FTC Charges Caremark Rx, Express Scripts, and Optum Rx with Inflating Insulin Prices

The Federal Trade Commission is suing the three largest drug benefit managers (PBMs) for allegedly driving up insulin prices through anticompetitive and unfair discounting practices, hindering patient access to lower-list-priced products, and shifting the cost of high insulin list prices to vulnerable patients.

The agency said Caremark Rx, Express Scripts (ESI), and OptumRx — and their affiliated group purchasing organizations (GPOs) — abused their economic power by rigging competition in the pharmaceutical supply chain in their favor, forcing patients to pay more for lifesaving drugs.

According to the complaint, these PBMs, known as the Big Three, together dispense about 80% of all prescriptions in the United States.

The FTC alleges that the three PBMs created a “perverse drug discount system” that prioritized high discounts from drug manufacturers, leading to artificially inflated insulin list prices.

The complaint alleges that even when lower-list-priced insulins became available, PBMs systematically excluded them in favor of high-list-priced and deeply discounted insulin products.

These strategies have allowed PBMs and GPOs to line their pockets while some patients are forced to pay higher out-of-pocket costs for insulin medications, according to the FTC complaint.

“Millions of Americans with diabetes rely on insulin to survive, but for many of these vulnerable patients, the cost of their insulin has skyrocketed over the past decade, in part because of powerful PBMs and their greed,” said Rahul Rao, Deputy Director of the FTC’s Bureau of Competition.

“Caremark, ESI, and Optum, as gatekeepers to drugs, have bilked patients who need lifesaving medications out of millions of dollars. The FTC’s administrative action seeks to end the exploitation of the Big Three PBMs and marks an important step in fixing a broken system—one that could have repercussions beyond the insulin market and restore healthy competition to lower drug prices for consumers.”

It was affordable before

Insulin drugs used to be affordable. In 1999, the average list price of Humalog, a brand-name insulin drug made by Eli Lilly, was just $21. However, the complaint alleges that PBMs’ discount-hunting strategy has led to skyrocketing list prices for insulin drugs.

In 2017, Humalog’s list price soared to more than $274, a staggering increase of more than 1,200%. While the PBMs surveyed reaped billions of dollars in rebates and associated fees, according to the complaint, by 2019, one in four insulin patients could not afford their medication.

The FTC’s Competition Bureau, in a statement released today, said:that PBMs are not the only potentially culpable actors – the Bureau also remains deeply troubled by the role that drugmakers like Eli Lilly, Novo Nordisk and Sanofi play in driving up the list prices of life-saving drugs like insulin.