FTC Sues Major Health Companies Over Insulin Pricing Practices #

The Federal Trade Commission (FTC) has filed a lawsuit against three large U.S. health companies that negotiate insulin prices. The agency alleges that these drug middlemen, known as pharmacy benefit managers (PBMs), boost their profits while artificially inflating costs for patients.

The lawsuit targets the three largest PBMs in the United States:

1. UnitedHealth Group’s Optum Rx
2. CVS Health’s Caremark
3. Cigna’s Express Scripts

These companies, which are owned by or connected to health insurers, collectively administer about 80% of the nation’s prescriptions. The lawsuit also includes each PBM’s affiliated group purchasing organization, which brokers drug purchases for hospitals and other healthcare providers.

Role of PBMs in the Drug Supply Chain #

PBMs play a central role in the U.S. drug supply chain:

• They negotiate rebates with drug manufacturers on behalf of insurers, large employers, and federal health plans.
• They create lists of medications (formularies) that are covered by insurance.
• They reimburse pharmacies for prescriptions.

FTC’s Allegations #

The FTC’s lawsuit argues that the three PBMs have created a ‘perverse’ drug rebate system that:

• Prioritizes high rebates from drugmakers
• Leads to artificially inflated insulin list prices
• Favors high-list-price insulins even when more affordable options become available

Potential Impact on Insulin Manufacturers #

The FTC expressed concern about the role of insulin manufacturers in higher list prices. The agency warned that all drugmakers should be aware that participating in the type of conduct challenged in this lawsuit raises serious concerns.

Conclusion #

This lawsuit represents a significant step in addressing the issue of high insulin prices in the United States. The FTC aims to end what it sees as exploitative conduct by major PBMs and restore healthy competition to drive down drug prices for consumers.