The Federal Trade Commission on Friday sued three large U.S. health care companies that negotiate insulin prices, saying drug brokers use practices that boost their profits while “artificially” inflating costs for patients.
The lawsuit targets the three largest companies that manage so-called pharmacy benefits, United Health Group Optum RX, CVS Health's Caremark and Signa Express Scripts. They are all owned or affiliated with health insurance companies and collectively manage about 80% of the nation's prescriptions, according to the Federal Trade Commission.
The FTC lawsuit also includes every PBM purchasing organization, which brokers drug purchases for hospitals and other health care providers. The agency said it may recommend suing the drug companies. Eli Lilly, Sanofi and Novo Nordisk And in the future also about their role in raising the prices of insulin products listed.
A UnitedHealth spokesman said the lawsuit “demonstrates a profound misunderstanding of how drug prices work,” noting that Optum RX negotiated “aggressively and successfully” with drug manufacturers.
A CVS spokesperson said Caremark is “proud of the work” it has done to make insulin more affordable for Americans, adding that “to suggest anything else, as the FTC did today, is simply wrong.”
An Express Scripts spokesperson said the lawsuit “continues a disturbing pattern of unsubstantiated, ideologically driven attacks” by the FTC on pharmacy benefit management companies. The lawsuit comes three days after Express Scripts sued the FTC, demanding that the agency retract its allegedly “defamatory” report it released in July that alleged the pharmacy benefit management industry was raising drug prices.
Pharmacy benefit management companies are at the heart of the U.S. drug supply chain. They negotiate discounts with drug manufacturers on behalf of insurance companies, large employers, and federal health care plans. They also create lists of drugs or formulas that insurance covers and reimburse pharmacies for prescriptions. The Federal Trade Commission has been investigating pharmacy benefit management companies since 2022.
The agency’s lawsuit alleges that the three drug benefit management companies created a “skewed” drug discount system that prioritizes high-priced drug companies, leading to “artificially high insulin prices.” The lawsuit also alleges that the drug benefit management companies favor high-priced insulins even when cheaper insulins become available at lower prices.
The FTC files its complaint through what is called the administrative process, which begins proceedings before an administrative judge who hears the case.
“Millions of Americans with diabetes need insulin to survive, but for many of these vulnerable patients, the cost of insulin medication has skyrocketed over the past decade thanks to powerful pharmacy benefit management companies and their greed,” Raul Rao, deputy director of the FTC’s Bureau of Competition, said in a statement.
“The FTC’s administrative action aims to put an end to the predatory behavior of the Big Three PBMs and represents an important step in fixing a broken system—one that could extend beyond the insulin market and restore healthy competition to lower drug prices for consumers,” Rao added.
About eight million Americans with diabetes depend on insulin to survive, and many have had to ration treatment because of high prices, according to the Federal Trade Commission.
The Inflation Reduction Act signed by President Joe Biden capped insulin prices for Medicare beneficiaries at $35 per month. This policy currently does not cover patients with private insurance.
The Biden administration and Congress have stepped up pressure on pharmacy benefit managers, seeking greater transparency in their operations as many Americans struggle to afford prescription drugs. On average, Americans pay two to three times more for prescription drugs than patients in other developed countries, according to a White House fact sheet.
The Federal Trade Commission said it remains “deeply troubled” by the role insulin manufacturers play in raising list prices, arguing that they are raising prices in response to demands from drug benefit managers for deeper discounts. Eli Lilly, Sanofi and Novo Nordisk control nearly 90% of the U.S. insulin market.
For example, the list price of Eli Lilly's Humalog insulin was $274 in 2017, a 1,200% increase from its list price of $21 in 1999, according to the U.S. Federal Trade Commission.
The FTC said all drug companies should “be aware that their engagement in the type of conduct at issue here raises concerns about the chain.”
An Eli Lilly spokesman said the FTC lawsuit concerns “aspects of the U.S. health care system that we have long called for reform.” He added that the company last year became the first to cap out-of-pocket costs for all of its insulins at $35 a month for people with private insurance. Eli Lilly has also cut some listed insulin prices by as much as 70%.
Last year, Sanofi announced a similar monthly price cap of $35 for its most common insulin, and Novo Nordisk also announced last year that it would cut prices on some of its popular insulins by up to 75%.
Sanofi and Novo Nordisk did not immediately respond to requests for comment.
