The Federal Trade Commission is targeting the three largest pharmacy benefit managers over rebate schemes that allegedly inflate insulin prices for some consumers.
The commission said Friday it had filed an administrative complaint against CVS Health’s Caremark Rx, Cigna Group’s Express Scripts, and UnitedHealth Group’s OptumRx and their group purchasing organizations Zinc Health Services, Ascent Health Services and Emisar Pharma Services, respectively. The complaint alleges the companies' practices drive insulin manufacturers to raise prices, allegedly enabling PBMs to capture higher rebates and fees at the expense of some patients.
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“This perverse system results in billions of dollars in rebates and fees for the PBMs and their health plan sponsor clients — but does so at the expense of certain vulnerable diabetic patients who must pay significantly more out-of-pocket for their critical medications,” said FTC Bureau of Competition Deputy Director Rahul Rao in a statement.
The complaint will be publicly available early next week, an FTC official said on a Friday press call. The commission alleges in its complaint the companies have allegedly harmed market competition and consumers. If the charges in the complaint are contested, an administrative law judge will hear the case.
PBMs negotiate with drugmakers and manage formularies for employer and insurer clients.
CVS Caremark in a statement said it had worked to drive down insulin prices by creating new formulary options and negotiating discounts on behalf of clients. It pointed to a program available to patients at its network pharmacies offering lower-cost insulin.
"Any action that limits the use of these PBM negotiating tools would reward the pharmaceutical industry and return the market to a broken state, leaving American businesses and patients at the mercy of the prices drugmakers set," a spokesperson said in the statement.
Cigna Chief Legal Officer Andrea Nelson refuted the FTC's allegations and reiterated the role PBMs such as Express Scripts play in the healthcare system. She said the case could lead to higher drug prices.
"Express Scripts intends to vigorously defend itself to protect our ability to lower drug costs for the thousands of clients and the millions of Americans we serve," Nelson said in a statement.
An OptumRx spokesperson said in a statement its negotiations with drugmakers and other actions have led to lower insulin costs for members.
"This baseless action demonstrates a profound misunderstanding of how drug pricing works," the spokesperson said.
Express Scripts, CVS Caremark and OptumRx together control 59.2% of the pharmacy benefits market, according to data the American Medical Association published this month. Other reports indicate the three PBMs control up to 80% of the market.
The FTC action could have implications for the more than 8 million Americans using insulin, one in four of whom couldn’t afford their medication in 2019, the FTC said.
The agency hopes the complaint will have marketwide implications and drive down costs for other drugs, including AbbVie’s Humira, an FTC official said on the press call. Rao in a statement warned drugmakers Eli Lilly, Novo Nordisk, and Sanofi that the FTC's Bureau of Competition may recommend enforcement action against them and others.
Three commissioners voted in favor of filing an administrative complaint, with the two Republican commissioners recusing themselves, the news release said.
The complaint comes on the heels of an FTC interim report, released in July, regarding PBM practices. Express Scripts sued the FTC Tuesday over the commission’s report, claiming its findings were false, defamatory and unconstitutional.
Bloomberg News reported in July the FTC was considering suing the major PBMs over how their business practices influence insulin list prices.
The Pharmaceutical Care Management Association, which represents PBMs, in a news release criticized the FTC action, faulted the pharmaceutical industry for higher insulin costs and pushed back against the assertion that rebates are related to higher prices.
Congress has weighed several bills this year that would rein in PBM business practices, with executives from CVS Caremark, Express Scripts and OptumRx testifying before a House committee in July.
House Oversight and Accountability Committee Chair James Comer (R-Ky.) in a news release praised the FTC administrative complaint and called on federal and state policymakers to implement legislation to increase industry transparency.
