Insulin prices increased 1,200% in 18 years because of unfair rebate practices: FTC
of ConsumerAffairsThe Federal Trade Commission is suing the three largest prescription drug benefit managers (PBMs) for allegedly driving up insulin prices throughanticompetitive and unfair rebating practices, impaired patients access to lower list price products, and shifted the cost of high insulin list prices to vulnerable patients.
The agency said the companies Caremark Rx, Express Scripts (ESI), and OptumRx and theiraffiliated group purchasing organizations (GPOs) abused their economic power by rigging pharmaceutical supply chain competition in their favor, forcing patients to pay more for life-saving medication.
According to the complaint, these PBMs, known as the Big Three, together administer about 80% of all prescriptions in the United States.
The FTC alleges that the three PBMs created a "perverse drug rebate system" that prioritizes high rebates from drug manufacturers, leading to artificially inflated insulin list prices.
The complaint charges that even when lower list price insulins became available, the PBMs systemically excluded them in favor of high list price, highly rebated insulin products.
These strategies have allowed the PBMs and GPOs to line their pockets while certain patients are forced to pay higher out-of-pocket costs for insulin medication, the FTCs complaint alleges.
Millions of Americans with diabetes need insulin to survive, yet for many of these vulnerable patients, their insulin drug costs have skyrocketed over the past decade thanks in part to powerful PBMs and their greed, said Rahul Rao, Deputy Director of the FTCs Bureau of Competition.
Caremark, ESI, and Optum as medication gatekeepers have extracted millions of dollars off the backs of patients who need life-saving medications. The FTCs 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.
Independent pharmacies have long argued that the PBMs were driving up drug costs and welcome today's announcement.
"The rebates create a powerful incentive for higher drug prices, which is completely upside-down. We are very pleased that the FTC is seeking to end that practice, saidB. Douglas Hoey of the National Community Pharmacists Association, in an email to ConsumerAffairs.
Pharmacists United for Truth and Transparency (PUTT) said the FTC action was a good start. "The FTC's lawsuit won't change the alarming trajectory of community pharmacy closures currently sweeping the country, but it nonetheless represents an important win for consumers and patients," said Monique Whitney, the group's executive director. "[It] echoes statements independent pharmacists have made for years regarding PBM practices that harm pharmacies and patients."
In separate statements, the companies said the FTC's charges were baseless.
But health policy expert Larry Levitt of KFF, the Kaiser Family Foundation, described the FTC action as a "shot across the bow."
"Insulin is an extreme case of PBMs extracting bigger and bigger rebates from drug manufacturers and driving list prices up at the pharmacy counter, but this is a dynamic that plays out with many medications," he said, according to Reuters.
It used to be affordable
Insulin medications used to be affordable. In 1999, the average list price of Humalog a brand-name insulin medication manufactured by Eli Lilly was only $21. However, the complaint alleges that the PBMs chase-the-rebate strategy has led to skyrocketing list prices of insulin medications.
By 2017, the list price of Humalog soared to more than $274a staggering increase of over 1,200%. While PBM respondents collected billions in rebates and associated fees according to the complaint, by 2019 one out of every four insulin patients was unable to afford their medication.
The FTCs Bureau of Competition,in a statement issued today, saidthat the PBMs are not the only potentially culpable actors the Bureau also remains deeply troubled by the role drug manufacturers like Eli Lilly, Novo Nordisk, and Sanofi play in driving up list prices of life-saving medications like insulin.
Indeed, all drug manufacturers should be on notice that their participation in the type of conduct challenged here raises serious concerns, and that the Bureau of Competition may recommend suing drug manufacturers in any future enforcement actions.
Photo Credit: Consumer Affairs News Department Images
Posted: 2024-09-20 21:47:39
