Federal Trade Commission Chairwoman Lina Khan testifies at a hearing of the House Appropriations Committee’s Financial Services and General Government Subcommittee on May 15, 2024.
Tom Williams | CQ-Roll Call, Inc. | Getty Images
The Federal Trade Commission plans to sue three major US health care companies over their practices in negotiating prices for insulin and other drugs, people familiar with the matter told CNBC on Wednesday, alleging the companies inflate costs for patients.
The lawsuit is expected to target three so-called pharmacy benefit management companies. UnitedHealth GroupOptum Rx, CVS HealthCare mark and SignaThe people confirmed Express Scripts’ plans to a Wall Street Journal report published Wednesday. All three companies are owned or affiliated with health insurers.
The Wall Street Journal reported, citing people familiar with the matter, that the lawsuit will focus specifically on business practices regarding kickbacks that pharmacy benefit managers (PBMs) broker with drug companies.
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 stands by our track record of protecting American businesses, unions and patients from rising prescription drug prices.”
On February 7, 2024, a customer visits a CVS Pharmacy in Miami.
Joe Raedl | Getty Images
“Prices for insulin and other medicines are set by manufacturers who have repeatedly raised list prices,” an Express Scripts spokesperson said, adding that Express Scripts “is fighting high pharmaceutical prices and working to lower the cost of thousands of medicines for patients and their health plans, and the data shows we’re making progress.”
An Optum Rx spokesman did not immediately respond to a request for comment.
The FTC declined to comment on the reported lawsuit.
PBMs sit at the heart of the U.S. drug supply chain, negotiating rebates with drug manufacturers on behalf of insurers, large corporations, and others, creating the list of drugs covered by insurance (formulas), and reimbursing pharmacies for prescription drugs.
The FTC has been investigating PBMs since 2022. Drug companies are also a target of the insulin pricing investigation, but it is unclear whether drug companies will be named in future lawsuits, Politico reported, citing people familiar with the matter. Eli LillyFrench pharmaceutical company Sanofi Danish pharmaceutical company Novo Nordisk It controls about 90% of the U.S. insulin market.
Pharmacist Thomas Jensen checks a prescription at Rock Canyon Pharmacy in Provo, Utah on May 9, 2019.
George Frey | Reuters
The FTC on Tuesday released a scathing interim report based on its ongoing investigations into PBMs, accusing the big three of manipulating the drug supply chain and lining their own pockets at the expense of smaller independent pharmacies and American patients.
According to the FTC report, the six largest PBMs process approximately 95% of prescriptions filled in the United States.
PBMs blame drug manufacturers for high drug prices, but the drug companies argue that kickbacks and fees charged by middlemen force them to raise the list prices of their products.
With many Americans struggling to afford prescription drugs, the Biden administration and Congress are stepping up pressure on PBMs to make their operations more transparent. On average, Americans pay two to three times more for prescription drugs than patients in other developed countries, according to a White House fact sheet.
The Stopping Inflation Act signed by President Joe Biden caps insulin prices at $35 a month for Medicare beneficiaries, a policy that currently does not apply to patients with private insurance.
