FTC sues drug brokers for allegedly inflating insulin prices

The Federal Trade Commission on Friday sued three major U.S. health care companies that negotiate insulin prices, arguing that drug middlemen boost their profits while “artificially” inflating costs for patients.

The lawsuit targets the three largest pharmacy benefit managers, UnitedHealth Group Optum Prescription Drugs from CVS Health Caremark and From Cigna Express Scripts. All are owned or affiliated with health insurers and together they fill about 80 percent of the nation's prescriptions, according to the FTC.

The FTC's complaint also names every PBM-affiliated group purchasing organization, which negotiates drug purchases for hospitals and other health care providers.

PBMs sit at the center of the U.S. drug supply chain. They negotiate rebates with drug manufacturers on behalf of insurers, large employers and federal health plans. They also create lists of drugs, or formularies, that are covered by insurance and reimburse pharmacies for prescriptions. The FTC has been investigating PBMs since 2022.

The agency’s lawsuit alleges that the three PBMs have created a “perverse” drug rebate system that prioritizes high rebates from drugmakers, leading to “artificially inflated insulin list prices.” It also alleges that the PBMs favor those high-list-priced insulins even when more affordable insulins with lower list prices are available.

“Millions of Americans with diabetes need insulin to survive, but for many of these vulnerable patients, the costs of their insulin medications have skyrocketed over the past decade thanks in part to powerful PBMs and their greed,” Rahul Rao, deputy director of the FTC's Bureau of Competition, said in a statement.

“The FTC's administrative action seeks to end the exploitative conduct of the Big Three PBMs and marks an important step toward fixing a broken system, a solution that could have repercussions beyond the insulin market and restore healthy competition to lower drug prices for consumers,” Rao continued.

The FTC said it also remains “deeply concerned” about the role insulin manufacturers play as Eli LillyDanish company New Nordisk and the French pharmaceutical company Sanofi According to a statement from the agency, the three companies control approximately 90% of the US insulin market.

The FTC said all drug makers should “be aware that their engagement in the type of conduct challenged here raises serious concerns.” The FTC's Bureau of Competition could recommend suing those manufacturers in the future, the statement said.