FTC Takes Action Against PBMs

The FTC is suing the three biggest PBMs and their affiliated GPOs alleging anticompetitive and unfair practices that have artificially inflated insulin prices. | Catalyst Corner | By Marsha Millonig

The Federal Trade Commission (FTC) is suing the three biggest pharmacy benefit managers (PBMs) and their affiliated group purchasing organizations (GPOs) for engaging in anticompetitive and unfair rebating practices that have artificially inflated insulin list prices. The FTC also said in the suit that actions by CVS Health’s Caremark, Cigna’s Express Scripts Inc (ESI), and UnitedHealth’s Optum impaired patient access to lower list price insulin products while also shifting costs of high insulin list prices to vulnerable patients. The move by the FTC was applauded by several pharmacy organizations, including the American Pharmacists Association (APhA) and the National Community Pharmacists Association (NCPA).

FTC Alleges The “Big Three” PBMs Abused Their Economic Power

In the administrative complaint, the FTC alleges the “Big Three” PBMs abused their economic power by taking actions that positioned the pharmaceutical supply chain in their favor while forcing patients to pay higher prices for “life saving” medication. In particular, the FTC cites how the PBMs drug rebate system is perverse because it prioritizes high rebates from drug manufacturers that then inflate drug prices. This inflation of prices is not new, and IQVIA’s Doug Long has presented this difference between list and net prices during his industry trend talks at the ASAP (American Society for Automation in Pharmacy) annual conferences.

Quotes in the FTC’s press release are damning. Rahul Rao, the FTC’s deputy director of the Bureau of Competition says, “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. 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 Three 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.”