USA sues pharmaceutical intermediaries over insulin price increases

The Federal Trade Commission filed suit Friday against Caremark, Express Scripts and Optum for creating a rebate system that drove up insulin prices and increased profits.

The lawsuit alleges that drug distributors, who negotiate volume discounts with pharmaceutical companies through their purchasing groups, harm vulnerable patients who rely on the drugs to treat their diabetes.

“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 powerful prescription drug insurers and their greed,” Rahul Rao, deputy director of the FTC's Bureau of Competition, said in a statement.

About 15% of adults in the United States have diabetes, a disease that affects the body's ability to produce insulin.

The FTC accused the companies of anti-competitive practices, including a rebate system that favored deep discounts from pharmaceutical companies and artificially inflated the price of insulin. According to the complaint, the companies excluded cheaper insulin when it was available and allowed the more expensive insulin to be used at higher discounts, which increased their profits.

According to the FTC, the three companies handle about 80 percent of all prescriptions in the United States.

“CVS Caremark is proud of the work we have done to make insulin more affordable for all Americans with diabetes. To say otherwise, as the FTC did today, is simply false. We stand by our track record of protecting American businesses, unions and patients from rising drug prices,” a Caremark spokesperson told Spectrum News.

He said Caremark has reduced insulin costs for insured, uninsured and underinsured patients, and its members pay an average of less than $25 for insulin – even less than the Biden-Harris administration's recent price cap of $35.

“Once again, the FTC – a government agency funded by taxpayer dollars – proves that it does not understand drug pricing and would rather ignore the facts and score political points than focus on its duty to protect consumers,” Andrea Nelson, chief legal officer at Cigna Group, told Spectrum News.

The agency said the price of an insulin drug called Humalog rose from $21 in 1999 to $274 in 2017. Nearly a quarter of all insulin patients will no longer be able to afford their medication by 2019, it said.

The FTC's competition bureau said in a statement Friday that it was “deeply concerned about the role that drug manufacturers such as Eli Lily, Novo Nordisk and Sanofi are playing in driving up the list prices of life-saving drugs such as insulin.”

The office said pharmaceutical companies “should be aware that their involvement in the type of conduct complained of here raises serious concerns and that the Competition Office may recommend suing the drug manufacturers in future enforcement actions.”