FTC sues drug middlemen over manipulating insulin market
The U.S. Federal Trade Commission sued units of CVS Health Corp., Cigna Group and UnitedHealth Group Inc. on Friday, accusing the drug middlemen of engaging in illegal rebate programs that drove up the price of insulin.
The agency said it filed a complaint in its administrative court alleging that CVS’s Caremark, Cigna’s Express Scripts and UnitedHealth’s Optum Rx accepted money from drugmakers in exchange for keeping lower-cost insulin off their lists of approved drugs. The companies’ affiliated group purchasing organizations — started in recent years to negotiate rebate payments with drugmakers — were also named.
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The enforcement action is part of an escalating conflict between the FTC and the three pharmacy benefit managers that together control about 80% of prescriptions filled in the U.S. Since the companies have merged with larger health conglomerates that also own insurers, pharmacies, and doctors clinics, they’ve faced intensifying pressure in Washington.
The drug gatekeepers favored versions of insulin with higher upfront prices and bigger rebate payments from pharmaceutical companies, which shifted more costs onto patients, the FTC alleged. The PBMs collected billions in rebates and fees as the list price of a common insulin, Humalog, rose 1,200% between 1999 and 2017, the agency said.
It didn’t make its filing available immediately, but described it in materials shared with reporters. The administrative complaint starts a process whereby the allegations will be tried in a formal hearing before an administrative law judge, the agency said.
An FTC official said the case argues that PBMs’ rebate practices amount to unfair methods of competition. The official, who was unauthorized to speak publicly on the matter, said the agency hopes the enforcement action will lead to lower list prices not just for insulin but for other drugs, too.
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CUTTING COSTS
The pharmacy benefit managers defended their programs, saying they protect Americans from rising drug costs. If the suit succeeds, it could drive prices even higher, Cigna Chief Legal Officer Andrea Nelson said in an emailed statement.
The lawsuit “continues a troubling pattern from the FTC of unsubstantiated and ideologically-driven attacks on pharmacy benefit managers,” Nelson said. The company intends to “protect our ability to lower drug costs” for clients and members, she said.
CVS said its members already pay less than $25 for insulin on average. The company blamed drugmakers for rising prices and said it negotiated discounts to lower costs for members.
