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FTC sues PBMs, affiliated GPOs for inflating insulin prices

Caremark Rx, Express Scripts, and OptumRx are facing legal repercussions after the FTC accused them of insulin price inflation in a lawsuit announced on Sept. 20, 2024.

Caremark Rx, Express Scripts, Optum Rx and their affiliated group purchasing organizations are being accused by the Federal Trade Commission of artificially inflating the price of insulin using anticompetitive and unfair rebate practices, which, in turn, has restricted access to insulin for many individuals who rely on the drug.

Insulin prices have long been a challenge in the United States, with domestic prices magnitudes greater than prices in other similarly developed nations. Although this challenge is not exclusive to insulin, this drug, in particular, has gained much attention.

Recently, the enforcement of the Inflation Reduction Act has capped insulin prices for Medicare beneficiaries. However, the source of these exorbitant prices remains unclear. While some experts have pointed the finger at manufacturers and insurers, others, including the Federal Trade Commission (FTC), have accused pharmacy benefit managers (PBMs) of artificially inflating the price of this drug.

According to the FTC's press release, the organization is alleging that CVS Health's Caremark, Cigna's Express Scripts (ESI) and United Health Group's Optum -- and their associated group purchasing organizations (GPOs) Zinc Health Services, Ascent Health Services, and Emisar Pharma Services -- have rigged the competitive landscape in their favor, prioritizing high rebates from manufacturers.

The claim notes that these PBMs, known as the Big Three, favored insulin with a higher list price, which provided higher rebates even when versions with a lower list price that could be more affordable or for vulnerable populations were available.

"Millions of Americans with diabetes need insulin to survive, 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," said Rahul Rao, deputy director of the FTC's Bureau of Competition, in the press release.

"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."

Although this lawsuit focuses on PBMs and their GPOs, the FTC notes that they are not the only guilty party in the insulin pricing problem across the U.S. The FTC names several drug manufacturers, including Eli Lilly, Novo Nordisk, and Sanofi, implying they have participated in PBMs' "chase-the-rebate" strategy by inflating their list prices to meet PBMs' favor for higher rebates.

While this case is still in its early stages, the lawsuit's outcome might inform new policies for PBMs and drug manufacturers to minimize the risk of inflated pricing for other drugs.

Veronica Salib has covered news related to the pharmaceutical and life sciences industry since 2022.

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