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The Federal Trade Commission filed a lawsuit on Friday against three major U.S. health companies involved in negotiating insulin prices. The FTC alleges that these pharmacy benefit managers (PBMs) engage in practices that increase their profits at the expense of patients by artificially inflating costs. The companies targeted in the lawsuit are UnitedHealth Group’s Optum Rx, CVS Health’s Caremark, and Cigna’s Express Scripts. These PBMs collectively administer around 80% of the nation’s prescriptions, according to the FTC.

The lawsuit also names each PBM’s affiliated group purchasing organization, which facilitates drug purchases for healthcare providers. The FTC hinted at the possibility of suing insulin manufacturers like Eli Lilly, Sanofi, and Novo Nordisk in the future for their role in driving up list prices for insulin products.

A spokesperson for CVS stated that Caremark has worked to make insulin more affordable for Americans and refuted the FTC’s claims. Express Scripts criticized the FTC for what they see as baseless attacks on PBMs, following a lawsuit filed by Express Scripts against the agency to retract a report accusing the PBM industry of raising drug prices.

PBMs play a significant role in the U.S. drug supply chain by negotiating rebates with drug manufacturers on behalf of various entities. The FTC has been investigating PBMs since 2022. The agency’s lawsuit alleges that the PBMs have established a rebate system that prioritizes high rebates from drug manufacturers, resulting in artificially inflated insulin list prices. It also accuses PBMs of favoring high-list-price insulins over more affordable options.

The FTC’s administrative action seeks to address what they consider exploitative practices by the Big Three PBMs and bring competition into the market to lower drug prices for consumers. Millions of Americans with diabetes rely on insulin to survive, and high prices have forced many to ration their treatment.

The Biden administration has capped insulin prices for Medicare beneficiaries at $35 per month but has not extended this policy to patients with private insurance. There is a push for increased transparency in PBM operations as Americans struggle to afford prescription drugs. The FTC also expressed concerns about the role insulin manufacturers play in inflating prices in response to demands from PBMs for higher rebates.

For example, Eli Lilly’s Humalog insulin experienced a significant price increase from $21 in 1999 to $274 in 2017. The FTC warns all drugmakers that engaging in similar practices could lead to serious consequences. Eli Lilly, Sanofi, and Novo Nordisk, the three main insulin manufacturers in the U.S., did not immediately respond to requests for comment.

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