the many ways that PBMs manipulate the system against patients, taxpayers, and small pharmacies is the rebate game,” said B. Douglas Hoey, the association’s chief executive officer.

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