On Sept. 23, the Federal Trade Commission published a redacted lawsuit it recently filed against three pharmacy benefit managers and group purchasing organizations. Here is what to know:
1. The lawsuit accuses the nation's three largest PBMs and their GPOs of inflating insulin prices through alleged anticompetitive practices. "These behemoth PBMs came to exert enormous influence over drug pricing and purchasing decisions" as they work between drug manufacturers, payers and pharmacies, according to the suit.
2. The defendants are CVS Health's Caremark and its GPO, Zinc Health Services; UnitedHealth Group's Optum Rx and its GPO, Ascent Health Services; and Cigna Group's Express Scripts/Evernorth Health and their GPOs, Medco Health Services/Ascent Health Services.
3. In response to the lawsuit, CVS and Express Scripts said they have lowered the price of insulin; Optum Rx did not respond to Becker's request for comment.
4. These companies have 14 days since receiving the administrative complaint to submit a response to the allegations, the FTC said, adding that it will hold an evidentiary hearing Aug. 27.
Here are some of the allegations:
5. The PBMs' formation of GPOs have "further exacerbated payers' ability to determine whether rebates and fees are actually being passed through, because the [PBMs] do not disclose the amount of fees retained by the GPOs. … A former Optum executive who helped set up Emisar, Optum's GPO, candidly explained, 'The intention of the G.P.O. is to create a fee structure that can be retained and not passed on to a client.'"
6. The PBMs "leveraged their size and the threat of excluding drugs from their formularies — resulting in significant sales losses — to demand higher rebates from insulin manufacturers. … Insulin manufacturers understood that 'the magnitude of the rebate amount' was crucial and that they 'had to compete for both net price and the amount of rebate in order to win access that PBMs prioritize.'"
7. The PBMs not only "knowingly design formularies that can shift costs on to patients by preferring high WAC, highly rebated drugs, they also incentivize and encourage commercial payers to select these types of formularies."
8. After Medicaid rebates stopped capping some drugs at 100% of the quarterly average manufacturer price on Jan. 1, 2024, the PBMs switched to new insulin products not affected by this change.
9. The PBMs and GPOs collect more money from higher list price products because of rebates and fees, not because these products are more effective than lower list price products.