The Federal Trade Commission (FTC) has taken a significant step in addressing the rising cost of insulin, filing a formal complaint against three major pharmacy benefit managers (PBMs): CVS Health Inc’s CVS Caremark, Cigna Corp’s CI Express Scripts, and UnitedHealth Group Inc’s UNH Optum. The FTC alleges that these companies, collectively known as the Big Three, have engaged in unfair and anti-competitive practices that have artificially inflated the list price of insulin medications.
The complaint centers around a system the PBMs allegedly created that prioritizes drug rebates, a practice that financially benefits them while forcing patients to shoulder the burden of higher costs for life-saving insulin. These PBMs, managing roughly 80% of prescriptions in the U.S., hold a significant amount of power in the healthcare system.
The FTC claims the PBMs abused their market dominance by promoting a rebate system with drug manufacturers. This system led to the exclusion of lower-priced insulin from formularies, further driving up costs for vulnerable patients. As a result, individuals requiring essential diabetes medication face significantly higher out-of-pocket expenses.
For example, the list price of Eli Lilly And Co’s Humalog, a widely used insulin, skyrocketed from $21 in 1999 to over $274 in 2017. Despite the availability of lower-priced alternatives, the PBMs favored higher-priced drugs because of the lucrative rebates they received.
The FTC’s investigation also extends to drug manufacturers, including Eli Lilly, Novo Nordisk A/S, and Sanofi SA, as they may have played a role in driving up insulin prices. This indicates the possibility of further action against these companies.
The rebate-driven system, according to the FTC, excluded lower-priced insulins and enabled the Big Three PBMs to retain substantial revenue through rebates and fees. This strategy prioritized the financial gain of the PBMs at the expense of patients.
The most vulnerable patients, those with high deductibles or coinsurance, faced the greatest impact from these inflated costs, paying more for their insulin than the overall net cost to insurers.
The FTC’s lawsuit against these PBMs aims to address a critical issue in the healthcare system, highlighting the potential for market manipulation and the need for greater transparency in drug pricing. This legal action could have a significant impact on the future of insulin pricing and the affordability of essential medications for millions of Americans.
