FTC sues pharmaceutical middlemen, claiming their practices drove up insulin costs

The Federal Trade Commission announced on Friday that it is suing the country's three largest pharmacy benefit managers, alleging that the cost of insulin was driven up through unfair business practices.

Pharmacy benefit managers (PBMs) negotiate discounts on medications for insurance companies, unions and government agencies. These discounts help lower out-of-pocket costs for patients, but critics say they also force manufacturers to raise a drug's list price, ultimately raising the price patients pay at the pharmacy.

The lawsuit names Optum Rx, owned by United Health Group, as well as CVS Health's Caremark and Express Scripts, owned by Cigna.

According to the FTC, the PBMs “abused their economic power by manipulating competition in the pharmaceutical supply chain in their favor and forcing patients to pay more for life-saving medicines.”

The reason given was the price of Humalog, an insulin made by Eli Lilly, which has risen 1,200 percent in 18 years. Eli Lilly announced last year that it would cut the price of Humalog by 70 percent.

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Scripps News reached out to the PBMs named in the lawsuit for comment. All three said the FTC's complaint misrepresents the drug pricing process and places blame for high insulin costs elsewhere.

Optum Rx said: “Optum Rx has been negotiating aggressively and successfully with drug manufacturers for many years and is taking additional steps to reduce the cost of prescription insulin for our health insurance customers and their members, who now pay an average of less than $18 per month for insulin.”

Caremark responded similarly, claiming: “Three branded drug manufacturers control virtually the entire insulin market and, in the absence of competitive, lower-cost generic alternatives, they have increased their list prices in lockstep by as much as 500% prior to 2012.”

And Express Scripts said, “Once again, the FTC – a government agency funded by taxpayer dollars – proves that the FTC has no idea about drug pricing and would rather ignore the facts and score political points than focus on its duty to protect consumers.”