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insulin
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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What the Inflation Reduction Act Has Meant for Healthcare 2 Years Later
From the $35 insulin co-pay to capping insurance premium costs, the legislation has been health-changing and life-changing.
Aug 30, 2024
I was honored to be at the White House this month for the Inflation Reduction Act anniversary event, featuring Americans sharing their stories of saving money and saving lives.
Thank you to the millions of people fighting every day for lower drug prices, to Congress for passing the Inflation Reduction Act, U.S. Vice President Kamala Harris for casting the deciding vote in the Senate, and President Joe Biden for signing it into law.
Meet Bob Parant, from New York. He’s a 71-year-old man who has been living with type 1 diabetes for over fifty years. He lost his leg in 2010, and became eligible for Medicare. Before the Inflation Reduction Act, the last price Bob paid for a vial of insulin was $580, which was “horrendous.”
We have made so much progress on healthcare. But as everyone reading this knows, there is so much more to do.
Listen to Pam Parker, from Maryland: She’s a retired electrician, 62 years old, and has been diabetic since she was 30. “I had to decide, a lot of months, between mortgage, groceries, utilities, and other things… I would juggle my expenses, and really juggle my healthcare.. I would eat less, or ration my insulin to make it last.. I had high blood pressure, I fell into a coma, my kidneys failed… they told me I coded.”
Learn from Robin Craycroft, from Missouri: When she turned 65 and had access to Medicare, the pharmacist told her that one insulin for three months was $3,000. “Everything that we had planned, cancelled, and our life just changed. And I felt such guilt over that… We’re gonna spend $2,000 a month (two insulin vials) to keep me alive. You start going through, am I worth it? Should I do that to [my husband]?”
Hear Steven Hadfield, from North Carolina: “Before the $35 cap, sometimes you had to skip a dose, sometimes you had to not test yourself, watch what you eat because you couldn’t afford it…”
The $35 insulin co-pay cap for people on Medicare is just one of the health-changing and life-changing parts of the Inflation Reduction Act.
This year, people on Medicare have their out of pocket Part D drug costs capped at around $3,500. And next year, the maximum drops down to $2,000. This means seniors on a fixed income won’t have to choose medicine over food or housing or anything else. Also recommended adult vaccines such as the new shingles vaccine are now free for Medicare recipients.
Pharmaceutical companies that raise their prices higher than inflation are required to pay Medicare a rebate, to encourage them to stop price gouging patients. And in 2026, price negotiations for the first 10 drugs under Medicare go into effect: lowering the costs of those drugs for millions of Americans. The savings will continue for patients and taxpayers as more drug prices are negotiated each year.
But the Inflation Reduction Act doesn’t just help people on Medicare. Over 21 million Americans like me get their health insurance through the Affordable Care Act marketplaces. When I was diagnosed with stage 4 cancer in 2017, I did not qualify for financial help for insurance. Thankfully I was able to afford a plan anyway, and to pay the maximum deductible for that year. A bargain compared to the over half a million dollars it cost to save my life.
I am so grateful to still be here, and for the Affordable Care Act made truly more affordable to millions of working Americans like me.
The American Rescue Plan, and then the Inflation Reduction Act, provided financial help for health insurance to many more who needed it. This law caps the cost of premiums at no more than 8.5% of your income, meaning people—especially older folks who face higher premiums, or people in more expensive healthcare markets—don’t get penalized, and can still afford the care they need.
We have made so much progress on healthcare. But as everyone reading this knows, there is so much more to do.
First, we have to defend the advances in the Inflation Reduction Act. A new administration and a new Congress next year means everything we’ve gained could be on the chopping block.
Second, the health insurance tax credits piece expires in 2025. Without that renewal, millions of Americans would go back to being priced out of health insurance.
Third, the Medicare provisions such as the $35 insulin cap, the drug price negotiation, and more, need to be expanded to everyone.
We are grateful to still be here, and to keep fighting until every American can get the healthcare they need. We cannot go back.
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Make Insulin Affordable With Public Pharma
To create sustainable change in the insulin market and to truly lower costs to patients, we need to think outside of the dominant systems that rely on corporate actors.
Aug 24, 2023
In March, the Big Three manufacturers of insulin, who control over 90% of the insulin market in the U.S., announced highly publicized list price cuts to some insulins, after decades of
unchecked price increases on the 100-year-old drug that costs $6 a vial to produce. In response, some claimed that California’s foray into the insulin market (by way of a contract with the nonprofit CivicaRx to produce the state’s own insulin) was no longer needed. But recent findings confirm what advocates have known for a long time: The system of fully private, profit-driven production is not working for patients.
Lilly’s insulin Lispro was supposed to be available for $25 as of May 1. T1International recently shared that the average list price quoted to patient advocates attempting to acquire the $25 insulin since May 1 has been $107.31, while Sen. Elizabeth Warren’s (D-WMass.) office found chain stores charged uninsured customers an average of $123 per vial for the generic insulin, and nearly half (43%) of surveyed pharmacies did not stock it.
To create sustainable change in the insulin market and to truly lower costs to patients, we need to think outside of the dominant systems that rely on corporate actors to implement change—we need public pharma options.
Ultimately, insulin manufacturers and the pharmaceutical industry must be held accountable for putting profits over patients through legislation that permits price-lowering solutions to move quickly ahead.
“Public Pharma” refers to options in which state actors take or complement roles that private companies usually have in pharma: manufacturing, distributing, and pricing prescription drugs. Three variations of Public Pharma are: public manufacturing, in which the state manufactures the drug; public procurement, in which states purchase drugs in bulk quantities at a lower price and distribute them; and public PBMs, in which the state(s) negotiate lower prices for public or private entities to purchase.
States who invest in public manufacturing of insulin and other medicines are investing in the future of their citizens. The demand for insulin, which is as essential as water to a person with type 1 diabetes, will only increase in the coming years, with rates of diabetes in young U.S. populations predicted to rise dramatically. The current faulty system has resulted in an estimated 1.3 million Americans rationing their insulin in the last year. States that provide affordable and accessible insulin will save money through fewer emergency room visits for diabetic ketoacidosis (DKA), a consequence of rationing that costs an average of $30,000 per ER visit. They can also count on a reduction of long-term complications caused by the inability to correctly manage diabetes with insulin, such as amputations, kidney failure, vision damage, and more. In 2019, taxpayer-funded programs like Medicare and Medicaid spent over $120 billion (65% of total expenditures) on total health expenditures, including over $25 billion on insulin. If patients were able to buy their medicine at a price that is close to the manufacturing cost—or better yet, receive it for free—money would be saved and quality of life would be vastly improved.
Public manufacturing will also create new jobs and allow states to take ownership of the supply chain. There is opportunity to sell the publicly produced medicines to other states interested in contracting for lower cost options. And of course, states are not limited to only addressing insulin costs, but can focus on other high priced drugs in the future, as California is doing with Naloxone.
Public Pharma initiatives, most specifically targeting insulin, have already been started in Washington, Maine, Michigan, and California, with Michigan and California both budgeting significant funds for the efforts ($150 million and $100 million, respectively). Establishing a manufacturing facility and getting FDA approval is a longer process, so while public manufacturing should be the end goal among the various pathways, establishing interim solutions with public PBMs (as Washington, Oregon, Nevada, and Connecticut have done with ArrayRX) and public procurement options can lower prices quickly and save states money. Additionally, creating a public-private partnership by contracting with a nonprofit like Civica, as California has done for their state brand CalRx, could lower costs for some patients as soon as 2024, since they are further along in the drug development and approval process for insulin. Ultimately, insulin manufacturers and the pharmaceutical industry must be held accountable for putting profits over patients through legislation that permits these and other price-lowering solutions to move quickly ahead.
Public manufacturing has already been implemented successfully by several states. Massachusetts and Michigan have both developed, manufactured, and marketed biologics (including vaccines, monoclonal antibodies, and immunoglobulins) in the past, and Massachusetts continues to do so today through MassBiologics. The California Department of Public Health produces BabyBIG, a biologic drug used to treat infant botulism, which was developed and produced in response to a high incidence of infant botulism cases in the state.
It’s time to put people over profit, and join #insulin4all advocates across the country in urging our state legislators to prioritize public pharma.
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