US FTC sues drug gatekeepers over high insulin prices

Sept. 20 (Reuters) – The U.S. Federal Trade Commission on Friday sued the country's three largest pharmacy benefit managers, accusing them of pushing diabetes patients to buy more expensive insulin in order to receive millions in rebates from pharmaceutical companies.

The FTC said the conduct harmed patients who, for example, had copayments and deductibles and were not entitled to the reduced price. The three companies together dispense 80% of all prescriptions in the United States, according to the case, which was heard in the FTC's internal court.

The three companies said in statements that the lawsuit was without merit and defended their business practices by saying they had lowered insulin prices for companies, unions and patients.

KFF health policy expert Larry Levitt called the FTC's action “a warning shot.”

“Insulin is an extreme case where PBMs are extracting ever-increasing discounts from drug manufacturers and driving up list prices at the pharmacy counter. But this dynamic exists with many drugs,” he said.

CVS shares fell 1.4% in midday trading, while UnitedHealth and Cigna shares were unchanged.

The lawsuit also named Zinc Health Services, Ascent Health Services and Emisar Pharma Services, purchasing organizations the companies had established in recent years.

CVS spokesman David Whitrap said in an emailed statement that the company has worked to make insulin more affordable for Americans and called the FTC's actions “simply wrong.” CVS said it offered insulin for $25 as part of a discount program.

Andrea Nelson, Cigna's general counsel, said if the FTC succeeds in forcing Cigna and others to include drugs in health plans that have higher total net costs, drug prices would rise.

Elizabeth Hoff, a spokeswoman for Optum Rx, said the company has reduced insulin costs for its health insurance customers and members to an average of less than $18 per month.

“MEDICAL GATEKEEPER”

Rahul Rao, deputy director of the FTC's Bureau of Competition, said in a statement that the three pharmacy benefit managers were “drug gatekeepers” who “extorted millions of dollars off the backs of patients who needed life-saving medications.”

“Millions of Americans with diabetes need insulin to survive, yet for many of these vulnerable patients, the cost of insulin medications has skyrocketed over the past decade, in part due to the powerful PBMs and their greed,” he said.

The case will be heard by one of the FTC's three administrative law judges.

The pharmaceutical company's shares did not react on Friday afternoon.

Sanofi and Lilly said the FTC's lawsuit targets aspects of the U.S. health care system that they have long advocated for reform, saying they have programs to reduce the out-of-pocket cost of their insulins to $35.

CVS Caremark stated in its statement that any attempt to limit the bargaining power of pharmacy benefit managers in drug price negotiations would only benefit the pharmaceutical companies.

James Harlow, senior vice president at Novare Capital Management, said PBMs have withstood previous criticism.

“Despite intense scrutiny, negative headlines and attempts to pass legislation against PBMs, this business remains stable and generates solid growth and high margins,” he said. Novare owns shares of UnitedHealth and CVS, according to regulatory filings.

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Jody Godoy covers technology policy and antitrust, including how regulators are responding to the rise of AI. She can be reached at [email protected]

Washington-based correspondent covering U.S. health and drug policy with a focus on the Department of Health and Human Services and its subordinate agencies such as the Food and Drug Administration, previously based in Iraq and Egypt.