The Federal Trade Commission (FTC) has filed a lawsuit against the three largest pharmacy benefit managers (PBMs) in the United States.
In a Sept. 20 press release, the FTC announced it had filed suit against Caremark Rx, Express Scripts (ESI), and Optum Rx “for engaging in anticompetitive and unfair rebating practices that have artificially inflated the list price of insulin drugs, impaired patients’ access to lower list price products, and shifted the cost of high insulin list prices to vulnerable patients.”
The FTC’s administrative complaint contended that the PBMs “have abused their economic power by rigging pharmaceutical supply chain competition in their favor, forcing patients to pay more for their life-saving medication.”
The three PBMs — CVS Health’s Caremark Rx, Cigna’s Express Scripts, and UnitedHealth Group’s Optum Rx — in total administer about 80% of all prescriptions in the country.
A 1200% price increase for Eli Lilly insulin
The FTC described the PBMs’ drug rebate system as “perverse,” and said it “prioritizes high rebates from drug manufacturers, leading to artificially inflated insulin list prices.”
When cheaper insulin became available — which “could have been more affordable for vulnerable patients,” the FTC said — the three PBMs “systematically excluded them in favor of high list-price, highly rebated insulin products.”
As an example, the FTC cited Humalog, a brand-name insulin manufactured by Eli Lilly. In 1999, the average list price for Humalog was $21. By 2017, Humalog’s list price had leaped to more than $274, an increase of more than 1200% — because, the FTC said, of the PBM’s “chase-the-rebate strategy.”
“Millions of Americans with diabetes need insulin to survive,” said Rahul Rao, deputy director of the FTC’s bureau of competition. “Yet for many of these vulnerable patients, their insulin drug costs have skyrocketed over the past decade thanks in part to powerful PBMs and their greed. Caremark, ESI and Optum — as medication gatekeepers — have extracted millions of dollars off the backs of patients who need life-saving medications.
“The FTC’s administrative action seeks to put an end to the Big Three PBMs’ exploitative conduct and marks an important step in fixing a broken system — a fix that could ripple beyond the insulin market and restore healthy competition to drive down drug prices for consumers.”
In a statement accompanying the PBM lawsuit announcement, Rao made clear that the FTC does not believe PBMs are the only ones at fault.
“The PBMs are not the only actors who have contributed to this broken system that has driven up the price of insulin and other drugs,” Rao said. “While the Commission has exercised its discretion to move forward with suing only the PBMs and GPOs [group purchasing organizations] now, FTC staff’s investigation has also shed light on the concerning and active role that the insulin manufacturers — Eli Lilly, Sanofi, and Novo Nordisk — play in the challenged conduct. As detailed in the complaint, over the years, the insulin manufacturers have sharply inflated the list price of their insulin products in response to the PBMs’ demand for higher rebates.”
Pharmacy organizations react to the lawsuit
Not surprisingly, industry organizations who’ve protested PBM behavior for years applauded the news of the FTC lawsuit.
“APhA [American Pharmacists Association] and our member pharmacists have known about the highly corrupt practices of PBMs for years, and APhA alerted our members in July of potential action by FTC,” said Michael Hogue, PharmD, FAPhA, FNAP, FFIP, CEO of the APhA in a Sept. 20 announcement. “The two-year investigation tells us what we already know: PBMs must be held accountable for the immense pain they have caused patients across the country. This is a huge win for patients, who should never be in a position of paying inflated prices at the counter to feed PBMs’ addiction to profits at the expense of hardworking, trusted community pharmacists.”
National Community Pharmacists Association (NCPA) CEO B. Douglas Hoey said in response to the lawsuit, “One of the many ways that PBMs manipulate the system against patients, taxpayers and small pharmacies is the rebate game. The PBMs determine which drugs are covered by health insurance plans. They get bigger rebates for the most expensive drugs. Naturally, the most expensive drugs end up on the formularies, even when there are cheaper alternatives.
“Patients end up paying more. Employers end up paying more. Taxpayers end up paying more. And more small business pharmacies are driven out of business. The rebates create a powerful incentive for higher drug prices, which is completely upside down. We are very pleased that the FTC is seeking to end that practice.”