FTC sues PBMs 

 WASHINGTON – The Federal Trade Commission has sued the three largest prescription drug benefit managers (PBMs) – Caremark Rx, Express Scripts and OptumRx – and their affiliated group purchasing organizations for engaging in anticompetitive and unfair rebating practices that have artificially inflated the list price of insulin drugs. 

These practices have also impaired the ability of patients to access lower list price products and shifted the cost of high insulin list prices to them, the FTC argues. 

“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. “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.” 

The FTC alleges that the three PBMs created a perverse drug rebate system that prioritizes high rebates from drug manufacturers, leading to artificially inflated insulin list prices. The complaint charges that even when lower list price insulins became available that could have been more affordable for vulnerable patients, the PBMs systemically excluded them in favor of high list price, highly rebated insulin products. It also alleges these strategies have allowed the PBMs and GPOs to line their pockets while certain patients are forced to pay higher out-of-pocket costs for insulin medication. 

The FTC’s Bureau of Competition also made it clear in a statement that it remains deeply troubled by the role drug manufacturers like Eli Lilly, Novo Nordisk and Sanofi play in driving up list prices of life-saving medications like insulin. It says all drug manufacturers should be on notice that their participation in this type of conduct raises serious concerns, and that it may recommend suing drug manufacturers in any future enforcement actions. 

Read the FTC’s full announcement here. 

Industry reaction:  

“One of the many ways that PBMs manipulate the system against patients, taxpayers, and small pharmacies is the rebate game,” said B. Douglas Hoey, CEO of the National Community Pharmacists Association. “The PBMs determine which drugs are covered by health insurance plans. They get bigger rebates for the most expensive drugs. Naturally, the most expensive drugs end up on the formularies even when there are cheaper alternatives. Patients end up paying more. Employers end up paying more. Taxpayers end up paying more. And more small business pharmacies are driven out of business. The rebates create a powerful incentive for higher drug prices, which is completely upside-down. We are very pleased that the FTC is seeking to end that practice.”   

• Related: The NCPA in July launched a TV ad on CNN criticizing PBMs.