The Federal Trade Commission’s legal action against the three largest pharmacy benefit managers will move forward after a federal judge rejected their bid to halt the case.
In a court filing Tuesday, U.S. District Judge Matthew Schelp denied a request by CVS Health’s CVS Caremark, Cigna’s Express Scripts and UnitedHealth Group’s OptumRx for a preliminary injunction in the FTC’s in-house case examining their influence over insulin costs.
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CVS Caremark, Express Scripts and OptumRx, and their respective affiliated group purchasing organizations, Zinc Health Services, Ascent Health Services and Emisar Pharma Services, sued the FTC in November, alleging the agency’s administrative proceedings violated the Constitution and would limit their ability to achieve lower prices for their customers.
The court was not convinced. "The Commissioners here are acting on their congressional mandate. A preliminary injunction would stop them from carrying out their duties,” Schelp wrote in the filing. “In the same way, the requested injunction would be against the public’s interest.”
In September, the FTC filed a complaint in its administrative court alleging the rebate system used by CVS Caremark, Express Scripts and OptumRx wrongly inflated insulin prices for some consumers. The FTC said its action could have implications for the more than 8 million Americans taking insulin.
Express Scripts, CVS Caremark and OptumRx together control nearly 60% of the pharmacy benefits market based on their control over rebate negotiations, retail network management and claims adjudication, according to the American Medical Association.
PBMs, which negotiate costs with drugmakers and manage medication formularies for payers, have been facing scrutiny from lawmakers and regulators nationwide. The pressure has driven some customers to switch to smaller PBM partners and has spurred the market leaders to launch transparent models.
The FTC has been conducting a yearslong investigation into PBM business practices. The commission has released two reports revealing the biggest PBMs pay higher prices to their affiliated pharmacies than to rivals and have raised costs for specialty generic drugs by billions of dollars. Express Scripts has sued the FTC, claiming its July report was false, defamatory and unconstitutional. The agency is seeking to have the suit dismissed.
