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FTC Sues Big Pharma Middlemen for Inflating Insulin Prices
"Caremark, ESI, and Optum—as medication gatekeepers—have extracted millions of dollars off the backs of patients who need lifesaving medications," said one agency leader.
Sep 20, 2024
The Federal Trade Commission on Friday initiated a legal process against middlemen that collectively administer about 80% of all prescriptions in the United States, accusing them of artificially inflating the list price of insulin drugs and blocking patients from accessing cheaper products.
The FTC action targets the "Big Three" pharmacy benefit managers (PBMs): CVS Health's Caremark Rx, Cigna's Express Scripts (ESI), and UnitedHealth Group's OptumRx. It also involves their affiliated group purchasing organizations (GPOs): Zinc Health Services, Ascent Health Services, and Emisar Pharma Services.
"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 FTC's Bureau of Competition.
"Caremark, ESI, and Optum—as medication gatekeepers—have extracted millions of dollars off the backs of patients who need lifesaving medications," Rao continued. "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."
The FTC's vote to begin the legal process by filing a complaint was 3-0. Led by Chair Lina Khan, the Democrats supported the move while the two Republicans, Commissioners Melissa Holyoak and Andrew N. Ferguson, recused.
The American Prospect executive editor David Dayen noted that "the complaint, which was filed in an administrative court, has not yet been made public, as it is undergoing redactions. Agency officials expect it to be made public on Monday."
However, in a statement after the vote, the FTC shared some details about the complaint's arguments that "Caremark, ESI, and Optum and their respective GPOs engaged in unfair methods of competition and unfair acts or practices under Section 5 of the FTC Act by incentivizing manufacturers to inflate insulin list prices, restricting patients' access to more affordable insulins on drug formularies, and shifting the cost of high list price insulins to vulnerable patient populations."
Rao emphasized that while the commission on Friday "exercised its discretion to move forward with suing only the PBMs and GPOs now, FTC staff's investigation has also shed light on the concerning and active role that the insulin manufacturers—Eli Lilly, Sanofi, and Novo Nordisk—play in the challenged conduct."
"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," he said.
Emma Freer, senior policy analyst for healthcare at the American Economic Liberties Project, pointed out that "the FTC's case adds to the mounting, bipartisan criticism of the 'Big Three' PBMs, which for far too long have exploited their monopoly power to inflate drug prices and enrich shareholders at the expense of patients' health and pocketbooks."
"The lawsuit also exposes their industrywide abuse, using insulin—the price of which has soared over 1,200% since 1999—as a flagship example of how PBMs' rebate schemes distort markets and drive up costs for lifesaving drugs," Freer said. "While PBMs bear much of the blame, the FTC is right to also put brand-name manufacturers like Eli Lilly, Novo Nordisk, and Sanofi on notice for their role in this crisis. We're thrilled to see the commission bring this long overdue challenge against healthcare's most notorious middlemen, and hope to see it result in concrete reform and accountability."
As The New York Timesreported:
Just weeks before the presidential election, the agency is tackling an issue that Vice President Kamala Harris has signaled an interest in. Campaigning at a community college in Raleigh, North Carolina, in August, Ms. Harris promised to "demand transparency from the middlemen who operate between Big Pharma and the insurance companies, who use opaque practices to raise your drug prices and profit off your need for medicine."
Former President Donald J. Trump has not campaigned on the issue, but in 2018, his administration proposed a sweeping change that would have threatened the benefit managers' business model. The proposal was never enacted. Mr. Trump's administration also created a model for capping Medicare patients' out-of-pocket costs for some insulin products that was later expanded under President [Joe] Biden.
The Times also noted that "some Republicans in Congress have proposed curbing some of the benefit managers' business practices. But other top Republicans have defended PBMs and said the FTC is overreaching."
Among the GOP's critics of PBMs is House Committee on Oversight and Accountability Chairman James Comer (R-Ky.), who highlighted his panel's investigations into the companies and praised the FTC move.
Another leading congressional critic of PBMs—and the country's failing for-profit healthcare system more broadly—is Senate Committee on Health, Education, Labor, and Pensions (HELP) Chair Bernie Sanders (I-Vt.), who caucuses with Democrats.
After a public pressure campaign led Eli Lilly, Novo Nordisk, and Sanofi to cut list prices of insulin products last year, Sanders held a hearing with their CEOs as well as PBM executives. At the time, he welcomed the voluntary reductions but also stressed that as "Americans pay outrageously high prices for prescription drugs, the pharmaceutical industry and the PBMs make enormous profits."
While the FTC's Friday action was widely praised—other than by the PBMs, who denied the allegations—some advocates hope the commission and other decision-makers will go even further in the future.
Stacy Mitchell, co-executive director of the Institute for Local Self-Reliance, called PBMs "some of the most predatory corporations in healthcare" and highlighted that "these companies have incredibly long rap sheets and convictions at the state level."
"I'm thrilled the FTC is going after these criminal enterprises," she said. "I hope this lawsuit, with its focus on kickbacks, is just the beginning. We also need action on how PBMs harm local pharmacies. Ultimately, these corporations need to be broken up."
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CVS and Walgreens to Offer Abortion Pill Mifepristone in Some States
"I encourage all pharmacies that want to pursue this option to seek certification," said President Joe Biden.
Mar 01, 2024
CVS and Walgreens will soon start offering the abortion pill mifepristone in certain states, including New York, Pennsylvania, Massachusetts, California, and Illinois.
It's not yet clear how many pharmacies in those states will sell the drug. Walgreens is considering expanding this offering to Kansas, Montana, and Wyoming.
The U.S. Food and Drug Administration announced a rule change in January of last year that made it so retail pharmacies like CVS and Walgreens would be permitted to sell the abortion pill. Retail pharmacies that would like to be able to sell mifepristone have to certify that they know how to treat abortion patients and require that patients fill out a consent form before obtaining the drug.
🥳 Huge W for abortion access 🎉
CVS and Walgreens can now offer #mifepristone - one of the pills used in medication abortion - in states where abortion is legal!
This is ✨great news✨, but let's be clear - everyone deserves access to abortion care, no matter where they live. https://t.co/aieNA4PAO5
— Planned Parenthood (@PPFA) March 1, 2024
"With major retail pharmacy chains newly certified to dispense medication abortion, many women will soon have the option to pick up their prescription at a local, certified pharmacy—just as they would for any other medication. I encourage all pharmacies that want to pursue this option to seek certification," President Joe Biden said in a statement.
Mifepristone is the subject of an upcoming Supreme Court case that could see access to the drug limited. U.S. District Judge Matthew Kacsmaryk, a former anti-abortion activist, issued a nationwide ban on the sale of mifepristone in April of last year in response to a lawsuit in his district that was brought by right-wing activists.
Kacsmaryk argued the FDA was wrong to approve the drug in 2000—which is very safe and has been used for decades. The Supreme Court put a hold on the ban in late April and then agreed to take the case in December.
It remains to be seen what the Supreme Court will do, but it could very well affect retail pharmacies' ability to sell mifepristone. Considering this is the court that overturned Roe, pro-choice voters are very worried about what the outcome might be. A ruling is expected in late June.
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Dem Governors, US Senators Call On Top Pharmacies to Clarify Medication Abortion Plans
"As companies that dispense critical, lifesaving medications, we urge that your decisions continue to be guided by well-established science and medical evidence and a commitment to the health and well-being of patients—not politics or litigation threats," wrote 14 governors.
Mar 14, 2023
With Walgreens under fire for its new abortion pill policy, 14 Democratic U.S. governors on Tuesday asked the corporate leaders of seven other major pharmacies to clarify their plans to lawfully distribute abortion medication like mifepristone.
The Food and Drug Administration (FDA) in January announced a regulatory change to allow retail pharmacies to dispense mifepristone, one of two medications commonly taken in tandem to induce abortion. The move came after the U.S. Supreme Court last summer reversed Roe v. Wade with its 6-3 ruling in Dobbs v. Jackson Women's Health Organization.
In the wake of the high court decision, patients have had to contend with trigger laws, new efforts to enact abortion bans, and other attempts by right-wing political leaders to cut off access to healthcare, including 20 GOP state attorneys general who last month threatened legal action against Walgreens and CVS if they dispense abortion medication by mail.
While shortly after the FDA announcement both pharmacy giants confirmed they planned to seek certification to distribute mifepristone, Walgreens later clarified it won't offer the drug in states where Republican AGs have threatened legal action—prompting California Gov. Gavin Newsom last week to not renew his state's $54 million contract with Walgreens.
Newsom is spearheading the Reproductive Freedom Alliance and on Tuesday joined the Democratic governors of Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, North Carolina, New Jersey, New Mexico, New York, Oregon, Washington, and Wisconsin in sending letters to the leaders of Costco, CVS, Health Mart, Kroger, Rite Aid, Safeway, and Walmart.
As the governors wrote:
We are deeply committed to protecting and expanding reproductive freedom and the health and well-being of all of our residents. As governors of 14 states, we not only represent over 141 million residents with a combined economy of over $11 trillion, but we are also direct customers who have partnered with many of your companies for years on a variety of issues and initiatives. We understand you are carefully reviewing the new mifepristone certification process. We look forward to receiving your plans for dispensing mifepristone in states where such care is legal, as well as any other actions you plan to take to safeguard access to reproductive healthcare.
"As companies that dispense critical, lifesaving medications, we urge that your decisions continue to be guided by well-established science and medical evidence and a commitment to the health and well-being of patients—not politics or litigation threats," the governors added.
Meanwhile, Sens. Patty Murray (D-Wash. ) and Debbie Stabenow (D-Mich.) revealed a series of letters—backed by several Senate Democrats—sent to various pharmacy leaders in recent days. They wrote to Walgreens' chief executive officer "with grave concerns about the misunderstanding and confusion your company has created with regard to patients' access to mifepristone from retail pharmacies."
Walgreens' response to Republican attorney generals' pressure "was unacceptable and appeared to yield to these threats—ignoring the critical need to ensure patients can get this essential healthcare wherever possible," the senators continued. "As you work through the FDA certification process, we urge you to fully assess the laws in each state and ensure your policies provide the strongest possible legal access to this critical patient care."
Stabenow told NBC News, which first reported on the senators' letters Tuesday, that "in no way, shape, or form should businesses deny legal healthcare to women who have the right to access this vital medication. All businesses should follow the FDA certification process and fully comply with applicable state and federal law."
The Senate Democrats wrote to the CEOs of Albertsons, Costco, Kroger, and Walmart "with great frustration" that none of them has publicly indicated whether they plan to allow customers to access mifepristone through their pharmacies across the country.
After expressing concern that GOP intimidation tactics could "lead companies like yours to continue to sit on the sidelines and undermine critical care for your customers," the senators urged those four chains "to pursue policies that provide the strongest possible access to the full range of essential healthcare they need, including mifepristone, and to communicate clearly to your customers about how they can access this care."
"We look forward to hearing back from you by March 21, 2023 about your intentions to ensure access to this critical FDA-approved product," the lawmakers added.
In letters to CVS and Rite Aid leadership, the Senate Democrats expressed appreciation for both chains' ongoing efforts to become distributors of mifepristone while also stressing that "at a time of great confusion about abortion access, it is imperative that no company adds to it."
The senators asked both companies' leaders to respond to three questions by March 21:
- If certified, how do you plan to notify current customers about access to mifepristone in any given state, where restrictions do and do not exist?
- If a new state law to restrict access to medication abortion is proposed, at what stage will you clarify to your customers whether they still have access to mifepristone?
- Will your company conduct any community outreach to ensure customers are aware of the full range of legal health services available to them?
"Medication abortion is how most women across our country get abortion care," Murray told NBC, "and it's absolutely critical patients can access this safe, FDA-approved drug without being forced to jump through medically unnecessary hoops or drain their bank accounts to travel hundreds of miles."
The questions and concerns about accessing mifepristone at retail pharmacies come as patients and providers nationwide prepare for a secretive Wednesday hearing before right-wing U.S. District Court Judge Matthew Kacsmaryk regarding an anti-choice group's effort to limit abortion access by arguing that the FDA never should have approved the drug over two decades ago.
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