US FTC sues drug ‘gatekeepers’ over high insulin prices – 2024-09-20 20:14

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((Automated translation by Reuters, please see disclaimer https://bit.ly/rtrsauto))

(Added external commentary to paragraphs 6 and 7, pharmaceutical company commentary to paragraph 18, and investor commentary to paragraphs 21 and 22) by Jody Godoy and Ahmed Aboulenein

The U.S. Federal Trade Commission sued the nation’s three largest pharmacy benefit managers on Friday, accusing them of steering diabetes patients toward more expensive insulins to collect millions of dollars in rebates from drug companies.

The case accuses UnitedHealth Group Inc.’s Optum unit.

UNH.N , CVS Health Corp.’s CVS Caremark CVS.N and Cigna Corp.’s Express Scripts CI.N of unfairly excluding less expensive insulin products from insurers’ drug lists.

Lowering drug prices has been a key goal of the Biden administration, and Democratic candidate Vice President Kamala Harris has emphasized her work on behalf of patients, particularly lowering insulin prices, on the campaign trail.

The FTC said the actions harmed patients, including those who had to pay co-payments and deductibles and were not eligible for the discount. The three companies together dispense 80 percent of all prescriptions in the United States, according to the case, which was filed in the FTC’s internal court.

All three companies said in statements that the complaint was without merit and defended their business practices, saying they had lowered insulin prices for businesses, unions and patients.

KFF health policy expert Larry Levitt called the FTC’s action “a waste of time.”

“Insulin is an extreme case of PBMs extracting ever-larger rebates from drugmakers and driving up prices at the pharmacy counter, but that’s a dynamic that happens with many drugs,” he said.

Shares of CVS fell 1.4% in midday trading, while those of UnitedHealth and Cigna were flat.

The complaint also names Zinc Health Services, Ascent Health Services and Emisar Pharma Services, purchasing groups created by the companies in recent years.

CVS spokesman David Whitrap said in an emailed statement that the company has worked to make insulin more affordable for Americans and called the FTC’s claim “simply wrong” that it was providing insulin for $25 as part of a discounted pricing program.

Andrea Nelson, Cigna’s general counsel, said that if the FTC were successful in forcing it and others to include drugs with higher total net costs to health plans, drug prices would rise.

Elizabeth Hoff, a spokeswoman for Optum Rx, said the company has reduced the cost of insulin for its customers and members to an average of less than $18 per month.

THE “GUARDIANS OF MEDICATION”

Rahul Rao, deputy director of the FTC’s Bureau of Competition, said in a statement that the three pharmacy benefit managers were “drug gatekeepers” who had “swindled millions of dollars from patients who needed life-saving medications.”

“Millions of Americans with diabetes need insulin to survive, but for many of these vulnerable patients, the cost of their insulin medications has skyrocketed over the past decade, in part because of powerful PBMs and their greed,” he added.

The case will be heard by one of the FTC’s three administrative judges.

The FTC did not sue the three major insulin makers, Eli Lilly LLY.N , Sanofi SASY.PA and Novo Nordisk

NOVOb.CO, but criticized their role in what she called a broken system, and said she reserved the right to sue the pharmaceutical companies at a later date.

Shares of drugmakers were unmoved Friday afternoon.

Sanofi and Lilly said the FTC’s lawsuit addresses aspects of the U.S. health care system that they have long advocated for reform and that they have implemented programs to reduce the cost of their insulins to $35.

CVS Caremark said in its statement that any attempt to reduce the ability of pharmacy benefit managers to negotiate drug prices would only benefit the drug companies.

All three PBMs have criticized the FTC’s approach to the industry, accusing it of bias. Express Scripts sued the FTC earlier this week to force it to retract a report that said PBMs were getting rich at the expense of small pharmacies.

James Harlow, senior vice president of Novare Capital Management, said PBMs have withstood previous criticism.

“Despite intense scrutiny, negative headlines and attempts to pass legislation targeting PBMs, this business continues to be strong and generates solid growth and margins,” he said. Novare owns shares of UnitedHealth and CVS, regulatory filings show.

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