FTC to Sue Top PBMs Over Drug Price Negotiation Tactics

The Federal Trade Commission (FTC) will sue the top 3 pharmacy benefit managers (PBMs) over their negotiation tactics for drug prices, including insulin, to make health care more affordable according to reporting by the Wall Street Journal. 

The agency plans to file lawsuits against business practices involving rebates with drug manufacturers after a two-year investigation. The FTC is also looking into the role of insulin manufacturers in these negotiations. PBMs oversee prescription drug transactions for insurers and employers, negotiating discounts with drug manufacturers. The top 3 PBMs, UnitedHealth Group's OptumRx, Cigna Group's Express Scripts, and CVS Health's Caremark, handle around 80% of US prescriptions and have a parent company with a major health insurer.

Also under scrutiny over rebate negotiations are the 3 largest insulin makers: Eli Lilly and Company, Novo Nordisk, and Sanofi. A study published in JAMA Network Open found that list prices for insulin have increased annually from 2010-2019, despite PBMs negotiating discounts since 2015 to lower net prices. Senator Bernie Sanders has accused PBMs of prioritizing insulin products with the highest rebates instead of those with the lowest costs for patients.

Eli Lilly pointed out that they created a cheaper version of insulin, but claimed fewer insurers covered it due to the preference of PBMs for higher rebates on the more expensive version. 

After pressure from lawmakers, last year Eli Lilly, Sanofi, and Novo Nordisk reduced insulin prices in addition to offering copay coupons for uninsured and commercially insured patients to pay $35 a month. In 2022, President Joe Biden signed a law limiting out-of-pocket costs for Medicare patients to $35 a month for insulin.

The FTC released an interim report on Tuesday on the investigation into PBMs potentially increasing costs for clients and patients at pharmacies. The report focused on PBMs' relationships with pharmacies and revealed that PBMs had agreed to exclude competing drugs from preferred medicine lists for higher rebates. PBMs criticized the report, claiming it was flawed and misleading. 

“Legislators in the House and Senate have proposed bills to rein in PBMs’ business practices, and lobbyists for drugmakers have portrayed PBMs as the culprit behind escalating drug costs,” reported the Wall Street Journal. 

Reference
Whyte L E, Mathews A W. FTC to sue drug managers over insulin prices. WSJ. July 10, 2024. Accessed July 22, 2024. https://www.wsj.com/health/pharma/ftc-to-sue-drug-managers-over-insulin-prices-b46af71f?mod=health_feat1_pharma_pos1