High insulin prices spur a federal lawsuit against three pharmacy benefit managers

[September 21, 2024]  By TOM MURPHY

The federal government is suing some big pharmacy benefit managers over a system of drug rebates that regulators say has made the price of insulin soar for diabetic patients.

Three companies that process about 80% of prescriptions in the United States — Caremark, Express Scripts and OptumRx — have engaged in anticompetitive practices that spur price increases, the Federal Trade Commission alleged in a lawsuit filed Friday.

Pharmacy benefit managers, or PBMs, run prescription drug coverage for insurers, large employers and other clients. They set up formularies, or lists of covered drugs, and negotiate rebates off the drug prices.

The FTC said the rebating practices of the three companies have led to artificially inflated list prices for people. List prices are what a drugmaker initially sets for a product and what people who have no insurance or plans with high deductibles are sometimes stuck paying for prescriptions.

The price of insulin has emerged as a big campaign topic during this year’s presidential election.

For years, pharmacy benefit managers have been the target of ire for politicians, patients and others. But PBMs have said they play an important role in controlling drug costs and pass along most of the discounts they negotiate to their clients.

Some of the PBMs named by the FTC said in statements that the government's action showed that it does not understand how drug pricing works.

A sign stands outside the Federal Trade Commission building, Jan. 28, 2015, in Washington. (AP Photo/Alex Brandon, File)

But the FTC said the current system prioritizes insulins that come with high list prices and excludes lower-priced products. That, the FTC said, helped PBMs and their group purchasing organizations “line their pockets while certain patients are forced to pay higher out-of-pocket costs” for insulin, which is used by people with diabetes.

Caremark said Friday that it negotiates deep discounts for its clients and helps make insulin affordable for their members.

Express Scripts said the FTC has chosen “to ignore the facts and score political points, rather than focus on its duty to protect consumers.”

Optum called the FTC accusations baseless and said PBMs “are the key counterweight to pharmaceutical companies’ otherwise unchecked monopoly power to set and raise drug prices.”

The FTC started an inquiry more than two years ago into PBMs and said it would seek a range of information about how they do business. The Wall Street Journal reported in July that the FTC was planning to sue the three big PBMs over their drug price negotiation tactics.

That same month, the FTC published a report describing PBMs as powerful middlemen who “may be profiting by inflating drug costs and squeezing Main Street pharmacies.” Express Scripts said earlier this week that it wanted that report retracted and was suing the agency.

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