The American healthcare system has long been plagued by issues of affordability, but a recent Federal Trade Commission (FTC) lawsuit has brought attention to a particularly egregious example: pharmacy benefit managers (PBMs) allegedly inflating insulin prices at the expense of patients. The three largest PBMs - CVS Health's Caremark Rx, Cigna's Express Scripts, and UnitedHealth Group's Optum Rx - are accused of creating a system that prioritizes high rebates from drug manufacturers, resulting in artificially high insulin list prices.

Here's how it works: PBMs make money through rebates and fees, negotiated with drug manufacturers and tied to a drug's list price. Insulin products with higher list prices result in higher rebates and fees for the PBMs. The FTC alleges that these companies excluded available insulin products with lower prices, opting instead for higher-priced insulins that provide higher rebates. This manipulation has led to patients paying more for life-saving medications.

The consequences are dire. Millions of Americans with diabetes rely on insulin to survive, and for many, their insulin drug costs have skyrocketed over the past decade. PBMs have profited millions of dollars off the backs of these vulnerable patients. It's a clear case of greed, and the FTC is seeking to put an end to this exploitative conduct.

But the PBMs are fighting back, with Cigna's Express Scripts and Optum Rx dismissing the lawsuit as "unsubstantiated and ideologically-driven attacks." Optum Rx claims the FTC "demonstrates a profound misunderstanding of how drug pricing works." CVS Caremark maintains that it has made insulin more affordable and that the FTC's actions would reward the pharmaceutical industry and return the market to a broken state.

The Pharmaceutical Care Management Association, the industry's trade group, argues that PBMs are reducing insulin costs by leveraging greater competition. The FTC's action, they claim, ignores significant progress made in lowering costs and is driven by biased special interests.

Twisting the Reins: How Pharmacy Benefit Managers Stiffed Patients on Insulin Prices

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