The Federal Trade Commission (FTC) has filed a lawsuit against the three leading pharmacy benefit managers (PBMs) in the United States, accusing them of inflating insulin prices by exploiting their intermediary role within the drug supply chain to secure larger profits from drug manufacturers.
The FTC claims that PBMs, including CVS Health’s Caremark, Cigna’s Express Scripts, and UnitedHealth’s Optum Rx, profit from higher insulin list prices, allowing them to negotiate substantial rebates from manufacturers of this critical medication for diabetes patients. The agency alleges that these PBMs have strategically excluded lower-cost insulin options from their formularies, favoring more expensive versions that yield greater rebates.
As a result, patients with high deductibles or limited insurance coverage are disproportionately affected, often facing increased out-of-pocket costs. The FTC highlighted that an executive from one of the PBMs acknowledged this rebate-driven strategy, noting that the major PBMs continue to benefit from these financial arrangements.
In response to the lawsuit, the PBMs have defended their practices. Andrea Nelson, chief legal officer at Cigna, criticized the FTC’s action as an ideologically motivated attack on PBMs, asserting that the agency has misrepresented their role in drug pricing. Cigna’s Express Scripts has also filed a lawsuit against the FTC, challenging an interim report issued in July that it claims contains inaccuracies and seeks retraction.
CVS Health stated that the FTC is “simply wrong” and emphasized its efforts to negotiate significant discounts for clients, asserting it has contributed to making insulin more affordable for members. Optum Rx dismissed the FTC’s claims as “baseless,” arguing they reflect a misunderstanding of drug pricing dynamics.
The FTC clarified that while it holds PBMs partially accountable for rising insulin costs, it also remains concerned about the pricing practices of leading insulin manufacturers, such as Eli Lilly, Novo Nordisk, and Sanofi. The agency indicated it may pursue legal action against these companies in the future.
Insulin, essential for managing blood sugar levels, is vital for many of the 38 million Americans living with diabetes, who often require daily doses. In response to public and political pressure, the three major insulin manufacturers announced significant reductions in their list prices last year. Additionally, the Inflation Reduction Act has capped insulin costs at $35 per month for Medicare Part D beneficiaries.
PBMs play a distinct role in the American healthcare system by negotiating with drug manufacturers to lower prices. They earn a portion of the savings through rebates and fees, with the FTC asserting that higher drug list prices enable PBMs to collect hundreds of millions of dollars annually.
Insurance companies engage PBMs to manage their pharmacy benefits, which dictate the prescription drugs covered under their plans. Consequently, the structure of these formularies is crucial in determining patient access to medications. The FTC contends that PBMs have leveraged their position to negotiate higher rebates while systematically excluding more affordable insulin alternatives.
