The attorneys for UnitedHealth and CVS have requested that Federal Trade Commission (FTC) Chair Lina Khan and commissioners Rebecca Kelly Slaughter and Alvaro Bedoya recuse themselves from the active lawsuit the FTC has filed against the largest pharmacy benefit managers in the country.
The pharmaceutical companies claimed there was "extensive" records of bias against pharmacy benefit managers (PBMs) from the three commissioners which should disqualify them from continuing on with the lawsuit.
The lawsuit, filed by the FTC in September, was against the three largest PBMs in the country, along with their owned or affiliated group purchasing organizations, and claimed they engaged in anticompetitive business practices that increased insulin prices. The lawsuit comes after an FTC staff report released earlier this year on the prescription drug middleman industry. The report examines the numerous ways pharmacy benefit managers (PBMs) affect prescription drug accessibility and affordability.
According to an FTC press release, the interim report, required by a special order issued by the FTC in 2022, outlines how increased vertical integration and concentration have contributed to the rise of six PBMs that now manage almost 95% of the nation’s prescriptions.
The FTC asserts that this vertical integration and concentration have led to PBMs profiting at the expense of patients and independent pharmacists. "The FTC’s interim report lays out how dominant pharmacy benefit managers can hike the cost of drugs—including overcharging patients for cancer drugs," FTC Chair Lina M. Khan stated in the press release. "The report also details how PBMs can squeeze independent pharmacies that many Americans—especially those in rural communities—depend on for essential care."
According to the press release, the report reveals that PBMs influence the availability of prescription drugs and what consumers pay for them. Higher drug prices force some patients to modify how often they use a medication. The report points to a survey that shows nearly 30% of Americans ration or skip doses to manage the steep prices.
Furthermore, according to the press release, the report shows that PBMs command significant influence over independent pharmacies, mainly through unfair, arbitrary, and harmful contractual terms that they impose. In addition, it highlights how pharmacies affiliated with the three largest PBMs currently account for nearly 70% of all specialty drug revenue.
The interim report was published under Section 6(b) of the FTC Act and focuses on six large PBMs: Caremark Rx, LLC; Express Scripts, Inc.; OptumRx, Inc.; Humana Pharmacy Solutions, Inc.; Prime Therapeutics LLC; and MedImpact Healthcare Systems, Inc.
The current lawsuit against major PBMs claims that CVS Caremark, Cigna-owned Express Scripts, and Optum Rx established a "perverse" drug rebate system that emphasizes high rebates from manufacturers, driving up insulin prices. Rebates are payments made by manufacturers to PBMs in exchange for favorable placement on insurers’ drug tier formularies. The PBMs contend that these rebates largely benefit their clients.
According to the FTC, the price of Humalog, a brand-name insulin, was $21 in 1999. However, due to the rebate practices of these middlemen, the cost surged to over $274 by 2017.
Other lawsuits have been filed against PBMs, including one by Texas Attorney General Ken Paxton.
