FTC sues drug middlemen for allegedly inflating insulin prices

The Federal Trade Commission on Friday sued three large U.S. health companies that negotiate insulin prices, arguing the drug middlemen boost their profits while “artificially” inflating costs for patients. 

The suit targets the three biggest so-called pharmacy benefit managers, UnitedHealth Group’s Optum Rx, CVS Health‘s Caremark and Cigna’s Express Scripts. All are owned by or connected to health insurers and collectively administer about 80% of the nation’s prescriptions, according to the FTC. 

The FTC’s lawsuit also includes each PBM’s affiliated group purchasing organization, which brokers drug purchases for hospitals and other health-care providers. 

PBMs sit at the center of the drug supply chain in the U.S. They negotiate rebates with drug manufacturers on behalf of insurers, large employers and federal health plans. They also create lists of medications, or formularies, that are covered by insurance and reimburse pharmacies for prescriptions. The FTC has been investigating PBMs since 2022. 

The agency’s suit argues that the three PBMs have created a “perverse” drug rebate system that prioritizes high rebates from drugmakers, which leads to “artificially inflated insulin list prices.” It also alleges that PBMs favor those high-list-price insulins even when more affordable insulins with lower list prices become available. 

“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,” Rahul Rao, deputy director of the FTC’s Bureau of Competition, said in a statement. 

“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,” Rao continued. 

The FTC said it also remains “deeply troubled” by the role insulin manufacturers like Eli Lilly, Danish company Novo Nordisk and French drugmaker Sanofi play in higher list prices, according to a release from the agency. The three companies control roughly 90% of the U.S. insulin market.

The FTC said all drugmakers should “be on notice that their participation in the type of conduct challenged here raises series concerns.” The FTC’s Bureau of Competition may recommend suing those manufacturers in the future, the release said.