Federal Trade Committee Chairwoman Lina Khan testifies during a hearing of the House Appropriations Subcommittee on Financial Services and General Government, May 15, 2024.
Tom Williams | CQ-Roll Call, Inc. | Getty Images
The Federal Trade Commission plans to sue three major U.S. health care companies over their practices as middlemen who negotiate prices for drugs like insulin, as the agency argues they inflate costs for patients, a person familiar with the matter told CNBC on Wednesday. .
The suits are expected to target the three largest so-called pharmacy benefit managers, UnitedHealth Group‘s Optum Rx, CVS Health‘s Caremark and Cigna‘s Express Scripts, the person said, confirming one earlier Wall Street Journal report Wednesday on the agency’s plans. All three are owned or affiliated with health insurance companies.
The lawsuits will specifically focus on the rebate-related business practices of pharmacy benefit managers, or PBMs, intermediaries with drugmakers, the newspaper said, citing people familiar with the matter.
A CVS Caremark spokesman said in a statement Wednesday that the company is “proud of the work we’ve done to make insulin more affordable for all Americans with diabetes, and we stand by our track record of protecting American businesses, unions and patients from the increase in prescriptions and drug prices”.
A customer visits a CVS Pharmacy store in Miami, February 7, 2024.
Joe Raedle | Getty Images
An Express Scripts spokesman said “insulin and other drug prices are set by their manufacturers, who have repeatedly raised list prices.” The spokesman said Express Scripts is working to “fight the pharmaceutical industry’s high prices and lower the cost of thousands of drugs for patients and their health plans, and the data shows we’re succeeding.”
A representative for Optum Rx did not immediately respond to a request for comment.
The FTC declined to comment on the reported lawsuits.
PBMs are at the heart of the US drug supply chain. They negotiate discounts with drug manufacturers on behalf of insurers, large employers and others. They also create lists of drugs – or formulations – covered by insurance and reimburse pharmacies for prescriptions.
The FTC is investigating PBMs starting in 2022. The insulin pricing investigation is also looking at drug makers, but it’s unclear if they will be named in the upcoming lawsuits, Politico he said, citing people familiar with the matter. Eli LillyFrench pharmacist Sanofi and the Danish pharmaceutical company Novo Nordisk they control about 90% of the US insulin market.
Pharmacist Thomas Jensen looks at a prescription drug at Rock Canyon Pharmacy in Provo, Utah, on May 9, 2019.
George Frey | Reuters
The FTC released Tuesday a scathing interim report based on ongoing research on PBMs. The report accused the three largest PBMs of manipulating the drug supply chain to enrich the expensive smaller, independent pharmacies and patients in the US.
Six of the largest PBMs handled nearly 95 percent of prescriptions paid in the U.S., the FTC report said.
PBMs claim manufacturers are responsible for high drug prices, while pharmacists say rebates and fees collected by these middlemen force them to raise list prices for products.
The Biden administration and Congress have increased pressure on PBMs, seeking to increase transparency in their operations as many Americans struggle to afford prescription drugs. On average, Americans pay two to three times more than patients in other developed countries for prescription drugs, according to a newsletter from the White House.
President Joe Biden’s signature inflation-reduction law has capped insulin prices for Medicare beneficiaries at $35 a month. This policy does not currently extend to patients with private insurance.
