Federal Trade Commission (FTC) Chairwoman Lina Khan testifies before the House Appropriations Subcommittee on Federal Trade Commission (FTC) at the Rayburn House Office Building in Washington, DC on May 15, 2024.
Kevin Dietsch | Getty Images News | Getty Images
The Federal Trade Commission on Friday sued three major U.S. health care companies that negotiate insulin prices, alleging that the drug middlemen use tactics to “artificially” inflate patient costs while boosting their profits.
The lawsuit targets three so-called pharmacy benefit management companies. UnitedHealth Group OptumRx, CVS Health Care mark and Signa Express Scripts. All three companies are owned by or affiliated with health insurers and control about 80% of prescriptions in the U.S., according to the FTC.
The FTC’s lawsuit also includes the PBMs’ affiliated group purchasing organizations, which broker drug purchases for hospitals and other health care providers. The agency said it may recommend suing the drug companies. Eli Lilly, Sanofi and Novo Nordisk The company will continue to face criticism for its role in raising the list prices of insulin products.
A UnitedHealth spokesman said the lawsuit “shows a major misunderstanding of how drug pricing works” and noted that OptumRX has been negotiating “aggressively and successfully” with pharmaceutical companies.
A CVS spokesperson said Caremark is “proud of the work” it has done to make insulin more affordable for Americans, adding that it is “simply wrong to suggest otherwise, as the FTC did today.”
And an Express Scripts spokesperson said the lawsuit is “a continuation of the FTC’s troubling pattern of baseless, ideologically-based attacks on PBMs.” This comes three days after Express Scripts sued the FTC, demanding that the agency retract its allegedly “defamatory” actions. July Report They argued that the PBM industry is driving up drug prices.
PBMs are at the heart of the U.S. drug supply chain, negotiating kickbacks with drug manufacturers on behalf of insurance companies, large corporations and federal health plans. They also create the list of drugs covered by insurance, or formularies, and reimburse pharmacies for prescriptions. The FTC has been investigating PBMs since 2022.
The agency’s lawsuit alleges that the three PBMs created a “perverse” drug rebate system that favors higher kickbacks from pharmaceutical companies, leading to “artificially inflated insulin list prices,” and that the PBMs favor higher-priced insulin even when lower-priced, more affordable versions become available.
The FTC files complaints through what’s called an administrative process, which starts a proceeding before an administrative judge who hears the case.
“Millions of Americans with diabetes need insulin to live, but for many of these vulnerable patients, the cost of insulin has skyrocketed over the past decade, in part due to powerful PBMs and their greed,” Rahul Rao, Deputy Director of the FTC’s Bureau of Competition, said in a statement.
“The FTC’s administrative action seeks to put an end to the Big Three PBMs’ predatory practices and marks an important step in fixing a broken system that could ripple beyond the insulin market and restore healthy competition that lowers drug prices for consumers,” Rao continued.
According to the FTC, roughly 8 million Americans with diabetes depend on insulin to live, and rising prices are forcing many to cut back on their treatment.
The White House has not commented on the FTC lawsuit but has made clear that “no one should pay higher prices because of corporate greed,” White House spokeswoman Karine Jean-Pierre said in a statement Saturday.
The Stopping Inflation Act signed by President Joe Biden caps insulin prices at $35 a month for Medicare beneficiaries, a policy that currently does not apply to patients with private insurance.
The Biden administration and Congress have stepped up pressure on PBMs to increase transparency in their operations as many Americans struggle to afford prescription drugs, and studies have found that Americans pay two to three times as much on average for prescription drugs than patients in other developed countries. Fact Sheet From the White House.
The FTC said it was “deeply concerned” about the role insulin manufacturers are playing in raising list prices, alleging that they are inflating prices in response to PBM demands for higher rebates. Three companies — Eli Lilly, Sanofi and Novo Nordisk — control about 90% of the U.S. insulin market.
For example, according to the FTC, the list price for Eli Lilly’s insulin Humalog was $274 in 2017, up more than 1,200 percent from its list price of $21 in 1999.
The FTC said all pharmaceutical companies “should be aware that engaging in the type of conduct at issue here raises serious concerns.”
A Lilly spokesman said the FTC lawsuit concerns “aspects of the U.S. health care system that we have long advocated for reform,” adding that last year the company became the first to cap out-of-pocket costs for all insulin products at $35 per month for privately insured patients. Lilly has also cut the list prices of some of its insulins by up to 70%.
Sanofi last year Announced It has also imposed a $35-a-month price cap on the most commonly prescribed insulins. Novo Nordisk last year also announced it would cut the list prices of some of its popular insulins by up to 75%.
A Sanofi spokesman said the company hasn’t seen the FTC’s complaints against PBMs and wouldn’t comment on them, but the French drugmaker agrees with the FTC’s allegations that PBMs “use their position as powerful industry middlemen to misuse kickbacks to serve their own interests while simultaneously increasing costs for patients and payers.”
A Novo Nordisk spokesman said the company is “committed to providing patients with affordable access to medicines, including insulin.” The spokesman pointed to the company’s insulin savings card program and noted that Novo Nordisk has no control over the prices patients pay at pharmacies in the “complex U.S. healthcare system.”
Correction: This story has been updated to correct a quote from the FTC.
