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Us Ftc Sues Pharmacy Benefit Managers for Inflated Insulin Prices

US FTC Sues Pharmacy Benefit Managers for Inflated Insulin Prices

The U.S. Federal Trade Commission sued the country’s three largest pharmacy benefit managers on Friday, accusing them of steering diabetes patients toward higher-priced insulin to reap millions of dollars in rebates from pharmaceutical companies.

The case accuses UnitedHealth Group Inc’s (NYSE: UNH) Optum unit, CVS Health Corp’s (NYSE: CVS) CVS Caremark, and Cigna Corp’s Express Scripts of unfairly excluding lower-cost insulin products from lists of drugs covered by insurers.

Driving down drug prices has been a key goal for the Biden administration, and Vice President Kamala Harris, the Democratic nominee, has emphasized her work for patients, and in particular on lowering insulin prices, on the campaign trail.

The conduct hurt patients, such as those with coinsurance and deductibles, who were not eligible for the rebated price, the FTC said. The three companies together administer 80% of all prescriptions in the U.S., according to the case, which was filed in the FTC’s in-house court.

In statements, the three companies said that the suit was baseless and defended their business practices, saying that they had lowered insulin prices for businesses, unions, and patients.

KFF health policy expert Larry Levitt described the FTC action as a “shot across the bow.”

“Insulin is an extreme case of PBMs extracting bigger and bigger rebates from drug manufacturers and driving list prices up at the pharmacy counter, but this is a dynamic that plays out with many medications,” he said.

CVS Health (NYSE: CVS) shares fell 1.4% in midday trading, while UnitedHealth (NYSE: UNH) and Cigna shares were flat.

The suit also named Zinc Health Services, Ascent Health Services, and Emisar Pharma Services, purchasing organizations created by the companies in recent years.

In an emailed statement, CVS spokesman David Whitrap said that the company has worked to make insulin more affordable for Americans and described the FTC as being “simply wrong.” It said it provided insulin at $25 through a reduced-price program.

Cigna Chief Legal Officer Andrea Nelson said if the FTC were to succeed in forcing it and others to include drugs that have higher total net costs for health plans, drug prices would rise.

Optum Rx spokesperson Elizabeth Hoff said the company has lowered insulin costs for its health plan customers and members to an average of less than $18 per month.

‘MEDICATION GATEKEEPERS’

In a statement, Rahul Rao, Deputy Director of the FTC’s Bureau of Competition, said that the three pharmacy benefit managers are “medication gatekeepers” that have “extracted millions of dollars off the backs of patients who need life-saving medications.”

“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,” he said.

The case will be heard by one of the FTC’s three administrative law judges.

The FTC did not sue the three major makers of insulin, Eli Lilly (NYSE: LLY), Sanofi (NASDAQ: SNY), and Novo Nordisk (NYSE: NVO), but it did criticize their role in what it called a broken system and said it reserves the right to sue the pharmaceutical companies later.

The drugmakers’ shares did not react on Friday afternoon.

Sanofi and Lilly said the FTC’s lawsuit addressed aspects of the U.S. healthcare system they had long advocated reform and that they had programs to reduce the out-of-pocket cost of their insulins to $35.

CVS Caremark said in its statement that any attempt to curtail pharmacy benefit managers’ ability to negotiate drug prices will only benefit pharmaceutical companies.

The three PBMs have criticized the FTC’s approach to the industry, accusing it of bias. Earlier this week, Express Scripts sued the FTC seeking to force it to withdraw a report that said PBMs enrich themselves at the expense of smaller pharmacies.

James Harlow, Senior Vice President at Novare Capital Management said PBMs have withstood previous criticism.

“Despite intense scrutiny, negative headlines, and attempts to pass legislation targeting PBMs, this business continues to be sticky and generates solid growth and margins,” he said. Novare owns UnitedHealth and CVS shares, regulatory filings show.

(Source: ReutersReuters)