The Federal Trade Commission (FTC) is gearing up to file lawsuits against three major U.S. health companies for their practices as middlemen who negotiate prices for medications like insulin, claiming that these practices drive up costs for patients. The companies in the spotlight are UnitedHealth Group’s Optum Rx, CVS Health’s Caremark, and Cigna’s Express Scripts, all of which have ties to health insurers.
Lawsuits Targeting PBMs
The upcoming lawsuits will hone in on the business practices linked to the rebates that pharmacy benefit managers (PBMs) broker with drug manufacturers. These PBMs play a crucial role in negotiating rebates with manufacturers on behalf of insurers, large employers, and other entities. They also curate lists of covered medications and reimburse pharmacies for prescriptions.
In response to the impending legal action, representatives from CVS Caremark and Express Scripts have given statements defending their practices. CVS Caremark mentioned their efforts to make insulin more affordable while also safeguarding American businesses and patients from escalating prescription drug costs. On the contrary, Express Scripts blamed high drug prices on manufacturers while touting their own initiatives to lower medication costs.
The FTC has been investigating PBMs since 2022, with a specific focus on insulin prices. The commission’s interim report exposed the largest PBMs for allegedly exploiting the drug supply chain to benefit themselves at the expense of smaller pharmacies and U.S. patients. The report also highlighted how six major PBMs account for nearly 95% of prescription filings in the country, emphasizing their dominant position in the market.
The ongoing scrutiny of PBMs and drug manufacturers has prompted the Biden administration and Congress to push for transparency in the industry. The administration’s Inflation Reduction Act has capped insulin prices for Medicare beneficiaries at $35 per month, although this policy does not apply to individuals with private insurance. Moreover, Americans often pay significantly more for prescription drugs compared to patients in other developed nations, as detailed in a fact sheet from the White House.
The impending legal action against major health companies signifies a growing effort to hold PBMs and manufacturers accountable for the soaring costs of medications like insulin. As policymakers and regulators intensify their focus on the pharmaceutical industry, the outcomes of these lawsuits could have far-reaching implications on drug pricing and accessibility for American patients.