America's FTC Sues Insulin Middlemen Who 'Artificially Inflated' Drug Price

Friday America's Federal Trade Commission brought action against three companies for 'anticompetitive and unfair' practices 'that have artificially inflated the list price of insulin.'

For years, many of the millions of Americans who need insulin to survive 'have been forced to pay exorbitant prices for a product that's inexpensive to make,' writes NPR. 'Now, the federal government is targeting one part of the system behind high insulin prices.'

While out-of-pocket costs have gone down for many people to $35 a month, questions remain on how the drug became so expensive in the first place. In a new lawsuit filed Friday, the Federal Trade Commission said it's going after one link in the chain: pharmacy benefit managers. The FTC brought action against the top pharmacy benefit managers (PBMs) — CVS Health's Caremark Rx, Cigna's Express Scripts, and United Health Group's OptumRx — saying the companies created a 'perverse drug rebate system' that artificially inflates the cost of insulin. If the suit is successful, it could further drive down costs for patients at the pharmacy counter.

PBMs are essentially the middlemen between drug manufacturers and insurance providers. Their job is to reduce drug prices. But the process is complex and opaque, and critics say they're actually driving prices up for patients. The FTC said a big issue is that PBMs' revenue is tied to rebates and fees — which are based on a percentage of a drug's list price. Essentially, in the case of insulin, when the drug costed more, it generated higher rebates and fees for PBMs. 'Even when lower list price insulins became available that could have been more affordable for vulnerable patients, the PBMs systemically excluded them in favor of high list price, highly rebated insulin products,' the FTC said in a press release on Friday.

The three PBMs named in the FTC lawsuit make up about 80% of the market. According to the suit, the PBMs collected billions of dollars in rebates and fees while insulin became increasingly unaffordable. Over the last two decades, the cost of the lifesaving drug shot up 600% — forcing many Americans with diabetes to ration their medication and jeopardize their health. In 2019, one 1 of 4 insulin patients was unable to afford their medication, according to the FTC. Some people have died.
The FTC's statement says the companies 'have abused their economic power by rigging pharmaceutical supply chain competition in their favor, forcing patients to pay more for life-saving medication... While PBM respondents collected billions in rebates and associated fees according to the complaint, by 2019 one out of every four insulin patients was unable to afford their medication...'
'[A]ll drug manufacturers should be on notice that their participation in the type of conduct challenged here raises serious concerns, and that the Bureau of Competition may recommend suing drug manufacturers in any future enforcement actions.'

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