The Federal Trade Commission (FTC) has initiated legal action against the three largest prescription drug benefit managers (PBMs)—Caremark Rx, Express Scripts (ESI), and OptumRx—and their affiliated group purchasing organizations (GPOs). The FTC alleges that these entities have engaged in anticompetitive and unfair rebating practices, leading to artificially inflated insulin prices, restricted access to lower-priced products, and increased costs for vulnerable patients.
The administrative complaint targets CVS Health’s Caremark, Cigna’s ESI, and United Health Group’s Optum, along with their respective GPOs—Zinc Health Services, Ascent Health Services, and Emisar Pharma Services. According to the FTC, these PBMs collectively manage about 80% of all prescriptions in the United States.
The FTC claims that the PBMs have created a rebate system that prioritizes high rebates from drug manufacturers. This system allegedly results in inflated insulin list prices. Even when more affordable insulins became available, the PBMs are accused of excluding them in favor of higher-priced options with larger rebates. "Millions of Americans with diabetes need insulin to survive," said Rahul Rao, Deputy Director of the FTC’s Bureau of Competition. "Caremark, ESI, and Optum—as medication gatekeepers—have extracted millions of dollars off the backs of patients who need life-saving medications."
Historically affordable insulin medications have seen dramatic price increases. For instance, Humalog's list price rose from $21 in 1999 to over $274 by 2017. The complaint states that one out of every four insulin patients was unable to afford their medication by 2019.
The FTC also expressed concerns about drug manufacturers like Eli Lilly, Novo Nordisk, and Sanofi contributing to rising list prices. The Bureau of Competition indicated potential future actions against these manufacturers.
The financial incentives for PBMs are tied to a drug's list price through rebates and fees negotiated with manufacturers. Higher list prices result in higher rebates and fees for PBMs and GPOs without additional services provided in return.
The complaint highlights that exclusionary formularies created by PBMs since 2012 have reduced patient access to lower-priced insulins. These strategies reportedly forced manufacturers to increase list prices to compete for formulary access.
As insulin prices escalated, vulnerable patients often paid higher out-of-pocket costs due to deductibles and coinsurance requirements. The FTC alleges that Caremark, ESI, and Optum knowingly pursued strategies that shifted the burden of high list prices onto patients.
The Commission voted 3-0-2 to file an administrative complaint against these entities under Section 5 of the FTC Act for unfair competition practices.
This proceeding will be tried before an administrative law judge. The Health Care Division of the FTC’s Bureau of Competition is handling this matter.
The Federal Trade Commission aims to promote competition and protect consumers. More information on consumer benefits from competition or filing an antitrust complaint can be found on the FTC's website or social media channels.
