US FTC sues drug ‘gatekeepers’ over high insulin prices

By Jody Godoy and Ahmed Aboulenein

(Reuters) -The U.S. Federal Trade Commission sued the country’s three largest pharmacy benefit managers on Friday, accusing them of steering diabetes patients towards higher priced insulin in order to reap millions of dollars in rebates from pharmaceutical companies.

The case accuses UnitedHealth Group Inc (NYSE:)’s Optum unit, CVS Health Corp (NYSE:)’s CVS Caremark and Cigna Corp (NYSE:)’s Express Scripts of unfairly excluding lower cost insulin products from lists of drugs covered by insurers.

Driving down drug prices has been a key goal for the Joe Biden administration, and Vice President Kamala Harris, the Democratic nominee, has emphasized her work for patients, and in particular on lowering insulin prices, on the campaign trial.

The conduct hurt patients, such as those with coinsurance and deductibles, who were not eligible for the rebated price, the FTC said. The three PBMs together administer 80% of all prescriptions in the U.S., according to the case, which was filed in the FTC’s in-house court.

CVS Spokesman David Whitrap said in an emailed statement that the company has worked to make insulin more affordable for Americans and described the FTC as being “simply wrong.” “We stand by our record of protecting American businesses, unions, and patients from rising prescription drug prices,” he said.

CVS shares fell 1.6% in midday trading, while UnitedHealth and Cigna shares were down marginally.

The suit also named Zinc Health Services, Ascent Health Services, and Emisar Pharma Services, purchasing organizations created by the companies in recent years.

Rahul Rao, Deputy Director of the FTC’s Bureau of Competition, said in a statement that the three pharmacy benefit managers are “medication gatekeepers” that have “extracted millions of dollars off the backs of patients who need life-saving medications.”

“Millions of Americans with diabetes need insulin to survive, yet for many of these vulnerable patients, their insulin drug costs have skyrocketed over the past decade thanks in part to powerful PBMs and their greed,” he said.

The FTC did not sue the three major makers of insulin, Eli Lilly (NYSE:), Sanofi (NASDAQ:), and Novo Nordisk (NYSE:), but it did criticise their role in what it called a broken system, and said it reserves the right to sue the pharmaceutical companies later.

The drugmaker’s shares did not react on Friday afternoon.

CVS Caremark said in its statement that any attempt to curtail pharmacy benefit managers’ ability to negotiate drug prices will only benefit pharmaceutical companies.

The three PBMs have criticised the FTC’s approach to the industry, accusing it of bias. Express Scripts sued the FTC earlier this week seeking to force it to withdraw a report that said PBMs enrich themselves at the expense of smaller pharmacies.