FTC Takes Bold Stand: Major PBMs Face Scrutiny Over Inflated Insulin Prices!

Federal Trade Commission (FTC)

WASHINGTON, D.C. — In a move to address escalating insulin prices, the Federal Trade Commission (FTC) has initiated action against the three largest prescription drug benefit managers (PBMs) in the country. The administrative complaint targets Caremark Rx, Express Scripts (ESI), and OptumRx, along with their affiliated group purchasing organizations (GPOs), for engaging in anticompetitive practices that have artificially inflated insulin prices, limiting patient access to more affordable options.

According to the FTC, these PBMs, collectively known as the “Big Three,” orchestrated a rebate-driven scheme that prioritizes high rebates from drug manufacturers over patient affordability. This practice has led to inflated list prices for insulin, a life-saving medication vital for millions of Americans living with diabetes. Deputy Director of the FTC’s Bureau of Competition, Rahul Rao, expressed concern over the impact of such practices, highlighting the significant financial burden placed on vulnerable patients.

The FTC’s complaint alleges that the PBMs, through their GPOs—Zinc Health Services, Ascent Health Services, and Emisar Pharma Services—have leveraged their substantial market power to manipulate the pharmaceutical supply chain. By administering approximately 80% of all U.S. prescriptions, these entities have systematically favored high list price insulins that offer lucrative rebates. This strategy has resulted in higher out-of-pocket costs for patients, exacerbating the financial strain on those needing insulin to manage their diabetes.

Historically, insulin was more affordable, with a notable example being the brand-name insulin Humalog, which had an average list price of $21 in 1999. However, due to the PBMs’ rebate-focused practices, the price surged to over $274 by 2017, representing a dramatic increase of over 1,200%. This inflationary trend has left one in four insulin patients struggling to afford their medication by 2019, per the FTC’s findings.

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The complaint also highlights the broader implications of these practices within the pharmaceutical industry. The FTC points to the role of drug manufacturers, such as Eli Lilly, Novo Nordisk, and Sanofi, in perpetuating high list prices as they compete for formulary access through increased rebates. This dynamic effectively upends the typical competitive market environment, where prices would ordinarily decrease as sellers vie for business.

In response, the FTC is seeking to dismantle what it describes as exploitative conduct by the PBMs and restore competition within the insulin market. The agency’s action is seen as a potential catalyst for broader reform, with implications extending beyond insulin to other prescription drugs.

The FTC’s Bureau of Competition has emphasized its continued scrutiny of all entities contributing to inflated drug prices, indicating that drug manufacturers are also under evaluation for their role in this systemic issue. The agency’s administrative complaint represents a significant step in addressing financial inequities faced by patients and aims to realign incentives to prioritize patient welfare over profits.

The Commission’s decision to file the complaint was unanimous among participating members, demonstrating a firm commitment to rectifying anticompetitive practices and ensuring fairer drug pricing for consumers. As the proceedings unfold, the pharmaceutical industry and healthcare stakeholders will be closely monitoring the outcomes, which could reshape the landscape of prescription drug pricing and access in the United States.

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