Federal Trade Commission Sues the Big Three PBMs Over Insulin Pricing

Challenges continue to arise for the 3 largest pharmacy benefits managers (PBMs)—Caremark, Express Scripts, and OptumRx—who, together, administer about 80% of the prescriptions in the United States. In late September 2024, the Federal Trade Commission (FTC) brought action against the PBMs and their respective group purchasing agents (GPOs): Zinc Health Services, Ascent Health Services, and Emisar Pharma Services.

The Legal Action

On September 20, 2024, the FTC filed an administrative complaint against the PBMs and GPOs. The FTC issues such complaints when it has reason to believe that the law has been violated and it appears that a proceeding is in the public interest. An administrative complaint is the first of many steps leading to the allegations being tried before an administrative law judge.

The Complaint’s Allegations

“Americans pay too much for prescription drugs, including life-saving drugs like insulin,” begins the factual portion of the FTC’s complaint. It goes on to allege that PBMs are responsible for their role “in designing, directing, and overseeing a drug reimbursement system, which generates billions of dollars in rebates and fees for them while incentivizing drug manufacturers to raise (not lower) the sticker price (i.e., list price) of their drugs.” As a result, the complaint concludes, “many diabetics and other sick patients are stuck paying significantly more for life-saving medications like insulin.” The complaint specifically pointed to the significant rise in the cost of insulin starting in 2012 and noted that spending on insulin in the United States has nearly tripled over the last decade, increasing from $8 billion in 2012 to $22.3 billion in 2022. The soaring prices are due to PBMs’ demands for rebates and fees from insulin manufacturers to pay for favorable formulary placement. The costs are then passed on to patients in what the FTC calls an “unfair cost shifting practice,” potentially leading to decreased adherence and adverse health outcomes due to the lack of affordability.

Next Steps

A hearing has been scheduled for August 27, 2025, at the Federal Trade Commission offices in Washington, DC.

In Related News

In late September 2024, one of the PBMs, Express Scripts, filed a lawsuit in federal court in Missouri, demanding that the FTC retract its July 2024 report criticizing PBMs. The report, titled Pharmacy Benefit Managers: The Powerful Middlemen Inflating Drug Costs and Squeezing Main Street Pharmacies, alleged that PBMs were responsible for driving up drug costs. Express Scripts’ complaint claims that the FTC report is false and misleading, stating that PBMs do not inflate drug costs, manufacturers do. “PBMs lower prescription drug costs for health plan sponsors (employers, unions, and governments) who use PBMs to negotiate with (among others) pharmaceutical manufacturers and retail pharmacies to drive cost savings,” states the complaint. The lawsuit demands that the FTC retract the report, claiming it advances a false and damaging narrative.

References

FTC sues prescription drug middlemen for articifcially inflating insulin drug prices. Federal Trade Comission. Published September 20, 2024. Accessed October 21, 2024. https://www.ftc.gov/news-events/news/press-releases/2024/09/ftc-sues-prescription-drug-middlemen-artificially-inflating-insulin-drug-prices

FTC sues pharmacy benefit manages for inflating insulin prices. U.S. Senate Committee Transportation. Published September 30, 2024. Accessed October 21, 2024. https://www.commerce.senate.gov/2024/9/ftc-sues-pharmacy-benefit-managers-for-inflating-insulin-prices

The Federal Trade Commission v Caremark Rx, LLC; Zinc Health Services, LLC; Express Scripts, Inc., et al. Docket No 9437. US Before the Federal Trade Commission; 2024. https://www.ftc.gov/system/files/ftc_gov/pdf/d9437_caremark_rx_zinc_health_services_et_al_part_3_complaint_public_redacted.pdf

Express scripts sues FTC, demands withdrawal of PBM Report. Evernorth. Published September 17, 2024. Accessed October 21, 2024. https://www.evernorth.com/articles/express-scripts-sues-ftc-demands-withdrawal-pbm-report

Express Scripts, Inc. v The Federal Trade Commission, and Lina. M. Khan. No 4:24-vc-01263. US District Court for the Eastern District of Missouri; 2024. https://www.evernorth.com/sites/default/files/2024-09/express-scripts-legal-complaint.pdf