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FTC to Sue Prescription Drug Middlemen Over High Prices


The Federal Trade Commission plans to sue the three largest pharmacy benefit managers in the country over practices that have kept drug prices artificially high, according to new reports from the Wall Street Journal and healthcare news outlet STAT. The news comes just one day after the FTC announced it had completed a two-year investigation into the industry.

Pharmacy benefit managers, often abbreviated as PBMs, are essentially just middlemen who handle prescriptions for employers and insurers. PBMs and are supposed to negotiate with the drug companies to get better prices for consumers, but critics allege they’re often doing the exact opposite, driving up prices without the proper incentives to get better deals for patients.

The three largest pharmacy benefit managers in the country, Express Scripts, Caremark, and OptumRx, control roughly 80% of the 6.6 billion prescriptions filled each year, according to STAT, which also notes the companies didn’t provide all of the information requested by the FTC for its report released Tuesday. It appears that those three companies will be the only ones sued by the FTC, despite the fact that the next three are also relatively significant. The top six pharmacy benefit managers control 94% of the market, according to Marketwatch.

OptumRx is owned by the insurance company UnitedHealth, Caremark is owned by the pharmacy chain CVS, and Express Scripts is owned by the insurance company Cigna. And it’s that kind of ownership that critics point out doesn’t allow for proper negotiations in the first place.

The FTC may also go after the largest insulin manufacturers over the soaring costs that have been passed on to consumers over the past decade, according to the Wall Street Journal. Some legislators like Bernie Sanders have criticized the drug companies for their price-gouging, including the soaring cost of insulin in recent years. That scrutiny caused Lilly, Sanofi, and Novo Nordisk to all pledge lower insulin prices this year.

The timing of the FTC’s possible lawsuit is unclear, based on the reports, and the agency didn’t immediately respond to questions emailed on Wednesday. For their part, pharmacy benefit managers have defended their work, with Caremark telling Gizmodo over email that the company, “is proud of the work we have done to make insulin more affordable for all Americans with diabetes,” and noting the price of insulin has come down.

“Our members on average pay less than $25, far below list prices and far below the Biden Administration’s $35 cap,” David Whitrap, Vice President of External Affairs at Caremark, told Gizmodo. “Further, we also provide access to $25 insulin to every American, whether insured or uninsured, through our ReducedRx program at every one of our 67,000 network pharmacies and more than 9,000 CVS pharmacies.”

Express Scripts and OptumRx didn’t immediately respond to questions emailed on Wednesday. Gizmodo will update this post if we hear back.

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