FTC sues three largest UnitedHealth, Cigna, and CVS over high 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.
The Federal Trade Commission on Friday filed an administrative complaint against the three largest pharmacy benefit managers and their affiliated group purchasing organizations, alleging they have contributed to high insulin prices through anti-competitive practices.
The FTC claims CVS Health’s Caremark, Cigna’s ESI, United Health Group’s OptumRx created a “perverse drug rebate system,” resulting in higher insulin list prices. Even when lower list-price insulins became available, the PBMs excluded those options for patients and provided higher prices and highly rebated insulin products, the agency alleges.
“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,” Rahul Rao, deputy director of the FTC’s Bureau of Competition, said in a statement.
“Caremark, ESI, and Optum—as medication gatekeepers—have extracted millions of dollars off the backs of patients who need life-saving medications,” Rao added. “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.”
PBMs are intermediaries in the pharmaceutical system, negotiating the terms and conditions for access to prescription drugs. An FTC official said if the agency prevails in this case, it will have significant implications for not only insulin but also other classes of drugs.
The FTC Commission voted 3-0-2 to take action against the PBMs, with Republican commissioners Melissa Holyoak and Andrew Ferguson recusing themselves. Holyoak and Ferguson did not publicly state the reason for their recusals.
All three PBMs denied the FTC’s claims.
“CVS Caremark is proud of the work we have done to make insulin more affordable for all Americans with diabetes,” the company said in a statement. “To suggest anything else, as the FTC did today, is simply wrong. We stand by our record of protecting American businesses, unions, and patients from rising prescription drug prices.”
Andrea Nelson, the Cigna Group’s chief legal officer, stated via email, “The fact is that in the unlikely event the FTC succeeds in its suit and forces PBMs to include drugs on formulary even if they have higher net costs for plan sponsors—and regardless of whether they are clinically necessary – the FTC will drive drug prices higher in this country.”
Nelson added that, “in a world where pharmaceutical manufacturers continue to raise the price of medications every year, Express Scripts’ work is more important than ever, and we won’t allow baseless suits and false information to deter us from our mission.”
OptumRx called the FTC’s action “baseless.”
“For many years, OptumRx has aggressively and successfully negotiated with drug manufacturers and taken additional actions to lower prescription insulin costs for our health plan customers and their members, who now pay an average of less than $18 per month for insulin,” the company added.
In a separate statement, Rao noted that PBMs are not the only players who have contributed to the high prices of insulin and other drugs.
He said that drug manufacturers such as Eli Lilly, Sanofi and Novo Nordisk have actively inflated the list price of their insulin products in response to the PBMs’ demand for higher prices.
“For example, the list price of Lilly’s Humalog soared from $21 in 1999 to $274 in 2017—a staggering increase of more than 1200%,” Rao said.
“The skyrocketing list price of insulin has had devastating consequences for far too many diabetic patients who have struggled to afford their medication and have been forced to ration these life-saving drugs,” Rao added. “With today’s suit, the Commission is focusing this vital enforcement action against the PBMs, who sit at the center of the drug reimbursement system, and their affiliated GPOs [group purchasing organizations]. The Bureau of Competition, however, remains deeply troubled by the role drug manufacturers play in driving up prices of life-saving medications like insulin.”
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Eli Lilly said in a statement Friday that it “was the first and still only company to cap what people pay at $35 per month for all our insulins. The average monthly out-of-pocket cost for Lilly insulin is just $17.16, and we have not raised list prices for any insulin product since 2017–we’ve only cut them, including by 70% last year.”
Sanofi stated Friday that its “pricing practices have always complied with the law, and the company has fully cooperated with the FTC.”
“Sanofi believes that no one should struggle to pay for their insulin, regardless of their income level or insurance status,” the company added. “This is why Sanofi has a suite of innovative and patient-centric savings programs to help most people reduce the cost of their diabetes medicine, including our insulin products Admelog, Apidra, Lantus, and Toujeo, to a price of $35 or less for a 30-day supply, regardless of income or insurance status.”
Novo Nordisk stated Friday that it is “committed to ensuring patients have affordable access to their medicines, including insulin.”
“However, in the complex U.S. healthcare system, we do not control the prices patients pay at the pharmacy,” the company added. “Since U.S. patients face different challenges and not all situations are the same, Novo Nordisk offers a variety of access and affordability programs at Novocare.com, including MyInsulinRX: a monthly supply of any combination of Novo Nordisk insulins for eligible patients (up to three vials or two packs of FlexPen/FlexTouch/PenFill pens) for $35 [and] Immediate Supply: a one-time free short-term supply of insulin (up to three vials or two packs of pens) to eligible patients at risk of rationing.”
The FTC’s action follows its July release of an interim report that six PBMs control 94% of all prescriptions in the United States, contributing to higher drug costs and driving out independent pharmacies. Earlier this week, Express Scripts filed a defamation case in the U.S. District Court for the Eastern District of Missouri against the FTC and its chair, Lina Khan, calling for the agency to retract the report.