Financial Association News September 21 (Editor Zhao Hao) Local time on Friday (September 20), the United States Federal Trade Commission (FTC) announced on its official website that it has filed a lawsuit against the three major pharmacy benefit managers (PBM) and their affiliated organizations, accusing them of participating in anti-competitive and unfair kickback behaviors.

Source: FTC official website

As intermediaries in the pharmaceutical distribution, PBMs negotiate drug prices on behalf of medical insurance plans and pharmaceutical companies, negotiate bulk discounts and fees, create a list of drugs covered by insurance, and reimburse pharmacies for prescriptions.

In theory, these intermediaries PBMs should strive for the lowest drug prices for their clients, but in reality, some pharmaceutical companies provide so-called 'financial incentives' to pharmacy benefit managers to support high-priced drugs and prevent competitors.

These three PBMs are CVS Health's Caremark, the cigna group's Express Scripts, UnitedHealth's Optum, and their respective 'pharmacy group purchasing organizations' (GPOs) - Zinc Health Services, Ascent Health Services, and Emisar Pharma Services.

The press release states that these three so-called 'big three' PBMs collectively manage about 80% of prescription drugs in the USA. The FTC believes that the actions of PBMs artificially inflate the prices of insulin drugs, harming patients' opportunities to access lower-cost products and passing the high costs onto vulnerable patients.

The FTC accuses them of abusing their economic power, manipulating the drug supply chain competition, causing patients to pay more for life-saving drugs. The complaint states that the 'big three' established an improper drug kickback system, prioritizing high rebates from drug manufacturers, artificially leading to an increase in the list price of insulin.

Even with lower-priced insulin available for vulnerable patients to purchase, these PBMs systematically exclude them and favor higher-priced and higher-rebated insulin. This strategy allows PBMs and GPOs to line their pockets, while patients are forced to pay higher out-of-pocket costs for insulin medication.

The lawsuit filed by the FTC will initiate a procedure in which an administrative judge will hear the case. Rahul Rao, Deputy Director of the FTC's Bureau of Competition, wrote that millions of Americans with diabetes rely on insulin for their survival, but the cost of their insulin medication has skyrocketed in the past decade, "largely due to the power of PBMs and their greed."

"As gatekeepers for medication, Caremark, ESI, and Optum have extracted millions of dollars from patients in need of life-saving drugs. The FTC's administrative action aims to stop the exploitative practices of the three major PBMs, marking an important step in repairing the broken system that may extend beyond the insulin market, restoring fair competition and lowering consumer drug prices."

Cailian Press previously mentioned that according to data from the American Diabetes Association, there are over 8 million Americans who need to use insulin products to control their diabetes. However, many Americans, due to economic difficulties, have to risk their lives by using less or not using insulin, ultimately contributing to diabetes being the seventh leading cause of death in the United States.

In addition to the three major PBMs, the FTC also expressed deep concern in its statement regarding the role played by Eli Lilly and Co, Novo Nordisk, Sanofi, and other pharmaceutical companies, and the Bureau of Competition may recommend pursuing enforcement actions against these manufacturers in the future. Data shows that these three companies produce about 90% of the insulin in the United States.

The press release mentioned that in 1999, the average list price of Eli Lilly and Co's insulin medication "Humalog" was only $21. By 2017, the list price of Humalog had risen to over $274, an increase of over 1,200%. The list price of Novo Nordisk's "Novolog U-100" more than doubled from $122.59 in 2012 to $289.36 in 2018.

Last year, under pressure from the White House, Eli Lilly and Co, Novo Nordisk, and Sanofi significantly reduced the prices of insulin.