In its first move since the July interim report detailing pharmacy benefit manager practices, the FTC is now suing CVS Caremark, Express Scripts, and Optum Rx.
Just days after Cigna’s pharmacy benefit manager (PBM), Express Scripts, filed a lawsuit against the Federal Trade Commission (FTC) for defamation regarding the Commission’s July interim staff report, the FTC countered and filed a lawsuit against the “Big 3” PBMs— CVS Caremark, Express Scripts, and Optum Rx—for using unfair practices to inflate insulin prices.
“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,” said Rahul Rao, Deputy Director of the FTC’s Bureau of Competition.1 “Caremark, ESI, and Optum—as medication gatekeepers—have extracted millions of dollars off the backs of patients who need life-saving medications. The FTC’s administrative action seeks to put an end to the Big 3 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.”
The FTC’s role in regulating and monitoring PBM activity within the pharmaceutical supply chain dates back to 2022 when it originally opened up its investigation. Two years later, animosity between the FTC and the “Big 3” PBMs has heated up exponentially.
On July 9, the FTC released its interim staff report detailing exactly how PBMs use the supply chain in their favor to reward their affiliated businesses and take away from the pockets of patients around the country.2
Recently, however, Express Scripts was the first of the 3 to clap back at the FTC and its investigation. Earlier this week, the PBM—owned by Cigna—sued the FTC for its report, stating that it was “filled with false and misleading claims about the PBM industry and fails to serve the interests of American consumers,” according to an Express Scripts by Evernorth news release.3
The FTC’s role in regulating and monitoring PBM activity within the pharmaceutical supply chain dates back to 2022 when it originally opened up its investigation. | image credit: Ascannio / stock.adobe.com
READ MORE: Cigna’s PBM Express Scripts Files Lawsuit in Response to July FTC Report
As Express Scripts’ lawsuit begins, the FTC has since introduced further action against the 3 PBMs controlling close to 80% of the pharmacy benefits market. But with this most recent lawsuit, the Commission is focusing on PBMs’ involvement with insulin prices specifically.1
“The complaint alleges that the PBMs’ chase-the-rebate strategy has led to skyrocketing list prices of insulin medications. By 2017, the list price of Humalog soared to more than $274—a staggering increase of over 1200%. While PBM respondents collected billions in rebates and associated fees according to the complaint, by 2019 one out of every 4 insulin patients was unable to afford their medication,” according to the FTC’s release.1
Speaking to PBMs’ “chase-the-rebate” tactic, the pharmaceutical middlemen are expected to promote competition between drug manufacturers, which would in turn lead to lower list prices for insulin. However, according to the FTC’s complaint, and several data detailing PBM practices, the Big 3 PBMs search out drug manufacturers selling expensive drugs so that they can reap manufacturer rebates. When the manufacturer pays the PBM a rebate, it increases its chances of the PBM placing their drugs on preferred formularies.
Ultimately, as the FTC and several anti-PBM groups have been claiming for years, money is what stands in the way of patients receiving valued care for an affordable price.
And as the FTC’s complaint highlights, the money to be made within the pharmacy benefits market mainly lies within rebates. “According to the complaint, as insulin list prices escalated, the PBMs collected rebates that, in principle, should have significantly reduced the cost of insulin drugs for patients at the pharmacy counter. Certain vulnerable patients, such as patients with deductibles and coinsurance, often must pay the unrebated higher list price and do not benefit from rebates at the point of sale,” continued the complaint.1
When it comes to rebates, and other notable PBM tactics that have morphed them to become an adversary to many drug supply chain entities, there are currently not many laws or regulations that can stop what PBMs are doing. However, with 3 PBM reform bills circulating Congress and an immense microscope on the practices of PBMs, federal reform is becoming the only possible way to change the status quo within the supply chain.
“Caremark, [Express Scripts], and Optum and their respective GPOs engaged in unfair methods of competition and unfair acts or practices under Section 5 of the FTC Act by incentivizing manufacturers to inflate insulin list prices, restricting patients’ access to more affordable insulins on drug formularies, and shifting the cost of high list price insulins to vulnerable patient populations,” concluded the FTC.1
READ MORE: How the Big 3 PBMs Utilize Various Market Strategies
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