Lina Khan, Chair of the Federal Trade Commission (FTC), testifies before the House Appropriations Subcommittee at the Rayburn House Office Building on May 15, 2024 in Washington, DC. Kevin Dietsch | Getty Images News | Getty Images
FTC Sues Drug Middlemen Over Insulin Price Hikes, Allegations Spark Uproar
The Federal Trade Commission (FTC) has taken a bold step, filing a lawsuit on Friday, September 20, 2024, against three major U.S. health companies. These companies, known as pharmacy benefit managers (PBMs), are accused of inflating the price of insulin, a life-saving drug for millions of Americans with diabetes. The companies targeted in this lawsuit are UnitedHealth Group’s Optum Rx, CVS Health’s Caremark, and Cigna’s Express Scripts. Together, they control around 80% of the prescription drug market in the U.S. and allegedly use their power to boost profits at the expense of patients.
This lawsuit is part of a larger investigation by the FTC, which has been probing into PBMs and their practices since 2022. The agency claims that these companies have created a system that rewards high rebates from drug manufacturers, which in turn leads to artificially inflated prices for insulin. The suit also includes each PBM’s affiliated group purchasing organizations, which help hospitals and other healthcare providers broker drug purchases.
The FTC’s action may not stop here. The agency hinted that it could also go after the insulin manufacturers themselves, including Eli Lilly, Sanofi, and Novo Nordisk, for their role in driving up prices. The rising costs of insulin have become a significant issue, with millions of Americans being forced to pay exorbitant prices for the drug or even rationing their doses, putting their health at serious risk.
UnitedHealth, CVS, and Cigna have quickly responded to the lawsuit. A UnitedHealth spokesperson stated that the FTC’s lawsuit “shows a misunderstanding of how drug pricing works,” adding that Optum Rx has aggressively negotiated to lower prices with manufacturers. CVS, on the other hand, defended its role in making insulin more affordable for Americans and accused the FTC of being incorrect in its allegations. Express Scripts, which is part of Cigna, called the lawsuit another “unsubstantiated” attack on PBMs. Express Scripts also recently sued the FTC, asking the agency to retract a July report that claimed PBMs were contributing to rising drug prices.
PBMs are central to the U.S. healthcare system, acting as intermediaries between drug manufacturers, insurers, and pharmacies. They negotiate rebates with manufacturers on behalf of insurers and large employers, decide which drugs are covered by insurance, and reimburse pharmacies for prescriptions. However, critics have argued that these companies have too much power and have prioritized profits over patients’ needs.
The FTC’s lawsuit claims that the PBMs have created a “perverse” system where high rebates from drugmakers are favored, leading to higher insulin list prices. This practice benefits PBMs but results in higher costs for patients, particularly those with diabetes who rely on insulin to survive. The suit argues that PBMs continue to push high-priced insulin products, even when more affordable options are available, because of the financial incentives involved.
The lawsuit was filed through the FTC’s administrative process, meaning the case will be heard by an administrative judge. The commission is hopeful that this legal action will end the exploitative practices of these PBMs and bring about much-needed reform in the U.S. drug pricing system.
The issue of insulin pricing has long been a hot topic in U.S. politics. According to the FTC, around 8 million Americans with diabetes depend on insulin to live. For many, the cost of the drug has become unbearable. Some patients have been forced to ration their insulin, which can have devastating health consequences. The White House, while not commenting directly on the FTC’s lawsuit, has made clear that corporate greed should not drive up prices for essential medications.
President Joe Biden’s Inflation Reduction Act, passed earlier this year, capped the price of insulin for Medicare beneficiaries at $35 per month. However, this cap does not extend to patients with private insurance, leaving many Americans vulnerable to high prices. Both the Biden administration and Congress have been ramping up pressure on PBMs to increase transparency in their operations and reduce the cost burden on patients.
On average, Americans pay two to three times more for prescription drugs than people in other developed countries. This stark disparity has led to growing outrage and demands for change. The FTC’s lawsuit is one of the most significant steps taken by the U.S. government to tackle the issue of high drug prices and could have far-reaching effects beyond the insulin market. If successful, the lawsuit could help restore competition and drive down drug prices for millions of Americans struggling to afford their medications.
The outcome of this case will be closely watched, not only by those in the healthcare industry but also by the millions of patients who rely on affordable access to life-saving drugs like insulin. The lawsuit could mark the beginning of a much-needed overhaul of the drug pricing system in the U.S.
#InsulinPrices #FTCAction #HealthcareReform #BigPharma #DrugPricing