FTC sues insulin middlemen for inflating prices

The Federal Trade Commission filed a lawsuit against Caremark Rx, Express Scripts, and OptumRx, on Friday, accusing the three largest prescription drug benefit managers, or PBMs, of breaking federal trade laws. PBMs and their affiliated purchasing organizations used anticompetitive and unfair rebating practices by unnecessarily raising the price of insulin, the lawsuit alleged. These companies–which together administer about 80 percent of all U.S. prescriptions–abused their economic power by rigging the pharmaceutical supply chain and forcing patients to pay more for essential medication, the FTC added. PBMs excluded lower-priced insulin options readily available and opted for higher-priced insulin to receive higher rebates from the drug companies, the lawsuit alleged.

This lawsuit came out of a wide-ranging investigation into distortions in the pharmaceutical distribution chain and its effects on essential insulin access, FTC Bureau of Competition Deputy Director Rahul Rao said in a Friday statement. The FTC’s investigation has exposed that insulin manufacturers also play into the problem by raising their own product prices in response to PBMs demand for higher rebates, he added. Rao ended by warning all drug manufacturers that his bureau would go after other companies harming consumers.

How have the companies responded? The action filed by the FTC on insulin is demonstrably baseless, and it's concerning that a government department continues misunderstanding how drug pricing works, Express Script’s parent company Evernorth said. The FTC’s lawsuit is full of unsubstantiated claims and pushes a false narrative about the PBM industry, the Friday statement continued. The company continued by pointing to examples of when it said it lowered the net cost of drugs and negotiated with drug companies for the lowest net cost for drugs, including insulin in both examples.

The FTC has missed the mark entirely, CVS External Affairs Vice President David Whitrap told WORLD. Caremark has led the way in driving down the cost of insulin for all patients with the average Caremark member paying less than the Biden Administration’s $35 cap, he added.

WORLD reached out to OptumRx for a statement and did not immediately hear back.