FTC Sues Major Health Companies Over Alleged Insulin Price Inflation

The Federal Trade Commission (FTC) has sued three major U.S. health companies—UnitedHealth Group's Optum Rx, CVS Health's Caremark, and Cigna's Express Scripts—alleging they inflate insulin prices through a "perverse" rebate system. These companies, known as Pharmacy Benefit Managers (PBMs), negotiate drug prices on behalf of insurers and employers. The FTC claims PBMs prioritize high rebates from drugmakers, leading to artificially high insulin list prices, even when cheaper alternatives exist.

PBMs control about 80% of the nation's prescriptions. The FTC's lawsuit also targets their affiliated Group Purchasing Organizations (GPOs), which broker drug purchases for hospitals. The agency may sue insulin manufacturers Eli Lilly, Sanofi, and Novo Nordisk in the future, accusing them of inflating prices in response to PBM demands.

Millions of Americans with diabetes rely on insulin, yet many face skyrocketing costs. The FTC aims to end this exploitative conduct, potentially lowering drug prices beyond insulin. President Biden's Inflation Reduction Act caps insulin prices for Medicare beneficiaries at $35 per month but excludes those with private insurance.

The FTC remains concerned about insulin manufacturers' role in higher prices. Eli Lilly, Sanofi, and Novo Nordisk control 90% of the U.S. insulin market. For instance, Eli Lilly's Humalog insulin list price rose from $21 in 1999 to $274 in 2017. All drugmakers should be aware that such conduct raises serious concerns, the FTC warns.

Eli Lilly, Sanofi, and Novo Nordisk have recently taken steps to reduce insulin costs, including capping out-of-pocket expenses at $35 per month for some insulins. However, the FTC's lawsuit seeks to address systemic issues in the drug pricing process.