FTC sues drug middlemen for allegedly inflating insulin prices

The Federal Trade Commission on Friday sued three major U.S. medical companies for negotiating insulin prices, saying drug middlemen “artificially” inflated costs for patients while boosting profits.

The lawsuit targets three major so-called pharmacy benefit managers, UnitedHealth Group OptumRx, CVS Health care markings and Cigna Expression script. All of these organizations are owned by or affiliated with health insurance companies and together manage approximately 80% of the nation's prescriptions, according to the FTC.

The FTC's lawsuit also includes each PBM's affiliated group purchasing organizations, which act as agents for drug purchases for hospitals and other health care providers.

PBMs are at the center of the U.S. drug supply chain, negotiating rebates with drug manufacturers on behalf of insurance companies, large employers and federal health plans. They also create a list of drugs or formularies covered by insurance and reimburse pharmacies for prescription drugs. The FTC has been investigating PBMs since 2022.

The agency's lawsuit alleges that the three PBMs created an “improper” drug rebate system that prioritized high rebates from drugmakers, resulting in “artificially high insulin list prices.” It also claims that PBMs favor insulins with high sticker prices even when more affordable insulins at lower prices are available.

“Millions of Americans with diabetes need insulin to survive, but for many vulnerable patients, the cost of their insulin medications has been higher than in the past,” said Rahul Rao, deputy director of the FTC Bureau. Soared during the decade, in part because of powerful PBMs and their greed.

“The FTC’s administrative action seeks to end the exploitative practices of three major PBMs and marks an important step in repairing a broken system—a repair that could ripple beyond the insulin market and restore healthy competition that drives down consumers. drug prices,” Rao continued.

FTC says it remains 'deeply troubled' by insulin makers' role Eli Lilly and Companydanish company Novo Nordisk and French pharmaceutical companies Sanofi to play at a higher price, according to a press release from the agency. These three companies control about 90% of the U.S. insulin market.

The FTC said all drug manufacturers should “be aware that their participation in the conduct challenged here raises a number of concerns.” The FTC's Bureau of Competition may recommend prosecution of these manufacturers in the future, the release said.