FTC sues PBMs, alleging they artificially inflated insulin costs

The Federal Trade Commission (FTC) filed a lawsuit on September 20 accusing the country’s top three pharmacy benefit managers (PBMs) of unfairly boosting their own profits by inflating the price of insulin at the expense of the more than 8 million people in the US who depend on the drug to live.

The PBMs—CVS Health’s Caremark, Cigna’s Express Scripts, and UnitedHealth Group’s Optum Rx—administer 80% of the country’s prescriptions. According to the FTC, the PBMs, along with their group purchasing organizations Zinc Health Services, Ascent Health Services, and Emisar Pharma Services, “abused their economic power by rigging pharmaceutical supply chain competition in their favor, forcing patients to pay more for life-saving medication.”

“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 a statement.

The background. PBMs are often called the “middlemen” of the pharmaceutical supply chain because they work between insurers and pharmacies. They negotiate with drugmakers over drug rebates, which is what manufacturers pay PBMs for their drug to be included in the formularies.

Drugmakers have introduced cheaper versions of their insulin products in recent years, but PBMs get paid smaller rebates to include them on formularies. The FTC alleged PBMs have continued to direct patients to the more expensive drugs, artificially inflating the prices.

In 1999, for instance, Eli Lilly’s insulin Humalog had an average list price of $21, according to the FTC. By 2017, that increased to more than $274, and by 2019, a quarter of insulin patients couldn’t afford their medication, agency officials wrote in the complaint.

“Caremark, [Express Scripts], and Optum—as medication gatekeepers—have extracted millions of dollars off the backs of patients who need life-saving medications,” Rao said in the statement.

The FTC’s three Democratic appointees voted in favor of the legal action against the PBMs, and the two Republicans recused themselves.

Warning sign. In addition to the action, the FTC told insulin drug makers to be “on notice” because the agency may sue them in the future, naming Eli Lilly, Novo Nordisk, and Sanofi, which collectively control more than 90% of the global insulin market.

The FTC action comes after Express Scripts, one of the big three PBMs, filed a lawsuit on September 17 against the agency, accusing it of making defamatory statements about PBMs in a July report that suggested the agency could possibly pursue legal action against PBMs.

The 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,” Andrea Nelson, chief legal officer of the Cigna Group, said in a statement.

“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,” CVS spokesperson David Whitrap told Healthcare Brew. “We stand by our record of protecting American businesses, unions, and patients from rising prescription drug prices.”

Optum Rx spokesperson Elizabeth Hoff said in an emailed statement: “This baseless action demonstrates a profound misunderstanding of how drug pricing works. For many years, Optum Rx has aggressively and successfully negotiated with drug manufacturers and taken additional actions to lower prescription insulin costs for our health plan customers and their members, who now pay an average of less than $18 per month for insulin.”