Federal Trade Commission Chairwoman Lina Khan testifies before the House Appropriations Subcommittee in the Rayburn House Office Building in Washington, D.C., May 15, 2024.
Kevin Deitch | Getty Images News | Getty Images
The Federal Trade Commission on Friday sued three major U.S. health care companies that negotiate insulin prices, claiming the drug brokers use practices that “artificially” inflate patients’ costs while increasing their profits.
The lawsuit targets three major pharmacy benefit managers. UnitedHealth Group Optum Rx, CVS Health’s With care mark Signa’s Express Scripts. All are owned by or connected to health insurers and fill about 80% of the nation’s prescriptions, according to the FTC.
The FTC’s lawsuit also includes each PBM’s affiliated group purchasing organization, which brokers drug purchases for hospitals and other health care providers. The agency said it may recommend that they sue drug manufacturers. Eli Lilly, Sanofi and Novo Nordisk We will continue to discuss what role it will play in raising the prices of insulin products.
A UnitedHealth spokesperson said the lawsuit “displays a serious misunderstanding of how drugs are priced,” and noted that Optum RX “aggressively and successfully” negotiated with drug manufacturers.
A CVS spokesperson said the company was “proud of the efforts” Caremark has made to make insulin more affordable for Americans, adding that “to suggest otherwise, as the FTC did today, is simply wrong.”
And an Express Scripts spokesperson said the lawsuit “continues a disturbing pattern of baseless, ideological attacks by the FTC.” The suit, filed three days after Express Scripts sued the FTC, demanding that it retract a July “defamatory” report that alleged the PBM industry was driving up drug prices.
PBMs are at the center of the U.S. drug supply chain. They negotiate rebates with drug manufacturers on behalf of insurers, large employers, and federal health plans. They also write lists or prescriptions for drugs covered by plans and reimburse pharmacies for prescriptions. The FTC has been investigating PBMs since 2022.
The agency’s lawsuit claims that the three PBMs created a “skewed” drug rebate system that favored high rebates from drug companies, resulting in “artificially inflated insulin list prices.” It also claims the PBMs favored insulins with higher list prices even when lower-priced insulins were available at lower list prices.
The FTC files complaints through what’s called an administrative proceeding, which involves filing a lawsuit before an administrative law judge who hears the case.
“Millions of Americans with diabetes need insulin to survive, but for many of these vulnerable patients, powerful PBMs and their greed have led to outrageous increases in the cost of insulin medications over the past decade,” Rahul Rao, deputy director of the FTC’s Bureau of Competition, said in a statement.
“The FTC’s administrative action represents a critical step toward ending the exploitative practices of the Big Three PBMs and fixing a broken system, a solution that will ripple beyond the insulin market and restore healthy competition, lowering drug prices for consumers,” Rao continued.
According to the FTC, about 8 million Americans with diabetes rely on insulin to survive, and many have been forced to limit their access to treatment because of its high cost.
The White House would not comment on the FTC lawsuit, but White House press secretary Karine Jean-Pierre said in a statement Saturday that the administration “makes clear that no one should have to pay higher prices because of corporate greed.”
President Joe Biden’s signature inflation reduction law caps the cost of insulin for Medicare beneficiaries at $35 a month. The policy does not currently apply to patients with private insurance.
The Biden administration and Congress are increasing pressure on PBMs to be more transparent about their operations as many Americans struggle to afford prescription drugs. According to a White House fact sheet, Americans pay on average two to three times more for prescription drugs than patients in other developed countries.
The FTC has expressed “deep concern” about the role insulin manufacturers play in higher price tags, claiming they inflate prices in response to PBMs’ demands for higher rebates. Eli Lilly, Sanofi and Novo Nordisk control about 90% of the U.S. insulin market.
For example, the 2017 price of Eli Lilly’s Humalog insulin was $274, according to the FTC, up more than 1,200% from its 1999 price of $21.
The FTC said all pharmaceutical companies should be aware that “engaging in the types of practices at issue here raises serious concerns.”
An Eli Lilly spokesperson said the FTC lawsuit was related to “aspects of the American health care system that we have long advocated for reform.” They added that the company last year became the first company to cap out-of-pocket costs for all insulins at $35 a month for people with private insurance. Eli Lilly also cut some of its insulin list prices by up to 70 percent.
Sanofi announced a similar $35 monthly price cap for its most commonly prescribed insulin last year. Novo Nordisk said last year it would slash the price tags of some of its popular insulins by up to 75 percent.
A Sanofi spokesperson said the company had not seen the FTC’s complaint about PBMs and would not comment on it. But the French drugmaker agrees with the FTC’s assertion that PBMs “leverage their position as powerful industry intermediaries to exploit rebates while simultaneously driving up costs for patients and payers, all to their own benefit.”
A Novo Nordisk spokesperson said the company is “committed to ensuring affordable access to medicines, including insulin.” The spokesperson pointed to the company’s insulin savings card program, saying Novo Nordisk does not control the prices patients pay at pharmacies in the “complex U.S. health care system.”
Correction: This article has been updated to correct a quote from the FTC.
