Shortly
after
releasing
a
scathing
interim
report
in
July
that
revealed
how
three
players
dominate
the
pharmacy
benefit
manager
market
and
raise
drug
costs
for
patients,
the
Federal
Trade
Commission
is
turning
its
words
into
action.
Late
last
week,
the
agency
sued
the
three
largest
PBMs
—
CVS
Caremark,
Express
Scripts
and
Optum
Rx
—
and
their
affiliated
group
purchasing
organizations
for
“engaging
in
anticompetitive
and
unfair
rebating
practices”
as
it
relates
to
insulin.
For
example,
the
PBMs
use
restrictive
drug
formularies
to
exclude
some
drugs
from
coverage,
and
demand
high
rebates
from
drug
manufacturers
to
get
their
products
on
their
formularies,
the
FTC
argues.
While
the
Inflation
Reduction
Act
already
caps
monthly
insulin
out-of-pocket
expenses
at
$35
for
Medicare
patients,
this
lawsuit
aims
to
help
everyone
taking
insulin.
In
its
administrative
complaint,
the
FTC
alleges
that
these
practices
violate
the
FTC
Act,
artificially
inflate
prices
and
make
it
more
difficult
for
patients
to
access
insulin.
Will
the
FTC
be
successful
in
its
pursuit
to
reign
in
PBMs?
According
to
one
legal
expert,
that
“depends
on
the
momentum
they
maintain”
moving
forward.
“I
will
say
that
right
now
on
the
issue
of
insulin,
the
momentum
favors
the
FTC,”
said
Lucas
Morgan,
partner
in
Frier
Levitt’s
Healthcare
and
Life
Sciences
groups,
in
an
interview.
“As
far
as
I
can
tell,
they
have
a
lot
of
very
detailed
information
and
evidence
to
show
exactly
what
[the
PBMs]
did
and
why
it
was
problematic.
…
I
would
also
say
that
they
have
the
public
support
in
their
favor,
because
who
isn’t
going
to
be
an
advocate
for
lowering
the
cost
of
these
types
of
medications
that
so
many
people
rely
on?
Whether
you’re
a
diabetic
or
not
a
diabetic,
I
think
most
people
are
going
to
side
with
patients
over
large
corporations
and
their
profits.”
What
the
complaint
alleges
According
to
the
complaint,
insulin
is
the
“poster
child
of
[the
PBMs’]
broken
drug
pricing
system.”
The
complaint
explains
that
diabetes
is
one
of
the
most
widespread
diseases
in
the
U.S.,
affecting
more
than
38
million
Americans.
For
some
Americans,
insulin
is
the
only
way
they
can
manage
the
disease.
The
medications
weren’t
always
unaffordable
either.
The
average
list
price
for
commonly
used
insulin
Humalog
was
just
$21
in
1999,
according
to
the
complaint.
In
2017,
the
price
reached
more
than
$274.
PBMs’
practices
are
largely
to
blame
for
this
increase
in
insulin
prices,
the
complaint
alleges.
CVS
Caremark,
Express
Scripts
and
Optum
Rx
administer
about
80%
of
all
prescriptions
in
the
U.S.,
and
they
have
“significant
influence
over
which
drugs
patients
can
access,
and
at
what
price.”
About
a
decade
ago,
the
three
PBMs
created
restrictive
drug
formularies
(lists
of
preferred
and
non-preferred
drugs)
to
exclude
some
medications
from
coverage,
the
FTC
argued.
This
puts
drug
manufacturers
at
risk
of
not
having
their
products
covered
for
millions
of
Americans.
PBMs
“began
demanding
higher
and
higher
rebates
from
drug
manufacturers
in
exchange
for
placing
those
drugs
on
their
restrictive
formularies,”
the
complaint
alleges.
The
FTC
noted
that
drug
manufacturers
aren’t
blameless,
and
specifically
called
out
insulin
manufacturers
Eli
Lilly,
Sanofi
and
Novo
Nordisk.
Because
of
the
demand
for
larger
rebates,
drug
manufacturers
began
to
increase
the
list
price
of
their
drugs,
“leading
to
artificially
inflated
list
prices
that
are
disconnected
from
the
actual
cost
of
the
drugs
to
insurers,”
the
complaint
states.
Patients’
out-of-pocket
expenses
are
often
tied
to
these
inflated
prices,
as
uninsured
patients
might
have
to
pay
the
full
list
price
and
insured
patients
with
high-deductibles
or
coinsurance
may
experience
costs
based
on
the
higher
list
price.
“Although
not
named
in
this
case,
all
drug
manufacturers
should
be
on
notice
that
their
participation
in
the
type
of
conduct
challenged
here
can
raise
serious
concerns,
with
a
potential
for
significant
consumer
harm,
and
that
the
Bureau
of
Competition
reserves
the
right
to
recommend
naming
drug
manufacturers
as
defendants
in
any
future
enforcement
actions
over
similar
conduct,”
said
Rahul
Rao,
deputy
director
of
the
FTC
Bureau
of
Competition,
in
a
statement.
These
issues
go
beyond
insulin,
according
to
the
complaint.
“The
Respondents’
demand
for
larger
rebates
has
also
inflated
list
prices
for
other
critical
drugs
including
treatments
for
autoimmune
diseases
and
inflammatory
conditions,”
the
complaint
states.
“Patients
whose
out-of-pocket
costs
are
tied
to
these
inflated
list
prices
may
spend
hundreds
of
dollars
per
prescription.
In
some
cases,
the
patient
may
pay
more
at
the
pharmacy
counter
than
the
actual
cost
to
their
commercial
insurer.
In
other
words,
the
insurer
functionally
makes
a
profit
from
the
prescription,
instead
of
paying
its
share
of
the
cost.
This
turns
the
normal
insurance
model
on
its
head
with
the
sick
subsidizing
the
healthy,
rather
than
the
other
way
around.”
A
‘baseless
action’
As
expected,
the
Big
Three
PBMs
defended
themselves
against
the
FTC’s
complaint.
“This
baseless
action
demonstrates
a
profound
misunderstanding
of
how
drug
pricing
works,”
said
Elizabeth
Hoff,
an
Optum
Rx
spokesperson.
“For
many
years,
Optum
Rx
has
aggressively
and
successfully
negotiated
with
drug
manufacturers
and
taken
additional
actions
to
lower
prescription
insulin
costs
for
our
health
plan
customers
and
their
members,
who
now
pay
an
average
of
less
than
$18
per
month
for
insulin.”
Cigna’s
chief
legal
officer,
Andrea
Nelson,
said
the
complaint
“continues
a
troubling
pattern
from
the
FTC
of
unsubstantiated
and
ideologically-driven
attacks
on
pharmacy
benefit
managers.”
Express
Scripts
also
recently
filed
a
lawsuit
against
the
FTC,
demanding
that
the
commission
withdraw
its
interim
report
on
PBMs
released
in
July.
A
spokesperson
for
CVS
Caremark
claimed
that
the
company
has
“led
the
way”
in
driving
down
insulin
costs,
noting
that
its
members
usually
pay
less
than
$25
on
average.
The
company
also
pointed
the
finger
at
drugmakers,
stating
that
limiting
PBM
negotiating
tools
would
reward
the
pharmaceutical
industry.
“The
FTC
has
missed
the
mark
entirely.
Not
only
is
the
FTC
letting
off
the
hook
the
drugmakers
who
historically
hiked
the
price
of
insulin,
last
week’s
announcement
threatens
to
limit
the
country’s
best
counterweight
against
future
drugmaker
price
gouging,”
said
David
Whitrap,
vice
president
of
external
affairs
at
CVS
Health,
in
an
email.
“And
the
FTC
is
choosing
to
do
so
at
a
time
when
the
American
healthcare
system
is
already
grappling
with
how
to
pay
for
these
same
manufacturers’
most
profitable
drugs,
the
GLP-1s.”
Meanwhile,
one
national
pharma
lobby
group
said
the
complaint
is
“the
latest
evidence
showing
that
PBMs
use
their
control
over
the
market
to
drive
up
patient
costs
and
limit
access.”
“Rebates
and
discounts
have
lowered
list
prices
for
the
most
commonly
used
insulins
by
84%,
yet
PBMs
use
those
savings
in
the
system
to
boost
their
own
profits
rather
than
pass
them
along
to
patients,”
said
Nick
McGee,
DVP
public
affairs
at
PhRMA,
in
an
email.
“This
move
by
the
FTC
just
adds
to
the
overwhelming
echo
chamber
of
support
for
reforms
that
will
fix
the
misaligned
incentives
in
the
system
and
hold
PBMs
accountable.”
What
could
come
out
of
this?
If
successful
in
this
lawsuit,
the
complaint
notes
that
the
commission
could
call
for
the
following
relief:
-
Prohibit
PBMs
from
excluding
or
disadvantaging
lower
wholesale
acquisition
cost
(WAC)
versions
of
high
WAC
drugs
from
the
same
manufacturers
when
the
respondent
includes
the
high
WAC
drug
on
a
formulary -
Ban
PBMs
from
taking
compensation
based
on
a
drug’s
list
price -
Stop
PBMs
from
designing
benefit
plans
that
base
patients’
deductibles
on
the
list
price
versus
the
net
cost
after
rebates
“The
FTC’s
administrative
action
seeks
to
put
an
end
to
the
Big
Three
PBMs’
exploitative
conduct
and
marks
an
important
step
in
fixing
a
broken
system
—
a
fix
that
could
ripple
beyond
the
insulin
market
and
restore
healthy
competition
to
drive
down
drug
prices
for
consumers,”
Rao
of
the
FTC
said
in
a
statement.
Morgan
of
Frier
Levitt
noted
that
this
case
will
ultimately
be
heard
by
an
administrative
law
judge
versus
a
federal
district
court
judge,
which
could
bode
well
for
the
FTC.
“This
is
an
administrative
proceeding,
as
opposed
to
one
that’s
in
federal
district
court.
That
is
a
venue
that
favors
the
FTC
and
the
agency,
as
opposed
to
the
PBMs
and
their
GPOs,”
he
said.
“That’s
not
to
say
that
if
the
FTC
were
in
court,
they
still
couldn’t
prove
their
case
or
that
the
PBMs
and
the
GPOs
aren’t
capable
of
defending
it
in
either
venue.
Agency
proceedings
tend
to
be
more
streamlined
and
tend
to
be
a
little
more
deferential
to
the
agency.”
The
FTC
succeeding
in
this
lawsuit
is
certainly
an
outcome
that
one
pharmacy
advocacy
organization
hopes
for.
“It’s
often
left
to
the
pharmacist
to
sort
of
be
the
insurance
agent,
if
you
will,
for
the
patient
when
they
come
in
and
are
told
that
their
inhaler
or
their
insulin
is
no
longer
on
formulary,”
said
Matthew
Seiler,
general
counsel
for
the
National
Community
Pharmacists
Association.
“The
pharmacist
has
to
call
an
insurance
company
and
try
to
get
a
generic
or
some
other
equivalent
that
is
on
formulary
or
that
is
cheaper,
so
that
can
take
multiple
calls,
multiple
hours
of
time,
and
sometimes
pharmacists
are
not
able
to
do
that.
…
I’m
hopeful
that
this
action
by
the
FTC
will
benefit
a
lot
of
patients
and
the
pharmacists
that
are
trying
to
serve
patients
as
best
they
can.”
Patients
for
Affordable
Drugs,
an
independent
patient
advocacy
organization,
would
also
like
to
see
action
taken
against
PBMs,
but
stressed
that
more
is
needed
beyond
that.
“Let’s
be
clear,
this
lawsuit
is
key
but
we
cannot
let
drug
manufacturers
off
the
hook
for
their
role
in
setting
high
list
prices
for
life-saving
medication
like
insulin,”
urged
Merith
Basey,
executive
director
of
Patients
for
Affordable
Drugs,
in
an
email.
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bong
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