FTC Reports Drug Middlemen Unlawfully Inflate Insulin Prices

Federal regulators have taken action against the three largest pharmacy benefit managers (PBMs) in the United States, accusing them of illegitimately inflating the cost of insulin, while inhibiting patients from accessing more affordable alternatives. The companies in question—CVS-owned Caremark Rx, Cigna Group’s Express Scripts, and UnitedHealth Group’s Optum Rx—are alleged to have engaged in practices that suppress competition within the insulin drug market, specifically through their rebate strategies.

The Federal Trade Commission (FTC) made these allegations public, stating that the PBMs created a “drug rebate system” that ultimately favored higher rebates provided by drug manufacturers, thereby artificially increasing the list prices of insulin. This situation has made life-saving medications significantly more expensive for those who rely on them.

As mediators between health insurance programs like Medicare, pharmacies, employers, and drug manufacturers, PBMs have a considerable influence on prescription drug pricing. Together, Caremark, Express Scripts, and Optum account for approximately 80% of all U.S. prescriptions. Significant price hikes in insulin have resulted in many patients facing overwhelming financial burdens, with some reporting that they are forced to ration their medication or forego it entirely.

According to Rahul Rao, deputy director of the FTC’s Bureau of Competition, millions of Americans living with diabetes depend on insulin, yet the cost has risen drastically over the last decade largely due to the actions of powerful PBMs. Rao stated, “Caremark, ESI, and Optum—acting as medication gatekeepers—have extracted millions of dollars off the backs of patients who need life-saving medications.”

Patient advocacy groups, lawmakers, and various commentators have long accused PBMs of exacerbating the issue of high drug costs. However, the companies dispute this narrative, claiming they help to manage healthcare expenses effectively and pass savings along to their customers. Each of the companies involved in the FTC’s lawsuits defended their practices in statements to the media.

CVS Caremark stated that it is proud of its efforts to make insulin more affordable for diabetes patients. They insisted that the FTC’s characterizations were misleading and unfounded. A spokesperson highlighted that, on average, CVS members pay less than $25 for insulin, noting that the company negotiates substantial discounts for their clients.

Optum Rx also refuted the FTC’s claims, labeling them as “baseless.” The company stated that it has aggressively negotiated with drug manufacturers over the years, which has led to lower costs for their health plan customers and members, with many paying less than $18 per month for insulin.

In response to the allegations, Express Scripts expressed disappointment, arguing that the FTC is politically motivated and not focused on its obligation to protect consumers.

The cost of insulin has dramatically increased in the U.S. over the last 20 years, making adequate healthcare unattainable for many. The American Diabetes Association reported that the cost of insulin rose by 24% between 2017 and 2022 when adjusted for inflation. Moreover, a RAND report has shown that the average gross price of insulin in the U.S. is over 900% higher than in 33 other developed nations.

This stark contrast is troubling, especially since even after accounting for discounts from drug manufacturers, Americans are still paying more than double the prices found in comparable countries. Andrew Mulcahy, a lead author of the RAND study and senior health economist, emphasized that these conditions are unsustainable and unjustifiable. Insulin prices in the U.S. have been on the rise for years and are significantly higher than those in other nations with similar economic statuses.

The FTC’s recent lawsuits highlight a critical issue impacting millions of Americans, calling into question the ethics and operations of the PBMs that control access to essential medications. As this legal battle unfolds, many will be watching closely to see whether meaningful changes will emerge in the pricing and availability of insulin in the United States.

Source: Associated Press